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Developers opt for new NHT guarantee

While take up under the older interim financing arrangement (IFA)– (where the National Housing Trust in Jamaica partnered with private developers to build affordable units) – has slowed, the NHT has announced that a newer programme is gaining traction among the home builders.

The National Housing Trust head office in New Kingston (Photo: Jamaica Observer)

Under its Guaranteed Purchase Programme the NHT is buying entire schemes on completion or part thereof, eliminating market risk for private developers who enter this agreement.

Peter Melhado, chairman of West Indies Home Contractors falls, said “NHT is a competitive lender and the Interim Finance Agreement, IFA is still a good option. However, NHT has been innovating by offering additional programmes like the Guaranteed Purchase Programme (GPP) along with their Joint Venture arrangements, which have attracted a number of developers.”

Dwayne Berbick – Manager, Corporate and Public Affairs at the NHT said that to date, a total of nine projects have been approved under the programme. Consultations, he also noted, are ongoing on additional projects.

” NHT contributors will be able to access these units through the NHT using the Trust’s 100 per cent financing facility for scheme purchases”

– Dwayne Berbick

He outlined that under the programme, developers conceptualise and execute their development plans while the NHT absorbs the market risk, by purchasing all the units in the development or part thereof.

By doing this, the official said, the state agency is able to leverage the efficiencies within the private sector to deliver housing projects at lower costs, within faster timeframes.

The NHT aims to deliver 23,000 housing starts by 2021. (Photo: National Housing Trust)

Berbick said that the Trust’s GPP is being pursued within the context of the NHT’s housing programme which aims to deliver 23,000 housing starts by 2021.

The NHT manager said, “The GPP is seen as a tool to energise residential housing development and also to bring more players to the table, especially those who may not have a developed sales capability but have land and the means to build schemes on a reasonable scale.”

He said the GPP therefore focuses on providing a guaranteed market for whole or a portion of the units being constructed at a pre-agreed price point, thereby allowing the developer to focus primarily on execution.

Berbick added that under the programme NHT contributors will be able to access these units through the NHT using the Trust’s 100 per cent financing facility for scheme purchases, coupled with other NHT value propositions such as low interest rates and grants.

Talecia Gayle, Economist in the Economic Planning and Research Division of the PIOJ indicates that private developers, under the Interim Financing Agreement with the NHT, recorded no starts during the review quarter (April to June 2019), similar to the corresponding quarter of 2018.

 Under this older programme, the Trust provides developers with funding for up to 100 per cent of the construction costs for their development at concessionary interest rates. This concession is expected to be reflected in the base selling prices of the housing solutions. 

 IFA loan interest rates are 5 per cent per annum for housing solutions with base selling prices equal to or less than the Trust’s recommended selling prices or 9 per cent per annum for housing solutions with base selling prices exceeding  recommended selling prices.