Budget 2019: Gov't to introduce new housing bond scheme
Finance Minister Colm Imbert says the government will offer members of the public $1.5 billion worth of interest-bearing housing bonds.
These bonds are to be used to fund accelerated housing construction and finance its subsidy arising from the two percent interest rate for low-income mortgages.
Imbert made the announcement during the reading of the 2018/2019 budget in Parliament on Tuesday.
"The intention is that citizens who invest in housing bonds will be given preference in the allocation of new HDC housing and will be able to assign the full value of their bonds to the Government in order to reduce the purchase price of their housing units. This will serve the dual purpose of encouraging national savings and giving first-time homeowners much-needed access to affordable housing,” he explained.
Imbert says the recent oversubscription of the public offering of the $4 billion asset-backed bonds provides a ‘window’ for raising capital. He says within the limits of the government's self-imposed and prudent debt benchmark, the Government intends to cap the domestic capital market to overcome financial constraints impacting and impeding the HDC from expanding its housing construction programme.
“We have established a framework of cooperation and financing among the HDC, the Home Mortgage Bank, and the Trinidad and Tobago Mortgage Finance Company to ramp up the financing for the Housing Construction Programme to deliver the existing portfolio of 6000 units by the year 2020 and thereafter to deliver an annual amount of 3000 units.”
Meanwhile, Imbert says the government intends to assist in the construction of 700 homes for qualified, low-income applicants. Imbert says this is possible through the recently established Aided Self-Help Housing Programme through which qualified persons can manage construction of their own homes with financial and technical support from the state.
“In three months, November 2017 to January 2018, 5000 applications were received in which a computerised random draw chose 700 applicants for homes to be constructed in 2019,” he said.
The Finance Minister also notes that through a competitive tendering process, plans are afoot to develop 6,000 more housing units by 2020 and 3,000 units per annum thereafter.
“We have been reducing through competitive tendering, the cost of construction from $1,200 per sq ft, which prevailed in the period 2011/2015 under the last Government, to approximately $600 per sq ft for the projects under our current accelerated housing programme which is targeting low income families having access to decent and comfortable dwelling. This programme will now generate 6000 units by 2020 across 24 communities throughout Trinidad and Tobago.”
That’s not all as the Minister identified the partnership between the public and private sector for the construction of 437 homes by 2020.
“Through public-private partnerships, we have actively engaged the private sector in the construction of homes. The programme is rolling out 437 housing units in three communities addressing the needs of our middle-income applicants:
- Chin Chin Cunupia with 205 units
- Fyzabad with 72 units
- and Mt Hope with 160 units
We envisage that these housing units will be delivered during the course of the next 2 years”
A total of 57 homeowners are also receiving assistance through the HDC’s Housing and Village Improvement Programme which targets rural communities and semi-urban settings. Imbert notes that the first to receive assistance are residents of Samuel Cooper Road, Moruga, where emergency work has commenced on 17 homes, reconstruction on 30 and improvement on 10. Another area is expected to be selected in 2019.
According to Imbert, the HDC has received a high demand for homes by low and middle-income groups to the tune of 176,000 applications. He said the HDC has had to establish a reliable and credible database in order to select persons most qualified for subsidised housing.
Noting the high cost of construction as well as the Government’s financial constraints, Imbert says the HDC was limited to delivering 800 units per annum. He says increasing housing supply requires innovative solutions and supporting and increasing roles from the private sector.
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