IN the middle of 2021, the National Housing Trust (NHT) simultaneously advertised eight housing schemes across the island as being open for purchase by Jamaicans needing homes.

The Trust will face a large outlay in cash, resulting from its accelerated housing programme. The projects involved fall under NHT’s Guaranteed Purchase Programme (GPP), introduced around 2019, whereby the NHT buys entire schemes on completion or part thereof, eliminating market risk for private developers who enter this agreement. Nine projects were approved under the new arrangement in 2019 while others were put under review at the time.

The NHT disclosed then 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 state agency has been able to leverage the efficiencies within the private sector to deliver housing projects at lower costs and within faster time frames.

The Jamaica Observer reached out to NHT three times within the last month to get an update on payments to developers in 2021, however, no response has been forthcoming. Earlier this year, NHT was allocated four per cent of a $32.56-billion budget for 101 major public investment projects during the 2020/21 fiscal year.

The NHT plans to continue pursuing the increased delivery of housing solutions over the medium term, in line with Government policies. The 2020/21 budgetary provision is part of the funding used to complete or facilitate the completion of some 20,000 houses and residential lots between April 1, 2020 and March 31, 2023. NHT’s projects are valued at $13.39 billion.

The NHT has been taking steps, meanwhile, to improve liquidity. Holding about 50 per cent of the island’s mortgages, and earlier this year it concluded a deal in which it sold an estimated $35 billion in mortgages to three local financial institutions. The NHT, meanwhile, has been affected by an increase in its bad debt portfolio, with some borrowers unable to pay due to the economic impact of the novel coronavirus pandemic.

The Trust’s GPP is being pursued within the context of the NHT’s housing programme that aims to deliver 23,000 housing starts by 2021. An NHT source explained, “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.” The source 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.

It was also noted that, under the programme, NHT contributors would 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.

The new arrangement came into play as the old joint venture model saw poor developer take-up. Private developers, under the Interim Financing Agreement with the NHT, recorded no starts for much of 2019.

Under this older programme, the Trust provided developers with funding for up to 100 per cent of the construction costs for their development at concessionary interest rates. These concessions were expected to be reflected in the base selling prices of the housing solutions. Developers began to shy away from the lower-priced loans because they were tied to selling houses at NHT-recommended prices.

The GPP was a better offer as it would see off-take by the Trust right after construction completion without the developer being obliged to sell the units.