Government is investigating the possibility of structured concessions for the development industry to incentivise affordable housing construction.
Premier Alden McLaughlin acknowledged that it had been a tough decision to extend duty concessions for the industry at a time when construction is booming.
But with an increasing population fuelling unprecedented demand for housing, he said government feared any new construction costs would simply be passed on to the consumer, making it harder for Caymanians to get on the housing ladder.
“We thought long and hard about this because the industry is booming and the concessions were introduced to try to spur development in the aftermath of the recession,” he told the Cayman Compass.
“But we know if we put those back on, what we are going to do is increase the cost of construction. With the market as it is now, developers are not going to take that, they are going to pass it on (to consumers) and we are going to make it harder for the average person to get a house built or for someone who is building apartments to rent to people living and working here. It will cost them more and the rents are going to go up again.”
He said there was currently low interest from developers in affordable housing projects.
“One of the things we are looking at – and we haven’t got there yet – is what kind of concessions we can offer developers who are prepared to build for the middle and affordable market,” the premier said. “The cost of land is so high and they are able in most cases to get far better returns on high-end projects, so there isn’t currently a great deal of interest by developers in building for that market.”
He said government’s main concern was the high cost of living for people who rent, which he said included a higher proportion of Caymanians than many imagine. He said government also wants to make it easier for Caymanians to buy or build property.
Cayman’s tax structure makes it difficult to directly impact the cost of living through fiscal policy. But the premier believes the concessions structure for the construction industry can be tailored to make a difference in the housing market.
“It is complex, and we are not there yet, but it is something we are looking into,” McLaughlin said.