For many residents, the Cayman Islands’ overall affluence is a double-edged sword, as great prosperity comes with great cost-of-living expenses. The National Housing Development Trust’s mission is to help Caymanians secure their own homes on Grand Cayman.
Since its inception in the early 2000s, the affordable housing programme has suffered public criticism and allegations of poor execution and outright wrongdoing. Last year, the trust’s leadership was reshuffled and the organisation is pushing forward with new homes under construction and other plans in the works. One significant change to the trust’s strategy is it is no longer offering houses for sale to new applicants, rather the trust is now offering applicants accommodations on five-year lease arrangements.
George Town independent candidate Stefan Baraud applauded the trust for its decision to build higher-quality housing, after the original batches of affordable houses were ravaged by Hurricane Ivan in 2004 and proved of inadequate quality for the government to obtain certificates of occupancy in order to transfer title properly to the purchasers. However, Mr. Baraud disagreed with the trust’s move to offer the houses for rent instead of for sale.
“In the last few years, the trust has made some significant strides in providing quality affordable homes to Caymanians, which is a far cry from what they inherited,” Mr. Baraud said. “The first homes did not have certificates of occupancy and were deemed unsafe to live in. They’ve now created a good product for Caymanian families. Regrettably, over the last year or two, the trust has deviated from the original intent of creating affordable homes available to purchase.”
People’s Progressive Movement candidate Marco Archer of George Town, also criticised the rental programme.
“Currently, only the Affordable Housing Initiative is offered by the National Housing Development Trust for qualifying Caymanians (including status holders) to enter into a five year lease for a two bedroom house at CI$700 or a three bedroom house at CI$800. The NHDT also offered the Government Guaranteed Home Assisted Mortgage programme that enabled families to own their home by purchasing from a developer but this programme has been on hold since 2011.
“During the 2005-2009 PPM administration, the GGHAM programme assisted approximately 200 qualifying Caymanian families in obtaining a mortgage from a local bank for up to CI$200,000 with government guaranteeing up to 35 per cent of the loan amount.
“Comparing the AHI to the GGHAM, there are several obvious problems. Firstly, after five years of paying rent to the NHDT the Caymanian would have no equity in the house and, therefore, no closer to owning a home. Secondly, tenants are less inclined to care for a rented property than they are to care for their own home. Therefore, the NHDT will forever have the expense of maintaining these houses. Thirdly, the NHDT is now limited in its ability to build additional houses for rent without additional government capital injection if the houses are only rented and not sold,” he said.
“Going to a leasing programme is a decision that, regrettably, will ultimately lead to the collapse of the housing trust, for obvious reasons,” Mr. Baraud said.
He said, “The trust needs that working capital to go ahead and build homes. That working capital will be tied up in existing homes because they are being leased. The trust is now taking a long-term view of leasing, and that is a disservice to the initial intent of the trust to provide affordable homes and then build new ones.”
Mr. Baraud said the trust appears to have obtained good value for the money it is spending on construction of the new houses – even though they cost more compared to the older prefabricated homes.
“They are still very reasonably priced homes, and I think there are ways they can get those prices down further. One is that construction costs have come down some in 2013 and material prices are still relatively low. That’s an opportunity to reduce the price some,” he said.
In addition to taking advantage of prevailing market conditions, Mr. Baraud said he supports the trust’s consideration of building multifamily properties, such as duplexes, triplexes or condominium developments.
“One of the things I’d certainly champion is a multifamily type of product. That reduces the construction costs of the home, and ultimately reduces the cost to the homeowner,” he said.
Mr. Baraud said the trust needs to return to its original model of providing affordable home ownership, not to become a leasing programme. “In order to create further affordability, the trust needs to look at multifamily type of developments to further reduce costs of home ownership,” he said.
Mr. Archer said the trust should revive the government-guaranteed mortgage programme, and the government should also help Caymanians build their own homes on their own land.
“The government should convert the existing lease agreements in the AHI programme to lease to own agreements and, when able to do so, return to the GGHAM programme to enable more qualifying Caymanians to experience the pride and joy of owning their own home. However, given the rising cost of construction, consideration should also be given to a modest increase in the maximum mortgage allowed.
“Additionally, the government should assist qualifying Caymanians to build on their own property. Also, to avoid the cost of acquiring additional property for more AHI homes, the government should encourage landowners to develop their properties for that purpose by providing appropriate incentives where applicable to those developers in order to reduce the cost of development and minimise the purchase price of the houses,” he said.