The Housing Development Corporation (HDC) will be seeking Cabinet’s approval to build simpler homes so that it can change the cost of its units, thus reducing the subsidy currently enjoyed by the public.
The HDC also intends to end an arrangement where it foots the utility bills for over 5,000 of its tenants.
The major announcements were made during a Public Administration and Appropriations Committee (PAAC) meeting yesterday.
HDC managing director Jayselle Mc Farlane told the PAAC that some of its customers currently benefit from what was called the “60/40 split.”
Under the Subsidies heading on the HDC’s website, it indicates that currently, HDC customers pay an average of 60 per cent of the cost of a unit while the other 40 per cent is absorbed by the State.
“The Cabinet-approved pricing policy was such where the Government would absorb the cost of the land and the cost of the infrastructure and the applicant will pay the cost of the construction,” committee member Randall Mitchell, who is a former Housing Minister, explained to his colleagues on the committee.
However, MacFarlane said that agreement will come to an end soon.
“The HDC’s board has approved a pricing policy, it’s a strategic measure of the board to keep the prices down and to implement subsidies that can be afforded by the Government, with a maximum subsidy of 25 per cent,” Mc Farlane explained while revealing that the board’s recommendation is currently before Cabinet.
This will also apply to rental properties.
HDC chairman Noel Garcia said price increases on the global market were forcing their hand.
“Inflationary pressures and a number of other issues such as COVID, with the supply chain logistics, are all contributing to an upward trend in prices that has distorted the 60/40 split.”
The announcement of the subsidy cap then prompted Minister Mitchell to ask, “Having regard to the inflationary pressures now being experienced, is it the HDC’s position that they are now going to reformulate the pricing policy through Cabinet or are they going to seek ways to reduce the cost of the construction of the units?”
Garcia said the answer was yes, to both.
“It is the intention of the board to approach the Minister (Housing) to take a note to Cabinet with respect to the pricing policy, the second part of it is that the HDC is seeking ways to bring down the cost of construction to really go back to the old days where we provided a very basic house which allowed people, as time goes on, to outfit their house in a manner that they wish, that would reduce costs significantly.”
Earlier during the meeting, it was revealed that the HDC’s Housing Construction Incentive Programme (HCIP), which incentivises the private sector to build low-cost housing, did not attract the investment it had hoped for.
“A total of 134 packages were sold, resulting in 38 contractors registering, in total thus far under the HCIP, 55 units were built,” said divisional manager Vidale Ramroopsingh.
The HCIP was rolled out in 2017.
Meanwhile, the HDC is looking to end its arrangement with most of their traditional renters who benefit from having their water and electricity bills covered by the corporation.
This announcement was news for some on the committee, in particular its chair Bridgid Anisette-George, who was unaware this was a function of the corporation.
Mc Farlane explained that those tenants are mostly in Port-of-Spain, where rent is $100 a month.
“We are currently reviewing this exercise in an effort, in some instances, to remove this provision by the HDC.”
She could not provide an exact cost to the State but said that the electricity bill for those renters could be around $10,000. However, the chair did allow her to submit the exact figures in writing at a later date.
Mc Farlane was probed by committee member Wade Mark on how many benefited from this coverage and where exactly they are located.
“About 5,454 are traditional renters. They are in areas such as Duncan Street, Nelson Street and Beetham,” Mc Farlane responded.
She also revealed that those very renters owe the HDC around $47m in arrears.