Housing Trust ends sales

| 12/10/2012

IMG-20121011-00279 (247x300).jpg(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 possibleto 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 salesis 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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  1. Anonymous says:

    Maybe if you leet the Chinese fleece oops sorry, build the houses next time?  But they can't vote so not gonna happen.

  2. Anony says:

    Wrong. Government should not be in the rental market. Either make affordable homes that people can buy (houses or apartments; we can call them townhouses) or get out of the bussiness. The government should not, in fact can not sustainably, be a source of rental accomadation.

    The 'real problem' that this highlights, however, is 'cost of living'. If it costs so much to get a home that it can't practically be done at the level of income that a lot of people have we have a problem. The solution is to either (a1) raise their income, (a2) lower their costs or (b) accept that in the future some people will live their entire lives in rented accomadations. They will be born in their parent's rented place, they will rent apartments for their entire working lives and then they will either move in to their children's rented apartment or 'rent' a room at the Pines when they are too old to look after themselves. This happens in many other developed countries with more land space (lower housing costs) than us. Even more so in the cities which, geographically, are Cayman's true comparisons.

    Once we choose either options a or b above, then we can start worrying about old age housing and care for the growing Cayman Islands population. At least when they are working people can pay their rent. When they stop working, have no substantial savings, no apreciable pension, no adequate health insurance, then we better have a plan.

  3. Thomas Jackson Jr says:

    It would be good to know if the Udp government gave any concessions to the contractors building the low cost houses and the suppliers such as lower permit fees. Seeing as they gave millions in concessions to Dart and Dr Shetty. Now will the people be renting the finished homes forever?

  4. Anonymous says:

    Surely the answer is to build social housing on the Brac. It is cheaper and will provide economic stimulus they keep demanding. If people are not willing to move to be housed they don’t need it.

    • Anonymous says:

      And what are those people going to do for jobs?  Almost everyone in Cayman Brac is receiving some kind of welfare.  Once the homes are built, there will be no more jobs and then how will they pay for these homes?

    • Anonymous says:

      A cmu block costs twice the price on Brac!

  5. Anonymous says:

    Surely we can cut the cost of housing if we build apt complexes . We can also build more apts. on one piece of land . We could cut the cost by half or less. We could also cut the cost of labor. Master carpenters were being paid $10 per hour who were building staircases and cabinets.

    During hurricane ivan I needed to replace my kitchen cabinets and found a fellow from a bank who was willing to rebuild my cabinets for 25,000 ci not including the top. He was trying to help me out. LOL. I found a northsider who would do the same work in wood formica top 3000 complete. 

    We need to come back to earth with these prices that we claim things cost when we know we CAN do it cheaper .We just need to stop charging so much.

  6. Anonymous says:

    Social housing around the world

    http://en.wikipedia.org/wiki/Public_housing

    Social housing in Florida

    http://www.hud.gov/local/fl/renting/hawebsites.cfm

  7. Anonymous says:

    Well I am a native Caymanian and I have been investing hundreds of thousand of dollars in rental apartments to have an income when I retire in a few years so that I would not have to depend on the welfare of the country.  Now the CIG has increase fees in every area that they could find, they even cause the already high insurance premiums to go even higher and now I have to compete against them to get my property rented.  They were the ones that were singing praises how their supporters were able to build these homes at affordable prices and how it was better for people to own their own home rather than rent and now after they are built them they are now saying that they will be leased.  We should not be surprise, they are the same group that told us they were going to sell the GAB and then lease it back.  It seems they want to get in the leasing business rather than leaving it for private investors.

    • Anonymous says:

      The CIG isn't looking out for Caymanians as they keep preeching…….Caymanian owned businesses small and large are suffering from the increases…everyone can preach hire cayman, hire cayman, but did the Ritz hire Cayman????They are one of the highest work permit holders in Cayman.  Keep rasiing everything, keep attacking Caymaninan businesses and see how many more people are going to go hungry and losing their homes…isn't it better to keep costs down instead of keep charging higher and higher fees, then seeing houses with broken windows, grass grown up because you know the house has been taken over by the bank….and no one is able to purchase it…..

