National Housing Trust addicted to failure
The National Housing Trust (NHT) was established in 1976 to address the housing shortage that resulted from a growing population and the inadequate annual output of houses by the public and private sectors. The Trust emerged out of the need for a financial institution that could mobilise additional funds for housing and ensure that those funds are available to more Jamaican families at rates below the traditional market rates. The institution was given a broad mandate. ( NHT website)
The announcement that the NHT plans to build only 2,400 new housing solutions, not all of which will be completed in 2015, raises serious doubt as to whether or not the NHT is fulfilling its mandate. Twenty-four hundred is at least 10,000 fewer than the annual national demand for new housing solutions.
This indicates that whatever boast there may have been of past achievements that the NHT may have made, its present output is a betrayal of its purpose and its mandate. The NHT, in 2015, is not doing nearly enough, and certainly it is not doing what it was intended to do.
Worse than the disappointing statistic in regard to promised housing solutions is the fact that NHT solutions only benefit the top 30 per cent of its contributors. The bottom 70 per cent receive only 10 per cent of NHT benefits by way of housing solutions. They do not qualify for mortgages and the available solutions are beyond the reach of their pockets.
More than anything else, the NHT was set up in the first place to solve Jamaica's housing problem. I put it to you that housing solutions that are needed are for the lower 70 per cent - it is for those who live in rented houses, in tenement yards and squatter settlements. A subsidiary benefit of the considerable savings amassed through the NHT and the initiatives to supply shelter solutions would be a stimulant for the construction industry that is a leading supplier of employment.
The fact is that the NHT is itself a major employer of labour and some of the best packages of emoluments in the public sector are provided by the NHT for employees of the NHT. With some J$120 billion of assets, including a substantial portion in cash assets, the NHT represents an important pool of local savings. There can be no doubt that the NHT has, in general, been prudent in the handling of its considerable investment portfolio.
The NHT has also been quite aggressive in going after employers who have been delinquent in remitting statutory deductions to the Trust. In fact, the NHT has been every bit the banker and tax collector; what the NHT has not been doing is providing housing solutions to dent the national demand.
The NHT certainly has not put Jamaica in a better position in respect of providing housing solutions for domestic workers and security guards, some of the most vulnerable among Jamaica's employed classes. In fact, between 2013 and 2015, Food For The Poor (FFP) has done far more in providing housing for Jamaicans than the NHT managed.
In September 2012, Dr Omar Davies spearheaded an initiative that saw an agreement between the NHT and FFP whereby NHT would provide 50 lots per month (600 per year) and FFP would build 50 concrete housing units (600 per year), two bedrooms with bathroom for approximately J$1m per unit. The NHT would then sell the unit for approximately $2m so that this solution would be in the range that is affordable to the poorest quintile of Jamaica's population who make contributions to the NHT, but cannot qualify for a loan under normal circumstances.
However, the NHT has been negligent in providing the required lots as called for under the contract. Over the past 30 months of the contract, 1,500 houses should have been built. Instead, only approximately 400 have been built. The best that one could say of the response of the NHT to this has been lukewarm. Here is a case where a solution was found by Dr Davies, who is the minister of transport, housing and works (but not the political head of the NHT; in fact, the NHT does not consider itself accountable to a particular minister) to deliver houses to contributors who would otherwise never receive help from NHT, and even in this most critical of cases, the NHT does not perform. The NHT has not demonstrated the same enthusiasm for this type of shelter solution from FFP that it has for collecting dues from delinquent employers.
The Government must, therefore, consider whether or not, with a capacity to deliver only 2,400 new housing solutions per year, the NHT represents the best use of five per cent of the total wage bill of the country annually. It seems to me that the NHT has lost its way; it no longer remembers what it is about.
Do not tell me it is too big to fail, because it already has failed. It is not stimulating the construction sector and it is not providing enough shelter solution. It is keeping the money so that financial institutions can rinse it, but it is not doing what it is supposed to do. It may now be time to abolish the NHT or invent a new one.
I would like to suggest three areas in which the NHT can take initiatives in order to change the housing and construction landscape in the new term.
1. There needs to be a solution that is a game-changer, like the Greater Portmore solution was in its time. Something of that scale should be attempted in more than one population centre across the island. I make only one caveat: that local companies should also be subcontracted. I was told recently of a local construction company that employed as many as 200 persons closing down and making its workers' jobs redundant. The Chinese have changed the construction sector. They are getting the majority of government contracts with no obligation to engage local subcontractors. Care should be taken to ensure that local layers get a piece of the action.
2. The partnership with FFP should be expanded and persons below an income threshold of $15,000 per week should pay 0.5% interest rate. The legislation governing the mortgage bank, which allows mortgages of 95% of value, should be exploited to further empower the working class. New paradigms should be explored to increase the options for those of the lowest quintile of the income pie. Then the NHT would be seen to do what it was set up to do.