Housing dilemma - Develop solutions for low-income earners - former NHT boss
MORE DISCUSSION is needed on the issue of providing proper housing for low-income earners, according to Earl Samuels, assistant general manager at the Jamaica National Building Society.
Samuels said over the weekend that the debate about affordable housing continues to be one-sided, excluding low-income earners from the discourse.
"The majority of the beneficiaries under the National Housing Trust (NHT) are those in the middle-income category, and there is a reason for that. Those at the lower-income level, they can't afford it," he argued.
"Even at $4.5 million at zero per cent interest, a significant portion of the contributors would still not be able to afford it," stressed Samuels, a former managing director of the NHT.
His comments follow on discussions raised about the issue during the recent two-day Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions, at The Jamaica Pegasus hotel in St Andrew.
NHT Chairman Easton Douglas said during the conference that low-income earners represent about 20 per cent to 25 per cent of beneficiaries, while middle-income earners make up some 40 per cent of beneficiaries, although near equal numbers of middle-income and low-income earners make up the more than 350,000 contributors to the NHT.
Samuels' revelation is supported by findings by the Caribbean Policy and Research Institute (CaPRI), which have indicated that the NHT has only been able to provide housing for some 12 per cent of the population.
The CaPRI says more than 600,000 Jamaicans are not eligible for mortgages from the Trust.
In a draft paper on the issue, CAPRI says with more than half a million Jamaicans living below the poverty line, the gap between effective housing demand and need is increasing.
Also speaking at the conference, Doreen Prendergast, chief technical director in the Ministry of Transport, Housing and Works, noted that partnerships with private developers to construct low-income housing have not been the best solution either as private companies are about generating profit.
She said the NHT has, in the past, offered special financing to private developers, which had low take-up.
"Given the situation in the low-income market, we will need some committed Jamaicans who are willing to see a change in the sector and come forth and decide that 'yes, it is essential to make a profit, but it is essential to do something for the public good'," she maintained.
She added that partnerships also leave the State vulnerable as the bulk of the risk is borne by central government, noting that moves to strengthen the policy governing private-public partnerships with developers and to reduce central government's risk have only been met by even lower participation by developers.
Douglas revealed that some private developers were lobbying the NHT to instead increase its benefits rather than engage in partnerships with developers to build low-income housing projects. He said, however, that the NHT would not yield to the lobby.
However, Samuels is arguing that there are other options.
He said the Government could look at developing rental housing, giving people the opportunity to own the house over time.
"This is something done in other countries, including Britain and Brazil, where a portion of the rent is treated as an equity investment so that over time, the person could eventually become the owner," he suggested.
He also said the Government could also look at implementing a tax incentive for persons who earn below a certain amount to broaden access to home ownership.
"So for persons earning below a certain level, you could look at a programme where you offer them the opportunity to reclaim the taxes on the mortgage offered for the purchase of a low-income unit. This could be a good way of also addressing even the squatter issue in Jamaica because what you're offering is an opportunity for even those who don't earn a formal income to get access to proper shelter through the formal system," he suggested.
He said the model was not new and has been working in other Caribbean countries such as Barbados.