NHT tax savings could be stimulant for low-cost homes
Avia Collinder, Business Writer
Realtor Andrew Issa says the savings projected from a two-year tax holiday granted to the National Housing Trust (NHT) should be reinvested into the development of homes capped at J$7 million in price to gin up market supply.
The management of the NHT itself did not appear to know whether the funds would be used to subsidise the proposed cut in interest rate and housing grants which were also announced for borrowers, or whether it would be ploughed into construction of low-income housing.
Prime Minister Portia Simpson Miller announced on June 6 that for three years, mortgage rates within the three-five per cent range would be cut to a range of one-three per cent.
Essentially, NHT will be giving new borrowers a 66 per cent discount on their mortgage rates for low-priced loans written in the period and 40 per cent discount on the top rate.
The NHT will also receive a two-year waiver from GCT and other taxes, the PM said.
Questions posed by Sunday Business relating to the revenue impact of the interest shave and plans for savings arising from the tax break have gone unanswered by the trust, which initially suggested that the questions be put directly to Prime Minister Portia Simpson Miller.
Issa, who heads Coldwell Banker Jamaica Realty, said there was pent-up demand for lowincome housing in the real estate market, from locals as well as Jamaicans resident overseas.
Any surplus within the NHT, he said, should be used for housing and no other purpose.
"While we have a good supply of J$6 million to J$7 million homes in St Catherine and Trelawny, the rest of the country is nowhere near meeting the demand," said Issa.
"Partnering with the private sector - both developers and mortgage providers - could provide a housing boom that could turn the economy around."
Issa suggests that the NHT split the funds between the developers and mortgage companies.
"Local purchasers would love to see starter units coming to market at J$5 million. It can happen," he said. "I can only see a win-win if the NHT is allowed to use their funds in this way."
None of the private mortgage financiers to whom Sunday Business sought comment were willing to weigh in on the implications of the new NHT policy.
Other realtors see positives arising from interest rate cuts, which will continue to apply to loan amounts capped at J$4.5 million for individuals or J$9 million in combination with others.
"It appears that these measures could have a positive impact on the market in general, but especially the residential market segment between J$6 million to J$10 million," said Edwin Wint, the CEO of La Maison Property Management Services.
"Access to the property market through NHT loans for aspiring homeowners and wage earners up to J$1 million per annum has been made easier, as the loan servicing has been eased with the reduction of interest rates in the bands announced," he said.
Wint said the real estate market believes the PM's NHT initiatives will spur the housing and property market, especially in the lower and lower-middle income category of contributors."