“Mid pleasures and palaces though we may roam, Be it ever so humble, there’s no place like home,” wrote 19th Century American dramatist, John Howard Payne in his song/poem, “Home Sweet Home”. That could well be the anthem of the working man and woman, who aspire to or already own a place they call their own.
Whether you’re a Jamaican in New York or a Bajan in Bridgetown, the goal is to acquire and retain that house to call your own and make it into a home.
Just how easy it is to make that dream a reality may depend on where you are, not merely physically but socio-economically. To be sure, multi-million dollar palaces are being built in the USA even as the sub-prime lending debacle rattles the economy, likewise in Jamaica, where thousands of workers compulsorily deposit money each payday into National Housing Trust (NHT) contributions, but with slim chances of owning a starter home.
So what’s the situation with affordable housing? Let’s look at two Anglo-Caribbean countries, one with a large population, and the other with a population about one tenth of the former. Jamaica with a population reported to be in the region of 2.7 million, and an estimated income per head in 2007, of about US$4,800, has a workforce of 1.255 million, an official jobless rate of about 10.2 per cent. Barbados has a population estimated at 270,000, an estimated per capita GDP of US$19,700, a workforce of about 129,000 and 10.7 per cent unemployment.
The Barbados government’s National Housing Corporation (NHC) defines affordable housing as “the delivery of a quality product at a reasonable price, without placing an undue financial burden on the purchasers, especially the low income and most disadvantaged sector of the community.”
Persons at present qualify as low-income earners if they earn less than $2,873.45 (US$1436.73) a month in wages.
The NHC, which is the leading provider for that income category, has a waiting list of 21,000 applications for houses, apartments and serviced lots to purchase or rent.
“Recent initiatives have made an impact on the demand for housing solutions but a point has not yet been reached where the corporation can satisfy the requirement of all needy Barbadians,” says the NHC.
“The current [touristic] building boom in Barbados is responsible to a large extent for some of the problems which are being encountered in the delivery of affordable housing,” the corporation reports.
The demand for labour has seen an influx of overseas workers from Guyana and other Caribbean countries to help to meet the current shortfall. Building materials and rental of construction equipment are often not easily obtained.
Wages in Barbados are now excessive when compared with the levels of other CARICOM countries and this the NHC says, is a contributory factor to the escalation in housing costs.
The corporation’s work is guided by a project titled “Settlement 2000 Programme” which was conceptualised in 1997. This project consisted of starter homes, houses, terrace units (apartments) built for sale or rent, serviced lots provided for sale, and infrastructure provided at occupied tenantries. Historically, many Barbadians lived in chattel houses they owned on plantation tenantries. In the late 80s and early 1990s the government enacted laws to prod estate owners to allow tenants to buy their lots.
Prior to Settlement 2000, the Corporation’s capital projects were financed by subsidies and grants from the government’s consolidated funds or by income derived from the sale of properties and lands. The financing of Settlement 2000 was innovative as the Corporation raised funds through a Bds$50,000,000 bond issue on the local financial market. There was further diversification of the NHC’s activities when in 1998 the Housing Act was amended to allow the engagement in non-housing commercial activities.
To buy a house a Barbadian has options through commercial lenders CLICO, Barbados Workers’ Union Credit Union, FirstCaribbean International Bank, the CIBC subsidiary and largest bank in the region, Caribbean Commercial Bank (RBTT) the state owned Barbados National Bank and the Barbados Mortgage Finance Corporation.
Since the late 1980s CLICO, owned by Trinidad and Tobago’s Lawrence Duprey, has thrown itself headlong into acquiring Caribbean real estate and providing mortgage services.
Barbados Mortgage Finance Corporation provides 100 per cent mortgage financing for amounts up to $400,000 and the BNB up to $750,000, at interest rates of 8.5 per cent for over 80 per cent financing and 8.25 per cent for 80 per cent or less.
Things are a little different in Jamaica. Under Jamaican law, all persons between the ages of 18 and 65 years and who earn at least the minimum wage are required to make NHT contributions. The Minister of Housing the the previous government administration had declared hat 13,260 new housing units would be required annually between 2001 and 2025 to satisfy the projected demand for housing.
As in the case of Barbados, mega projects are proceeding apace for tourism and the super rich but housing development for average middle income and lower income wage earners makes negligible contribution to the country’s GDP.
Figures from the Planning Institute of Jamaica (PIOJ) indicate that the average number of units completed between 2001 and 2003 was only 4,235 and the situation has not improved. With the average income being J$336,000, and the middle of the housing market ranging from $3.5m to $10M, not many officially earn enough to qualify for an open market mortgage where a 10 per cent deposit is needed and interest rates range from 13.5 to 17.5 per cent.
NHT rates vary by income at the time of application and are 2 per cent, $3,200 – $7,500.99 per week; 4 per cent, $7,501- $10,000.99; 5 per cent, $10,001 -$20,000.99 and 6 per cent, $20,001 and over per week.
The NHT’s Inner City Housing Project (ICHP) is a part of the Government of Jamaica’s larger Urban Renewal Programme. The ICHP intends to construct a total of 5,000 units in degraded urban communities over a 2004-2008. The trust reports having completed 1,268 up to January 2008. A further 2,518 are listed as future projects, 1,002 of them rural.
“Several projects have been delayed because of land acquisition or relocation issues,” says the Trust.
Past and present NHT mortgagors who received an NHT loan at least 15 years ago, may apply for a HELP Loan of up to $1million for repair work to the property which they own and occupy. Contributors may apply for a HOPE Loan of up to $1 million if they received an NHT loan in the past 15 year but no longer own a home. They can use this loan to buy another residential property.
One problem with the Trust is that the government, which is the largest employer on the island, owes it $18.8 billion in outstanding employer’s contributions and interest since 1994 – not a good prospect for the thousands desperately in need of a housing loan. It’s not easy for those with the yen for “home sweet home.”
But this is the story for the wage earner; what of those on the very fringes of society?