Property Matters – Housing Issues – part 3

SIDEBAR

• We all know of single persons who get new three-bedroom HDC homes, while entire needy families remain trapped on the waiting-list.
• We have all seen nifty HDC developments and known that ‘That development is way too nice for any poor person to live in there’.
• The actual distribution of new HDC homes shows the actual targets. HDC figures on distribution of new homes as at September 4th 2013 show 22% for rent and 78% sold (approx).
• In 2014 the monthly income limit to apply for a new HDC home was increased to $45,000. According to the Salaries Review Commission’s 2013 Report, that figure exceeds the salaries paid to Ministers in our Cabinet, Appeal Court Judges, The Ombudsman, The Auditor General and the Head of the Public Service/PS to the OPM. That is how far astray our housing policy has gone.
• The Housing policy is being implemented so as to promote home-ownership. This approach does not benefit the poorer applicants who cannot afford mortgages.

This week I will be examining the allocation policy in greater detail.

The PP administration took issue with the housing policy, very late in their term of office and only in reference to disabled persons and persons whose life had been threatened –

“Moonilal plans to review housing policy” in Newsday of Sunday, July 26 2015

“…Moonilal said Government has been satisfying the Cabinet-approved National Housing Allocation Policy 2008, which allows for 60 percent of housing to be distributed by random draw, 25 percent by ministerial discretion, ten percent by protective services, and five percent for senior citizens and the physically challenged….”

Those intentions to review housing policy were limited and in any case, the PP lost the September 2015 general election.

It was staggering to learn that the monthly income limit for HDC housing had been increased to $45,000 at some point in 2014. That significant and detrimental policy shift must have been done very quietly.

One of the early policy announcements of the new PNM administration was that the monthly income limit would revert to the previous level of $25,000. That policy change caused some controversy and even sparked some baseless talk of lawsuits. One of the concerns was as to the status of those persons who had qualified under the $45,000 limit – Would they lose their place in the queue? The decision was made to preserve the entitlements of those who had qualified under the $45,000 income ceiling.

All of that concern was in my view misplaced, since it did not address the needs of the poorest applicants.

What is Affordable Housing?

“…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…” (emphasis mine)

Adequacy and affordability are central to understanding these issues. Adequacy suggests that new homes are allocated to match the family size and other housing needs of the applicants. That has not been the case, as we all know.

That is bad enough, but the situation is even worse in terms of the important aspect of affordability. There is broad international consensus that ‘affordable housing’ costs no more than 30-35% of household income.

The question of just what is ‘affordable housing’ can be a frustrating one, but the decisive answer depends on ‘to whom’ is the housing designated. The needy applicants who cannot qualify for mortgages have to stretch the family budget to pay market rentals, yet the large-scale public housing program is not providing an adequate supply of affordable housing. That is our public housing crisis, in which vast resources of Public Money and time have been deployed via the HDC to –

“…Provide affordable shelter and associated community facilities for low and middle income persons;…” (citation from pg 8 of the 2014 Joint Select Committee Report on the HDC)

Despite these stated intentions, the needs of the middle income applicants have clearly prevailed over those of the low income persons, as demonstrated in the distribution details previously cited. According to the HDC’s figures, less than 22% of the new HDC homes have been allocated to those who can only afford to rent. We must do better.

In the advanced countries, to which status we aspire, the norm for affordable housing would seem to be at the level which could be afforded by persons earning about 60% of the average income in a given district. This sensible approach recognises, at the outset, that the persons for whom public housing is being provided earn less than the average.

Our approach can be gleaned from this statement from the Minister of Communications, made as he was announcing the restoration of the previous $25,000 monthly income ceiling for new HDC homes –

“HDC was not following the law” in Trinidad Guardian of Friday 20th November 2015

“…“The first thing we took into consideration was the fact that the HDC’s mandate was for low and middle income housing… the primary purpose of this change was to ensure the HDC operates by law.”

Cuffie said the original PNM stipulation was reversed by the PP, which led to low cost housing being afforded to people of higher income and this affected the availability of houses to lower income earners. He said Central Statistical Office (CSO) data showed 60 per cent of employed people earn less than $9,000 a month.

“So when you look at the fact that 60 per cent of the population earns $9,000 and less, you’ll see the HDC was operating outside of its mandate and it needed to operate according to law. Raising the joint income limit to $45,000 allowed it to operate outside the law.

“So the revision to the $25,000 joint income limit (the upper level) is in keeping with the HDC’s mandate to serve lower and middle income citizens,” he added…”

So, our limited resources are being so badly mis-allocated that the pressing needs of the poorest applicants will never be served. If the average monthly household income is less than $9,000, then setting a $25,000 limit for applicants for public housing will have the effect of drawing the limited resources away from the ‘lower income earners’. It is impossible for this approach to ever provide public housing to those in greatest need.

To understand this issue, it is necessary to understand just how well our country has done in terms of owner-occupation and perhaps begin to grapple with the concept of ‘limits to growth’.

What is the relative percentage of owner-occupation?

There are three points of reference from which one can consider this aspect of our housing policy –

1. 2002 Housing Policy – “…A cultural norm in Trinidad & Tobago is the orientation towards home ownership. This has led to an increase in home ownership from 65% in 1980 to 74% in 1990. Measured by world standards, Trinidad & Tobago ranks high among developing countries in home ownership…” (pg 4)
2. Vision 2020 Housing Sub Committee Report (2005) – This is a seminal 206-page report on the housing needs of our country, completed three years after the 2002 policy was launched. At page 12, it locates our country within 20 comparator countries with similar development indices – those countries are all advanced in comparison to ours, but the exercise was an aspirational one. The summary of housing indicators at page 14 discloses that the average rate of home-ownership in those 20 selected countries was 63.29%, while Trinidad & Tobago was at 72%. In terms of owner-occupation, our country was doing almost 14% better than the comparator countries, which included Canada, USA, UK, Scandinavian nations, Japan and so on. But there is more, since the table at page 17 sets out our country’s ‘desired profile’ against its ‘existing performance’. The ‘current score’ in terms of owner-occupation was 72% and the ‘target score’ was 70%. Imagine that.
3. Current position – After 13 years of the 2002 housing policy in effect, our owner-occupation rate is at 76%, according to Wikipedia. The comparative figures from the developed countries to which status we aspire are interesting – USA 64.5%; UK 64.6%; Canada 67.6%.

Conclusion

The emphasis on home-ownership in our housing policy is misplaced. It is at the base of fundamental problems in the implementation of the very housing program.

Given the data, how then can one justify the large-scale commitment of scarce land, Public Money and time to advance a home-ownership agenda? Rentals to needy applicants always were second-choice items in our national housing program. That program was pushing against the ‘glass ceiling’ of a high rate of home ownership, with the scandalously scarce provision for the neediest. What is more, of the estimated 30,000 new homes built by HDC in this period, only about 10,000 have been distributed. Most of the people on HDC’s waiting-list simply cannot afford a ticket to the allocations lottery. Hence the quiet shifts and complete contradictions in the income limits set for applicants.

Where is the needy applicant in all this? Next week, I will examine the issues of housing subsidy and the paradox of all those completed, empty units sitting alongside the growing waiting-list.