Beyond its core recommendation that Cayman needs to build thousands of new homes to meet current and future demand, government’s new housing strategy document includes multiple recommendations to make it easier to get on the housing ladder. Here, we look at some of the main ideas and how other countries have implemented similar measures.
1. Government-backed mortgages
The housing strategy report suggests government help reduce the risk for banks in making home loans by guaranteeing it will intervene in cases of default.
The report states, “From 2007 to 2012, the National Housing Development Trust, in partnership with private banks, administered a mortgage guarantee programme for first-time homebuyers. The programme was considered successful, and there have been repeated calls by those inside and outside of the [Cayman Islands government] to reinstate the programme with modifications.”
The programme provided mortgage guarantees of up to 35% of the purchase price. The report credits the programme with helping 325 borrowers get on the property ladder, with lower interest rates and reduced deposits as a result.
The report recommends reviving this with updated income eligibility.
It points to a similar programme in Bermuda, where the government launched a guaranteed mortgage scheme in 2022 in partnership with Bermuda Commercial Bank, making BD$50 million (CI$41 million) available in three phases. The programme provides favourable interest rates starting at 5% and reduces the required down payment to 10% of the purchase price. It also offers refinancing options for certain government employees.
The Cayman Islands government indicated in a recent press release that it is revamping and relaunching mortgage assistance as the HOME programme (Home Ownership and Mortgage Empowerment) with a mandate to help lower-income Caymanians and civil servants secure mortgages with zero down-payments.
2. Down-payment and closing cost assistance
Many of the people who spoke to the Compass for stories in our housing series highlighted challenges in covering down-payment and closing costs – the upfront financial package required to secure a home.
The report notes: “For many residents of the Cayman Islands, the amount of money needed up-front to purchase or build a home is too high of a barrier. Some residents may have acquired land but lack the funds to build a home on the land. Others may be interested in purchasing a home but lack the savings necessary for down-payment and closing costs.”
It references a Florida programme as one model for addressing this. The Florida Assist programme offers loans of up to $10,000 towards down-payment and closing costs, which do not have to be repaid until the home is sold, refinanced, or the main mortgage is paid off. It essentially allows home buyers to use a state-funded interest-free loan to cover closing costs, repaid eventually from the future equity of the asset.
3. Shared equity homeownership
Another model used worldwide to help get younger buyers on the housing ladder is shared equity, where government becomes a silent partner in the ownership of a first home.
It is referenced in the housing report: “Households purchase a home at a discounted purchase price. Upon resale, the homeowner keeps a portion of the accumulated equity, while a portion of the equity is returned to the housing authority.”
Under this framework, the state provides a direct financial contribution, purchasing a percentage stake in the property alongside the buyer. This reduces the size of the mortgage the buyer needs to secure from retail banks, lowering both upfront deposit requirements and monthly payments. When the home is eventually sold or refinanced, government reclaims its original percentage share from the final sale proceeds.
This approach has become a vital tool in other offshore financial centres, like Jersey and Guernsey, where limited land and high expatriate wealth create housing pressures similar to those in Cayman. In 2024, Jersey introduced the ‘First Step’ scheme, a government-backed partnership where the state contributes an equity loan of up to 40% toward an open-market home purchase, allowing locals to buy with just a 5% deposit.
4. Lease-to-own
Cayman is contemplating relaunching a form of the lease-to-own property model through a new national housing authority. Under that model, tenants in social housing can gradually convert their rent payments into actual ownership over a set period.
The National Housing Development Trust has only built 116 homes in the last 20 years, and just a fraction of them were under this model. There are more than 1,000 families on the waiting list.
The housing strategy report concludes that the scope of housing activities by the National Housing Development Trust and the Sister Islands Affordable Housing Development Corporation “does not match the demand for affordable housing”.
It recommends establishing a properly funded, government-owned housing corporation that can ramp up production and oversee various models of ownership, including lease-to-own.
Housing Minister Jay Ebanks indicated that government plans to do this and that a Housing Act is being drafted.
5. Revised stamp duty structure
Caymanian buyers already benefit from significantly reduced stamp duty rates on their first home. First-time Caymanian purchasers pay no stamp duty at all on properties up to $550,000 with a building, or up to $250,000 for land alone.
Between $550,000 and $650,000, a reduced rate of 3.75% applies to the value above the threshold. The standard rate of 7.5% applies above that.
Many of the homebuyers who spoke to the Compass said they could not have afforded the upfront costs of their property without the exemption.
But the report argues the threshold has not kept pace with the market. The average two-bedroom apartment now costs over $740,000, although it is argued by some that that high-end of Cayman’s real estate market skews the average.
The report recommends a more flexible approach of indexing the exemption threshold at 110%-120% of the average price of a three-bedroom home, excluding luxury sales. This would require a fairly intricate data analysis, but is likely to significantly increase the price point at which families become eligible for the waiver.
Further up the ladder, the report recommends allowing Caymanians to pay stamp duty over a number of years rather than in one lump sum. It suggests the loss in revenue could be offset with higher duties at the top end of the market – something government has already moved towards with a 10% rate on properties over $2 million introduced this year.
Related Videos