      • Married to a Caymanian - says:

        But you fail to see the big plan and political plot my friends….Your government WANTS you to rely on a nanny-state, thus you must rely on your politicians and they will get re-elected and control the power.

        Only better education is the key and you must demand books not bricks.  The cycle can only end with less government, not more.

  8. Anonymous says:

    typical cig shambles…..

  9. Anonymous says:

    Exactly right way to do it. Government should not be building new homes to be sold to those who can't afford to buy at the free market rate. Govt should build homes of good stock , rent them affordably for those that qualify and be done with it.

    Think the UK had a succesful 'council housing scheme' for decades – until Thatchers Tory regime decided to sell them all off cheaply…..

    • Anonymous says:

      Thanks comrade, I bought my first house from the council and it put me on the ladder to further home ownership. That's not to say that all those who wanted to purchase could or should have and many fell by the wayside. But that is the problem when you try to make those who cannot afford to purchase take out oversized mortgages. There is no substitute for getting an education and ensuring that you aspire to rise above the poverty trap.

      Thanks Mrs Thatcher, you helped thousands aspire to better things and not constantly rely on state assistance and a culture of entitlement.

  10. Anonymous says:

    What is needed is multistory blocks to save on costs. But then that can create other social issues.

  11. NeoSurvivor says:

    Building spec homes in 2002 for around $72,000 was possible, IF the construction was bid out AND signed contracts with liquidated damages for failure of completion or cost-overruns was included………  but we don't do that, do we?   Nope.  Not for the most part.   If we had, then we might've sooner seen the true cost of these homes and what was causing the change orders.  

    Agree with the two insightful posters who suggested the houses be on a rent-to-own basis.   I think the project had merit, and perhaps still does, but we have to be realistic with the true costs, and purchase materials in bulk and frankly in these terse times, it seems a bit ambitious for the current economy.   The increase in fees, duties and taxes has made us less of a favourable investment that we have been in past.  

    I'm hopeful we can be in that golden zone again, but it will require government to curtail their rampant spending, governmental cutbacks, and (dare I hope?   Yes, I dare) a sustainable government.  

     

  12. Anonymous says:

    There are sop many rental properties lying vacant island wide – can't the government come to some sort of agreement with the landlords instead of building more property to rent.

    Seems a no brainer to me.

  13. Anonymous says:

    Lease the Land.If government was to lease the some of the undeveloped land at a cost it would help families to build homes out of their pockets much easier.That would be part of problem solve plus they would retain the value and appreciation of the land after the lease is completed.

    This would also put more money into our economy and low-income families may be able to afford more in the future.

    After all we are just here temporarily.

    • Anonymous says:

      The Problem with Cayman and Caymanians is that they sold off most of their properties and it is now into foreign hands because they did not realise that first of all land is finite and that property ownership is wealth.  Every single native Caymanian had a piece of property or access to some back in the 1980s now they have sold out all and wasted the money and is now on social services.  This is what the Government should have realised would have happened and long ago put in place lease only to foreigners.  Cayman is at the point of no return.  Natives can't get jobs, housing, natural rights and can no longer speak out on issue.  Caymanians blame it on yourselves it could not have happened unless you allowed it to happen.  We love to talk about how free and unrestricted we are as a country and we see Bermuda, BVI and Anguilla as too restrictive in their land practices atleast in those islands the natives still own majority of the lands and that will not change anytime in the future.  I give Cayman 10 more years and natives will have to be living in Condos to afford something of their own and even then it will be impossible.

  14. Anonymous says:

    Hat's off to Mr. Bodden for speaking the truth – that is quite refreshing these days.

     

    However, what is being admitted here is that the Government cannot build homes affordably. Using 29million to build some 99 "affordable" homes for "low-income" families works out to be approx. 292,000 per home. I dont know about you, but that doesnt sound too affordable for persons on the lowest end of the income-earning spectrum. At 3.25 percent interest rate and a payment of 800 dollars a month, how long will it take to pay off for these homes? It will take over 60 years.

