Property Matters – The Housing Gap part two

“Until all have crossed, none have crossed…and some we have to carry”
— the late Dr Pat Bishop TC… timeless…

“…The Housing Policy of the Government of Trinidad & Tobago is based on the understanding that every citizen should be able to access adequate and affordable housing regardless of gender, race, religion or political affiliation…”
(the emphases are mine)

This is my second essay on the size and meaning of the Housing Gap. That is the gap between the beneficial intentions of the Housing Policy (2002) and the needs of the actual applicants, the neediest citizens, in this my Season of Reflection. The State Institution with responsibility to close that gap is the Housing Development Corporation (HDC). The Land Settlement Agency has responsibility for providing serviced lots but that is a minor part of the output.

The previous article opened by citing the little-known preamble to our Republican Constitution (1976), which affirms the principle of social justice by the operation of our country’s economic system to promote the common good. This week, my opening quotation is from the late artist, musician and commentator, Dr. Pat Bishop, in which important community values of assisting those least able to assist themselves are elevated. Almost socialist, in both expressions. I tell you.

Once again, I am asking the pointed questions as to how well does our existing housing program, as executed by the HDC, serve those ends as properly articulated in our housing policy.

In the previous article I also specified that a mere 21.4% of the HDC’s 2003-2015 output was allocated for permanent rental. That is a scandalously low percentage of rental homes, given that over 90% of the 176,000 applicants on the waiting-list cannot afford to buy.

In May 2018, the PM, who was at that time acting as Minister of Housing and Urban Development, announced an ambitious program to commit $9 Billion to build 10,000 new homes via the HDC. Dr. Rowley’s statement was welcome news for those involved in designing & building new homes for HDC, effectively setting the stage for a solid level of medium-term activity during a relatively slow period.

Apart from that effect within those ranks of professionals and contractors, there are further implications to be considered.

The way contracts are discussed in this country is that the cost of construction is the only figure which is really mentioned. We ignore the land, both literally and symbolically. Just consider that at an average cost $900,000 per new home ($9,000,000,000/10,000 = $900,000) the completed units would average over $1.0M each. Even with the HDC’s housing subsidy applied to each unit, the cost to the purchaser would be of the order of $600-650,000. Which means that those homes would be affordable only to households earning $15-20,000 per month, which is over twice the average household income in this country, as examined later in this article.

The Rental Housing option

Then, on 22nd June 2018, Dr. Rowley, still acting as Housing & Urban Development Minister, made these interesting assertions –

“If you know how the application list is made up. Of the tens of thousands of people who apply and who look to the HDC for relief in public housing, a huge amount of those persons can only afford a rent.” With the best facilitating policy in place, he said, some people simply could not afford high quality housing.

“So, what we have done is to change the policy a bit and say that the Government is going to focus now, or for a little while, at least going forward, on building houses or apartments for rental to service the needs of those persons for whom a rental can satisfy their needs.”
(the emphases are mine)

Dr. Rowley clearly recognised that the element of rental housing is essential in satisfying the neediest applicants, yet there is a painful ambivalence in that those are limited to ‘for a little while‘. The simple fact is that over 90% of the applicants on HDC’s waiting-list cannot afford to qualify for a mortgage. Obviously, the partial recognition of those needs is not a satisfactory position in terms of the real requirements. This is a fundamental issue of political responsibility.

Politically Correct Housing Policy – What is its impact?

The second opening citation is from the HDC’s publicity and is a commendable attempt to promote non-discrimination in the allocation of State housing. It is a policy approach intended to prevent any discrimination on the basis of ‘gender, race, religion or political affiliation‘, the only problem is that, notwithstanding its satisfying several aspects of political correctness, there is no focus on the decisive issue. The reason people do not live in proper housing has nothing to do with gender, race or any of those listed factors. The failure to obtain proper housing is due solely to a lack of money. We live in a capitalist society in which access to money will give access to various items on the market, including a decent home.

The singular failure here is one of vision, where we readily satisfy political correctness, while ignoring the only reason citizens cannot get good housing. Incredible, but true.

The income limits for HDC applicants

Finally, one must consider the fact that HDC’s qualification limits for applicants are severely at odds with the reality. With an average monthly national household income of less than $9,000, the HDC, which has a statutory duty to provide affordable housing to low and middle income applicants, has a monthly household income limit of $25,000.

The program can therefore be dedicated to providing new homes in the $700,000+ price-range, way outside the reach of the vast majority of applicants. That is what is happening and it is entirely unacceptable. We must do better.

Previously I expressed my support for current HDC efforts to develop low-cost model homes to meet the needs of the poorer applicants. I understand that the target cost is below $300,000, which is of course far less than the $900,000 average cost per unit disclosed by Dr Rowley in May 2018. Of course the HDC is an important part of the design and construction activity in our country, so maintaining its pace of activity is critical to the general level of the economy. I have been proposing that HDC make a shift in focus toward more modest and genuinely affordable new homes, to properly align with existing housing policy. The decisive point is that the level of activity could be maintained, while benefiting three times the number of applicants.