THE years 50 NEXT - Make homeownership affordable
Jamaica continues to celebrate 50 years of Independence. We have achieved a lot. However, there is much work left to be done if we are to progress as a country. We must begin to tackle Jamaica's chronic problems in a targeted and sustained way, to make this country a better place to live, work and grow families. The Next 50 Years, a special Gleaner series, will spotlight some of the challenges we must fix in the coming years. We want to hear from you. Email us at firstname.lastname@example.org and join the debate.
Jimmy Kazaara Tindigarukayo, Contributor
ALONG WITH food and clothing, shelter has traditionally been classified as a basic human necessity. Housing rights are protected by the Universal Declaration of Human Rights - established by the United Nations General Assembly in 1948 - to which Jamaica is a signatory. According to Article 25 (1) of that declaration:
"Everybody has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services."
The quest for adequate housing has been a long-standing challenge for Jamaica, because the demand for housing has always outstripped the supply.
During the early years of Independence, the Department of Housing was mostly preoccupied with the provision of housing in rural areas in order to reduce rural-urban migration.
In 1966, the Department of Housing and Social Welfare was replaced by a full-fledged Ministry of Housing, which added some housing schemes - mostly in favour of the rural poor.
Although rural housing continued to enjoy government support during 1971-1975, more attention than before started being paid to urban housing.
By 1975, eight public-housing agencies existed in Jamaica: the Ministry of Housing, the National Housing Corporation, the Urban Development Corporation, Sugar Industry Housing Limited, the Ministry of Local Government, the Ministry of Agriculture, the Jamaica Mortgage Bank, and the Jamaica Development Bank.
In 1976, the National Housing Trust (NHT) was established, by act of Parliament, with a mission to increase housing stock in the country and to assist the neediest contributors to NHT by charging them reduced interest rates on housing loans. Moreover, during the 1970s, Government provided 13,705 building permits to private-sector entrepreneurs for building new houses.
With emphasis being placed on both the public and private sectors during the 1970s, housing stock in Jamaica increased in the early 1980s.
This housing boom was soon followed by a slump arising mainly out of the 1982 Jamaica National Housing Policy that shifted from Government's direct construction of housing units to being a facilitator/enabler.
The change in government policy was mainly influenced by two factors: (i) structural adjustment policies, imposed by the World Bank and the International Monetary Fund, that led to declining levels in welfare for most sectors of society, including government housing supply; and (ii) the global recession of the 1980s, which adversely affected the bauxite sector, then Jamaica's main export earner.
changes in the sector
By the late 1980s, the housing sector in Jamaica exhibited the following characteristics: (i) a private sector catering mostly to upper-income groups; (ii) lack of collaboration between the private and public sectors, resulting in separate funding mechanisms, interest-rate structures, and underwriting procedures; (iii) a decline in formal housing investment from 24 per cent of GDP in 1980 to 1.0 per cent in 1985; (iv) an average annual production of housing units by the formal sector of 3,500 during the period 1971-1986, approximately one-fourth of annual estimated housing needs; and (v) a critical shortage of funds in the public sector, resulting in a dependence on external financing for most low-income shelter programmes.
In response to the above negative housing characteristics, the Jamaica Shelter Strategy was implemented in 1987, mainly to:
(i) Create market conditions in order to augment the supply of shelter;
(ii) Accelerate home improvement so that adequate housing was available to all Jamaicans;
(iii) Make shelter programmes more accessible to the poor; and
(iv) Encourage greater private-sector participation in housing development.
To achieve the above objectives, the Ministry of Housing forged closer alliances with the private sector, other public-sector agencies, and non-governmental organisations, through joint-venture partnerships.
Despite the above-mentioned efforts, housing provision continued to lag behind housing demand, creating the following housing deficits:
Deficit of 55,300 units in the 1980s;
Deficit of 15,500 new units and 9,700 upgrades during the 1990-1995 period;
Deficit of 28,503 units during the period 1996-2000;
Deficit of 170,517 new units in 2006 to cover all deficits accumulated up to that point.
As would be expected, the above housing deficits mostly affected the poor for two main reasons. First, about 80 per cent of NHT contributors cannot access mortgage loans because of their low incomes. Second, most poor households lack formal land tenure, which bars them from accessing the build-on-own land programme. Consequently, the poor have had to rely on informal housing, which accounted for 50-70 per cent of housing solutions in Jamaica by the early 1990s.
In an attempt to address the problem of informal housing in Jamaica, then Prime Minister P.J. Patterson launched the Operation PRIDE programme in May 1994. It was intended to address shelter needs of low-income Jamaicans through: (i) the establishment of new planned settlements; (ii) the regularisation of squatter settlements; and (iii) the upgrading of existing settlements.
Under Operation PRIDE, land was made legally accessible to low-income groups through government subsidies. Beneficiaries were required to save and to deposit their money in their respective building societies, commonly known as provident societies. These savings would then later be utilised to pay legal costs and to develop the required infrastructure.
Despite its promising start, Operation PRIDE was later characterised by a number of problems, including: (i) providing upscale infrastructure, leading to cost overruns; (ii) lack of partiality and transparency in selecting beneficiaries; and (iii) being prone to fraud and corruption. These problems undermined the integrity of the programme, which ultimately led to its demise.
The main conclusion is that, despite the effort made by the Government of Jamaica to provide shelter solutions, the demand for housing, especially by the poor, has continued to escalate for three reasons: (i) high costs for housing solutions, which the poor cannot afford; (ii) limited capital in the formal sector, which undermines the State's capacity to provide adequate and affordable housing solutions for the poor; and (iii) the inability of the poor to access a mortgage through existing sources since they lack the required credit.
the way forward
First, in order to attain the aspirations of Jamaica's Vision 2030 that "all Jamaican households should have access to affordable and legal housing options in vibrant, inclusive, and aesthetically pleasing communities" by 2030, the poor have to be integrated into the socio-economic fabric of the wider society by providing them with affordable housing, recreation, employment opportunities, and other basic services. This can be attained by extending the NHT's Relocation 2000 programme, which provides not only subsidised houses with amenities, but also skills training for an improved lifestyle to all poor communities in Jamaica.
Second, the option of 'Rent to Own', currently being practised in Trinidad, should be adopted in Jamaica to promote homeownership among those Jamaicans who cannot afford the initial deposit on a house in the open market.
Third, legislation relating to land titling and mortgage financing for the poor is necessary to enable the poor to access housing loans from the NHT, building societies, and credit unions.
Fourth, the partnership between the Ministry of Housing and Food For The Poor being proposed by the current minister of housing should be encouraged, because the provision of smaller housing units with amenities would facilitate affordable homeownership among low-income households.
Fifth, being the main housing provider in Jamaica, the NHT should be transferred from the Office of the Prime Minister and be integrated into the Ministry of Housing to allow for smooth planning and coordination of housing policy and housing development in the country.
Jimmy Kazaara Tindigarukayo PhD is a senior lecturer at the Sir Arthur Lewis Institute of Social and Economic Studies, University of the West Indies, Mona. Send feedback to email@example.com.