Unfair swing at NHT, Rev Roper
We write in response to an article by the Rev Garnett Roper published in The Sunday Gleaner of March 8, 2015. In that article, Rev Roper argues that the National Housing Trust (NHT) was set up to solve the nation's housing problem, and based on its performance, it has been a failure. He supports his argument by referring to matters pertaining mainly to housing supply and affordability.
The Trust's mission is to increase and enhance the housing stock by promoting new projects, providing mortgage loans to our contributors, and providing funding for the housing construction sector. The Trust was conceived as one entity in a partnership that would involve workers, private financial institutions, professionals in the construction industry, and government agencies. At no time was it ever thought that the NHT could single-handedly solve the national housing problem.
Rev Roper takes issue with the Trust's projection to provide 2,400 scheme solutions in the 2015-2016 financial year. He asserts that 2,400 is at least 10,000 fewer than the annual national demand for new housing solutions. He, however, does not give consideration to the fact that scheme construction is only one of the means by which the NHT seeks to address the issue of housing demand.
Indeed, so far this financial year, the NHT has added in excess of 7,000 new mortgages to its portfolio. Many of these properties were brought to market by private developers and individuals using financing provided by the NHT.
INVESTMENT IN HOUSING
Over the past five years, the Trust has provided $8.6 billion in construction financing on concessionary terms to private-sector housing developers and to the Housing Agency of Jamaica, and has gone further to provide mortgage loans to contributors to purchase the very units built under this financing programme. When one adds to this construction loans of just over $20 billion for building on lands owned by contributors and for home improvement, it becomes obvious that the NHT's scheme development figures alone do not capture the full impact of the organisation on housing provision.
To illustrate further, as at February 2015, $190 billion, or approximately 87 per cent of the total assets of the NHT were invested in housing. For the 2014-2015 financial year alone, the Trust spent a total of $23.6 billion on housing finance for all categories of contributors. Of this sum, $2.1 billion was spent on NHT scheme development and $18.1 billion on providing mortgage loans.
The NHT is aware that its low-income contributors are in need of housing. However, our figures do not support the claim that such persons currently receive only 10 per cent of NHT benefits. As at February 28, 2015, the NHT had 103,662 active mortgages. Of this number 41,571, or 40 per cent, had been given to persons classified as low-income contributors earning $10,000 per week or less. On the other hand, 26% of mortgages are held by contributors earning more than $20,000 per week.
Over the past five years, the NHT awarded $2.1b in subsidies and grants to low-income contributors. From 2012-2014, the Trust awarded $875 million in home grants to 730 beneficiaries earning under $10,000 per week to access solutions that they would not otherwise afford.
The most significant relief from which all contributors consistently benefit, however, is our concessionary interest rates. More than 40 per cent of our beneficiaries access loans at rates ranging from zero to three per cent, compared to the national average rate of 9.5 per cent. Further concessions are afforded to public-sector employees, sugar industry workers, hotel workers, and other select groups.
Any reasoned analysis must acknowledge that affordability is as much an income problem as a pricing issue. Costs associated with the importation of building material impact pricing and affordability, and a strategy now being adopted by the NHT is to encourage the use of alternative, more cost-efficient material in the construction process. It is expected that this, coupled with the income relief outlined above, will help to put more contributors into homes in the future.
The First Step Homes (FSH) programme was conceived as a partial response to affordability issues affecting lower-income earners. The NHT has been proactive and fully engaged in the programme, having provided full funding for its execution. In the first year, the NHT delivered the full complement of its scheme solutions. Despite extensive promotion, response to the contributor-owned lot category has been disappointing, with only 71 contributors purchasing units over the two years. This suggests that lot owners may not have a preference for the housing type on offer.
The Trust is still in discussion with the Ministry of Transport, Works and Housing and the Housing Agency of Jamaica regarding provision of suitable land for the development of outstanding units. Needless to say, the NHT remains fully committed to this programme.
The NHT is not the beneficiary of five per cent of the national wage bill, as the writer asserts. Only 54 per cent of liable companies comply with the requirement to contribute to the Trust, and billions in funds are owed by employers.
What is regrettable is that some companies withdraw amounts for both mortgage and
contributions from their employees' wages and fail to remit these funds to the Trust, resulting
in expensive and time-consuming efforts to recover same.
Indeed, the Trust has become an aggressive collector, but this is not a matter of choice: The NHT would rather expend its energies on providing housing than in pursuing delinquent employers. Please note that the organisation has spent more on housing than it has collected in contributions for each of the last five years. For the period 2010-2014, it spent a total of $107 billion on housing, $28 billion more than net contributions.
To conclude, our performance does not support the argument that the Trust is addicted to failure. Having provided shelter solutions for some
700,000 Jamaicans since its inception, the NHT will continue to contribute to the provision of housing solutions in Jamaica.