NASSAU, BAHAMAS — The government should look to engage a private developer for the build-out of its proposed western New Providence development, a local economist has suggested while arguing that simply subsidizing the cost of the land alone will not improve access to housing.
Rupert Pinder, a University of The Bahamas lecturer, told Eyewitness News the ability of many individuals desirous of homeownership to access credit and build their homes within the prescribed period given construction material costs and other factors could prove problematic.
“Even when you subsidize the price of land, that in and of itself does not improve access to housing,” said Pinder.
“I’m not sure it’s so clear-cut. You have to look at a person’s ability to access credit, the price of building materials and that sort of thing.
“Rather than look at it from a demand-side approach, government should perhaps look at it from a supply-side approach by engaging and working with a developer.
“The government, through regulation, can put a ceiling on how much a particular home can be sold for and as homes are sold, it receives a percentage of the sale price, bearing in mind that it provided the land. I believe that by going that route, the government would not have to expend so much capital upfront to develop this undeveloped land but leave that to the developer and get its money on the back end.”
Pinder added: “The government also would not have to deal with the issue of moral hazard and adverse selection, which could very well be a problem. The government could also avoid a situation where there are a bunch of incomplete homes all over the place as the developer could have the option to sell or offer financing for persons having trouble accessing credit.
“Having access to land is a good thing but the real value is often to what extent you can build on it. The question will be how many persons can afford to put a structure on the land in the prescribed time frame and if persons are unable to do so, how does the government then go about taking the property back. I don’t see it happening.”
The government has identified several tracts of land in western New Providence for purchase for young Bahamians between the ages of 18 and 45.
Prime Minister Dr Hubert Minnis previously indicated that 40 percent of the lots will be multi-family lots at $50,000, and 60 percent will be single-family lots at $40,000.
The government will bear the cost to put in place all of the necessary infrastructures for the 95×100 lots, which will be valued at $150,000. The housing program will also offer several concessions, including the waiver of customs duties on all the building materials and appliances, real property tax exemption for two years after construction and one year without stamp tax.
Additionally, the government will make available 10 approved Ministry of Works architectural designs for homeowners to choose from for a cost of $1,000, eliminating significant architectural fees.
While lauded by some, the proposed initiative has also been met with criticism and skepticism by others.
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