     

    What Govt should be doing is leaving the building of affordable homes to the private sector, e.g. Frank Hall Homes, Rainbow Realty or individuals who can develop a small piece of land with affordable homes that can be sold for 60,000 to 80,000 dollars, and Govt should be assisting the potential homeowners with financing the purchase of the homes. THAT WOULD BE THE GREATER STIMULUS!!!

     

    When politicians get involved, economic efficiency goes downhill real fast. 

  15. Special Needs Donkey says:

    "Rayal Bodden said that because of the cost of land and materials, it is simply not possible to build cheap family homes in Cayman that meet local building standards."

    Um, I guess Frank Hall Homes didn't get the memo?

    It is time for the Cayman Islands Government to get out of areas that should be left to private enterprise. The SOE (state owned enterprise) concept has never worked here and never will.

     

    • Anonymous says:

      Frank Hall selling homes for $114,000 for a 3 bedroom home?  I want one.

      • Caymanian - says:

        Even better- look off the Linford Pierson bypass and get a 4 bedroom home (yes 4!) for $246,000 with no strata fees and stamp duty only on the land.  I think Govt employees get 100% financing with Fidelity too.  Pretty sure I saw a local online advert for this too…3 bed $228

        This looks better than FH homes???  Someone call Mr. Bodden and tell him private builders have found a way to build nice affordable homes close to town and with a resonable budget.

  16. Anonymous says:

    This is just another roundabout way of Gov't offering free housing. As we are well aware that if these people cannot maintain their rental payments; they will either face eviction or more than likely the Gov't will provide assistance from the public purse. I tend to believe the latter.

  17. Anonymous says:

    Do some kind of rent to own. No one washes a rented car. Same thing applies here.

    • noname says:

      OK Mike and Elio,

      Those houses must be affordable to lease as affordable homes.

      The rate MUST be assessed according to the individuals household income.

      One size does NOT  fit all in this case.

      NATIVE CAYMANIANS MUST COME FIRST!

      • Anonymous says:

        Exactly how many NATIVE Caymaniansare there in reality and how many Jamaicans, Hondurans, Cuban's, Brits, Yanks, Canadians etc…….consider themselves native since living here all of their lives and contributing to society as honest citizens?

        Live in the real world, no country can afford to build homes for purchase by low income families or any one else for that matter. If you don't have the means you must accept that life in a rental property is as good as it gets until you get an education and a job that pays enough to qualify for a mortgage. Something for nothing doesn't work anymore and Cayman better learn that lesson fast. Xenophobic and racist attitudes don't help anybody, least of all those embittered or ill educated enough to spout such garbage.

        • Anonymous says:

          Xenophobic and racist attitudes??? I don't care how long I like in any county in the world if I do not have DNA to that soil and generational blood line I am not NATIVE plain and simple, I am either a resident or citizen of that country.  The same applies to anyone in the Cayman Islands that share the same profile and there is nothing that you are anyone else can do about that.  There are less than 10,000 Native Caymanians and the real Caymanians know this irrespective of  what you want to say.    No country can afford to build homes for low income families, there should have been one exception to that rule the Cayman Islands as we were less than 5,000 Natives in 1980 and at that time in our development no one lived off government hand outs and all Caymanians that wanted to had 2 and 3 jobs.  We seal our fate and wrote our doom when we encouraged mass immigration here.  We were well on our way to providing the level of care and attention that Dubai and Sudia Arabia offer to their people because we had the means then to do it.  Another thing that a newbie like you don't know Native Caymanians did not go the banks to qualify for mortgages for homes in the 60s 70s and 80s we built our own homes mortgage free one block at a time day by day and many of them are still around today (two bathroom and three bedroom concrete, block and steel homes). 

          • Anonymous says:

            There is no such thing as a native Caymanian.  There are just Jamaicans that have lived in Cayman long enough to think they are better than Jamaicans who have been around for less time.

  18. Anonymous says:

    Just a thought. Lets hope for the trust sake, the rental income covers the cost of maintenance and repairs (in some cases; severe) depending on the quality of people they are rented out to.

