Property Matters – Housing Issues – part 1

Marlene McDonald, MP

The ongoing and serious allegations against Housing & Urban Development Minister, Marlene McDonald, and UDECOTT Chairman, Noel Garcia, are obvious distractions launched for plainly political reasons. That is not to dismiss the details of those serious allegations, since at this early stage it is impossible to make any real judgment as to guilt or blame. The current furore over these allegations detracts from any serious discussion of real issues about public housing, while at the same time being emblematic as to the depth of the problem.

Subsidised housing is an important part of the ‘welfare state’ provided by our Republic’s wealth and it is therefore necessary to establish the most effective policies and operational arrangements to maximise the benefits to the most needy.

It is now time for us to convene a comprehensive and transparent review of our housing policies and delivery mechanisms.

The current housing policy was published in September 2002, with a headline proposal to build 100,000 new homes in a decade. Since late September 2012, I have been proposing a full policy review to the various responsible officials, but the responses were lukewarm. Once again, I am proposing that we now undertake a full review of national housing policy. I have been in recent preliminary discussions on this review with the principal policy advisers and it seems likely that this will be commenced shortly.

On the operational side, the Housing Development Corporation (HDC) was established on 1st October 2005, so after a decade of operations, it also seems timely to examine HDC’s operations and performance, especially in light of the serious allegations now emerging. The HDC was closely examined in a 174-page Joint Select Committee Report laid in Parliament on 24th June 2014 – that Report contains very interesting material and recommendations which I will delve into later in this series.

The Housing Ministry is responsible for establishing the policy within which the operations occur and the HDC is the main implementing agency for that policy. The relationship is summarised at page 8 of the JSC Report –

…2.1 The Housing Development Corporation (HDC) falls under the ambit of the Ministry of Housing and Urban Development (MoHUD) and is mandated to:

• Provide affordable shelter and associated community facilities for low and middle income persons; and
• Carry out the broad policy of the Government in relation to housing…

The mandate locates ‘low income’ persons ahead of ‘middle income’ persons, which would seem to indicate some sort of preference in terms of allocations. But we will see.

I have always had a serious objection to the fact that our public housing policy provides for middle income persons, given the levels of desperate housing need in our country.

It is my contention that the equitable allocation of scarce public resources cannot be achieved in a policy framework which places low and middle income citizens in competition. Given that the official estimates for applicants in the HDC’s database have ranged upwards from 170,000, it is very important to have an effective allocations policy.

What is our Allocation Policy?

At page 23 of the JSC Report –

…3.7.3 The Cabinet also approved an allocation regime, which dictates that housing, Units be distributed as follows:

• 60% via a Modified Random Selection process;
• 25% on the recommendation of the Minister with responsibility for housing to deal with special emergencies (persons selected by the Minister are subject to the same financial obligations as clients allocated units by other means);
• 10% for the Protective Services; and
• 5% for senior citizens and physically challenged persons…

That allocations policy was established at the start of 2008.

What are the outcomes?

In this case of our housing policy, in which there are no targets for satisfying the needs of the competing groups, the evidence is that the low income group has been substantially disadvantaged.

I asked HDC for details of the tenure of the new homes which were distributed and this table shows the replies.

HDC ALLOCATION of New Homes

Tenure Type	August 8th 2011	Percentages	September 4th 2013	Percentages
Rental	256	3.3%	1,962	21.7%
Rent to Own	111	1.4%	66	0.7%
Purchased	7,290	95.2%	7,029	77.6%
Totals	7,657	100	9,057	100

By any measure of reasonableness, it is appalling that less than a quarter of the new homes built by HDC have been distributed to persons who can only afford to rent. Those persons are certainly at an economic disadvantage when compared to those who qualify for a mortgage. The national housing policy is intended to serve the needs of those who cannot enter the market for quality housing, yet HDC’s outputs show that it is largely serving the more prosperous of the applicants.

Apart from the critical issue of just who gets these new homes, it is also necessary to re-examine the very model which proposes homes with gardens as a significant part of this large-scale program. There simply is not enough land in our tiny, overcrowded island state to satisfy that objective, but that is for later examination.

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SIDEBAR : Our Housing Market

Our housing market can be divided into five parts, proceeding from the neediest to the most prosperous:

1. Homeless: Those who do not have any money for housing are driven, unless they have family or friends who are willing to house them, to live in our streets, parks and vacant lands. One might also include here those who cannot afford land and are forced to build on land they do not own.
   These are widely known as squatters and they are a significant source of conflict for the wider, more prosperous community, particularly the HDC in the course of its large-scale building programme.
2. Permanent renters: These are employed people who are only able to afford to rent accommodation from those who own property. In every country in the world, even the most developed ones, there are significant numbers of working people who cannot ever afford to buy a home.
3. Transitional renters: These are people who can afford to rent and also put aside savings for a deposit towards owning a home.
4. Homeowners: These people, many of whom were once in the preceding group, who can afford to buy a home.
5. Multiple homeowners: These are people who are prosperous enough to own several homes, in some cases more than one for their family and, in others, one for their family, with the others rented out as investments.

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SIDEBAR: The Marlene McDonald allegations

Fidelis Heights

The key allegation against McDonald is that in 2008, when she was Minister of Community Development, she sought to obtain a unit for her male friend at the desirable ‘Fidelis Heights’ development in St Augustine.

It is further alleged that the new home, leased to Michael Carew under deed 201100262014D001, is rented-out to a tenant. If that is so, it would be breach of clause 23 of that lease, which prohibits sub-letting.

McDonald is the current Minister of Housing and Urban Development, so the issue is a compelling one.

This formal complaint against McDonald is rooted in the Integrity in Public Life Act, which states –

…24. (1) A person to whom this Part applies shall ensure that he performs his functions and administers the public resources for which he is responsible in an effective and efficient manner
and shall—

1.  be fair and impartial in exercising his public duty;
2.  afford no undue preferential treatment to any group or individual;…

(2) A person to whom this Part applies shall not—

1.  use his office for the improper advancement of his own or his family’s personal or financial interests or the interest of any person;…

The emphasised words, ‘undue‘ and ‘improper‘ are key since they create an option for a public official to seek favours for their family, if the policy justification exists. In this case, the allocations policy contains provision for “…25% on the recommendation of the Minister with responsibility for housing to deal with special emergencies…”. Of course, special emergencies is not defined so that is virtual carte blanche.

I objected to that provision when the allocations policy was revised in 2008 and this episode only underscores how unacceptable that clause is in a real-life situation of critical housing need. In light of the provisions of the existing housing policy, it seems clear to me that the alleged recommendation made by McDonald was not in breach. This is the result of bad policy and those provisions need to be changed.