Housing Trust ends sales
(CNS): There will be no more sales of government’s affordable homes in the short term as the programme has switched to leasing, the chair of the National Housing and Development Trust (NHDT) board revealed Thursday. Although government will continue to build new two- and three-bedroom houses, from now on the Trust will rent out the properties instead of selling them as the cost of the houses has passed the point where those they were intended for can actually afford to buy them. Rayal Bodden said that because of the cost of land and materials, it is simply not possible to build affordable family homes in Cayman that meet local building standards.
From the very beginning, the affordable housing initiative, which was started back in 2002 by the then community affairs minister Dr Frank McField, has faced significant problems. Having embarked on the project to try and build 200 cheap homes with $14.5million drawn down from a bond of around $29 million, the entire project soon became embroiled in scandal, exacerbated by Hurricane Ivan in September 2004.
The NHDT has been constantly undermined by a number of issues, including irregularities regarding the original procurement, McField's conflicts of interest with and the companies involved in the construction and repair after the storm (which was revealed by the Office of the Auditor General), and police investigations, both past and present.
Hurricane Ivan and subsequent insurance problems combined with the failure of the first properties to withstand the local environment ensured controversy has never been far away from the housing project. The latest controversy has seen a former board member charged with fraud and another police investigation.
Since then, however, a new board has been appointed with Bodden at the helm and the business of the project has turned in a new direction. Speaking to the media on Wednesday, Bodden stated that the financial situation at the Trust is stable and that the accounts up to this year have all been completed and audited by the auditor general.
Although the minister has not yet tabled the reports, none of them were qualified, Bodden said, and they are expected to be tabled in the Legislative Assembly next month, when they will become public documents.
With the various controversies behind it, Bodden said, the NHDT has undergone an extensive review and the battle it now faces is wrestling with its fundamental purpose, which is to provide low cost homes to those in need. It has continued the priority of replacing the old metal homes, which had deteriorated significantly since they were built just eight years ago, with concrete structures; however, in that process, the issue of affordability has been lost.
There are currently around 30 home owners who purchased the original cheaper properties, which were sold at $56,900 for a two-bedroom and $69,000 for a three-bedroom home, that have now been given properties that cost $97,500 for a two- and $114,000 for a three bedroom -- a cost difference which has been absorbed by government.
Owners in both George Town and West Bay who have been of good standing and paid their home loans are now in the process of moving into the new properties. The rest of the residents in these government homes, however, are now renters and not owners.
Despite some controversies over the right to buy the homes, which appears to be down to poor communication with previous tenants, the chair said that government had made no promises to any of the previous rental tenants and its obligation was to those who were in the process of buying the properties and were paying their mortgages.
Although the suspension of sales is not permanent and the ultimate aim is still to assist people in owning their own home, a new national policy will be required to address how that might be achieved. With over 700 people on the Trust’s list, the need for cheap homes remains apparent. But, Bodden said, in the short term all of the tenants will be leasing the properties, probably until that policy is developed.
A new approach is needed, he said, to tackle the problem of how to create quality affordable houses that meet local standards and density requirements that can withstand hurricanes and that can provide a proper home for families that do not earn a sufficient amount to buy on the open market.
The new homes are now leased to families at a rate of $700 per month for a two bedroom house and $800 for a three -- well below market rate for properties of such quality -- but government will retain the new properties as assets.
The goal for the NHDT is to cover its own running costs with the rental income as it seeks new ways to tackle the housing needs of the community’s most vulnerable. Bodden said that if the NHDT reaches its goal of around 200 properties, the income should cover the cost of maintaining the homes and the Trust’s operating costs, which is currently subsidised by the public purse with an annual cash injection of around $500,000.
In the meantime, the NHDT is pressing on with the building programme using the remaining cash from the bond given to the Trust by government in 2003. The 29 homes in West Bay have now been replaced and the owners and tenants will be moving in shortly.
Another seven homes are being built at the site, which could hold more than twenty more houses. In East End twelve properties from a possible 40 have been completed, and in Bodden Town the NHDT has started building twenty new houses on a site that could hold a further twenty-five.
In George Town the Windsor Park site is at capacity with the 26 new homes that have been completed but there are still seven old homes at the Eastern Avenue location, six of which are occupied. Bodden said that the future of that site is under discussion and the Trust is looking at developing a different type of property there rather than stand-alone family homes. Bodden explained that there are different social demographics on the NHDT list that also need assistance, including elderly people not yet ready for a retirement home to teenage girls coming out of the care system.
Faced with myriad issues, the Trust will press on, Bodden stated, in an effort to address the problem of home ownership for low income families. For many, however, the dream of being a homeowner will remain elusive, quite simply because the cost of land and building a durable house is out of reach, and despite the political rhetoric of successive administrations, the government does not have the cash or the political will to subsidize that dream.
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