Private developers accept NHT challenge to build cheaper homes

Private developers accept NHT challenge to build cheaper homes

BY AVIA COLLINDER Business reporter

Tuesday, October 11, 2016

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Following some years of producing homes above the $5.5-million selling price point, two local developers have taken on the challenge of building homes which fall below this line, using the National Housing Trust’s lowest-priced developers’ loan – that of three per cent.

The NHT disclosed on Monday that it has approved interim financing at a three per cent interest rate for 1,500 one-bedroom units at Friendship in St James and for 1,003 starter units at Winchester Estate in Green Island, Hanover.

The housing agency said that the developments – which cost $11 billion in total – are focused on producing one-bedroom homes and starter units. The names of the developers were not given.

Starter units consist of a bedroom, a kitchenette, a veranda and a bathroom, but there is space for expansion. Construction is expected to begin on both projects before the end of the year.

While the selling price of a unit was not given, the three per cent loan is granted only to developers who bring to market homes priced below $5.5 million; that is, developments in which at least 30 per cent of the housing solutions in the development include two-bedroom units priced at $5.5 million; studio units priced at $3.5 million and serviced lots priced at $1.5 million.

The NHT explained on Monday that currently, three per cent loans are granted for solutions which are assessed as affordable to the lowest income contributors; five per cent loans are for those producing housing solutions priced equal to or below the NHT’s generally recommended selling price, and nine per cent loans for developments in which solutions exceed the NHT’s recommended selling prices.

From a review of starter homes and studio units placed on the market since 2013, they have been variously priced at: $2,700,000, $2,900,000, and $3,500,000.

The NHT itself initiated the development of starter homes after a veritable drought of developers willing to deliver homes below the $5.5-million price point after the financial recession which exploded in December 2008.

Builders began avoiding the offer of cheap loan capital, saying it left them with limited room to make a profit off such projects.

First Step Homes are studio units that the NHT builds on contributors’ land as well as offers for sale in its schemes.

In mid-2013 the Trust partnered with Food for the Poor to develope its first set of First Step homes for $1.2 million each. It was offered to home buyers who had their own land.

These units consisted of basic units of 320 square feet each, which the NHT said was larger than the standard NHT studio unit of 230.8 sq ft. The units include electrical wiring and stanchions; concrete walls and flooring; bathroom area with shower stalls (but excluding face basin and wall tiles); PVC louvre windows; metal-clad front and rear doors; timber-frame roofs with alu-steel sheeting and plumbing.

Beneficiaries were expected to install their own kitchen sink and cabinets, face basin, partitions, ceiling and floor finishes.

The NHT said on Monday that since 2012 it had delivered eight projects of housing solutions priced at lower than $2.3 million and $4.8 million. The projects included four First Step or starter units schemes, one studio unit scheme and four schemes consisting of serviced lots.

Just this year it placed on the market 64 starter units at Caymanas, Orange Park and Bourkesfield Meadows priced in the range of $2.7 million to $3.5 million.

The first set of First Step Homes in Hampden, Trelawny, were priced at $1.77 million each.

The Trust said that in terms of measures to reduce the cost of developing new houses and prices, it now offers low-interest rates of three per cent and five per cent to developers for affordable housing and finances parish councils in the preparation of Parish Development Plans.

The housing agency said it also enters into agreements with approving agencies to shorten the approval turnaround time. Finally, it said, it continues to provide subsidies to long-standing, low-income earning contributors.

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