  19. Anonymous says:

    Looks like its time to shut down the housing trust as they have completely lost their way. Why would the NHDT want to enter the competitive rental market with subsidized rental units?

     

    Not only are they screwing any Caymanian who decided to build a rental unit as an investment, but they are setting themselves up for major expenses in the future. Do they really believe that $800 per month is going to cover insurance and the normal wear and tear on a house that the occupant has no equity in?

     

    If government wants to reduce their future expenses then its time to auction off ALL government housing to the highest bidder and let the free market set the rental rates.

    • †ŹĄР† says:

      In todays Cayman housing market, CI$ 800 a month should get you a one bedroom apartment, nothing more (unless you are willing to move to East End or Cayman Brac).

  20. Anonymous says:

    At least Mr. Bodden is telling it like it is. However, where are the politicians who promised all this wonderful affordable housing to the Cayman people. Mr. Adam, Mr. Solomon where are you? Should you not be telling us what went wrong…again? Does anything go right when politicians are involved? Obviously not and then they hide behind their appointed managers who have the job to tell the public they have failed. The more things change the more they remain the same…until next May! 

  21. Anonymous says:

    Property ownership is a privilege of the succesful not a right.

    • Anonymous says:

      …a privilege of the succes(s)ful not a right…?

      What a disgusting thing to say and all those that gave you thumbs up too!

       

      • NeoSurvivor says:

        We may wish it to be otherwise — and I do — however I think that the poster who posed the phrase "privilege of the sucessful"  is spot on.   Yes, many homesteads and properties are handed down, often within a miasma of familial competition for said property, but the new-built homes are for those who have been sucessful enough to be able to afford them.   It just is.  

        If I were granted a magic wand, I would give everyone — expat or Caymanian — a modest two-bedroom home, free and clear of stamp tax or other fees.    Sadly, such a device does not exist.    I had to save for years to make a down payment on my own home, and financed it.   I am eternally grateful for the institution that financed my home, in spite of the out-of-contract increase in interest that I bore.   

        If a person can afford the deal, and makes a good agreement, and nothing goes wrong within their life thatshifts their funds radically away from homeowner payments, then a person can own a home.   Times are tough.   I wish the assets and resources were available for all that were available for me.   

      • Anonymous says:

        No country has full home ownership, its unattainable and too expensive. If one wants to own their piece of paradise then one has to get an education, a decent career and work hard to earn their future asset. No one is saying that they shouldn't have decent housing, but to own is a product of hard work from cradle to the grave. Caymanians must learn that this speck of rock cannot afford some of the grand projects that they so aspire to without serious national productivity and international investment. The good times are over for us all folks, better start looking at ways to bolster the coffers, a start would be to look back at immigration and business restrictions combined with punitive taxation, all of which are discouraging overseas investment.

      • Anonymous says:

        Why don’t we pay everyone the same and then everybody can afford everything and then everyone will be happy.

    • Anonymous says:

      It should not be a the privilege of just the wealthy though. Think of someone who works hard 7-8 hours a day, 5 days a week, perhaps they are a cleaner or a nanny, how much are they getting paid? how much do you pay them?! not all get $10 per hour, thus not all can afford to have their own home. This is where the community, and in this case, the government helps out. It's a great initiative, if only it wasn't marred by fraud and mismanagement, but I'd be surprised if anyone actually thought it was going to be profitable!

      • Anonymous says:

        And this children is why you need to study hard at school.

        • Anonymous says:

          study yesand get an education, and invent a robot to clean your home and take care of your kids 😛

          otherwise pleae respect those that work hard even though their jobs may not require a huge education

    • Anonymous says:

      Cayman was one of the few countries that evey native owned propery or had a share in property it was a legacy of every native Caymanian and not the the priviledge of a few.  Caymanian did not know the value of property and got tricked out of it by speculators and government members with their own agendas on how to get rich of the backs of their own people by telling them to sell instead of leasing to foreigners.  Cayman is now a a bankcrupt society in all areas socially, spiritually and economical.  My only wish is for devine intervention soon.