Parliament has approved a Government guarantee for a US$20 million loan being taken by the Saint Lucia Development Bank (SLDB) to support low- to medium-income housing.
In practical terms, the Development Bank is borrowing the money, while the Government is standing behind the loan. If the Bank were unable to meet its repayment obligations, Government could ultimately be called on to cover the debt.
The money is coming from the Export-Import Bank of the Republic of China and will be used by the SLDB to provide financing for home construction and other housing-related needs.
During debate in the Lower House last Tuesday, Prime Minister Philip J. Pierre said the facility is meant to help tackle Saint Lucia’s housing shortage by making financing more accessible to first-time homebuyers.
He explained, however, that the facility will not only support new home construction.
“The facility also exists to assist existing home owners with financing for home repairs, extensions, renovations, drainage, retaining walls and the implementation of renewable energy solutions and rain water harvesting,” he said.
The programme is expected to target applicants who have completed at least two consecutive years of employment with the same employer or within the same industry. Those who qualify could be eligible for 100% mortgage financing, with the Prime Minister saying the interest rate would be competitive.
But when the matter reached the Senate on Thursday, the Opposition argued that access to loans alone does not get to the heart of Saint Lucia’s housing problem.
Leader of Opposition Business in the Senate Dominic Fedee pointed to a 2014 study by the Research and Policy Unit of the Ministry of Finance, which examined Saint Lucia’s housing deficit and the growing difficulty people faced in trying to build their own homes.
Fedee argued that the bigger problem is affordability.
“The root of the problem is how much people make,” he said. “Unless we drastically increase household income, unless our economic policy is robust and innovative enough, we are spinning top in mud.”
The Opposition’s position was that even with a new financing facility, many ordinary Saint Lucians may still struggle to afford a mortgage in the first place.
Opposition senators also argued that the Government should go further in reducing the cost of construction. While the current administration has removed Value Added Tax on building materials, they called for all taxes on materials used in construction to be removed.
Government, however, pushed back against the idea that the new facility was being presented as a complete answer to the country’s housing challenges.
Pierre had already made that point during Tuesday’s Lower House debate.
“Today is not a one shot. It came from a programme of trying to improve the housing stock and decreasing the housing deficit in this country,” he said.
He said the loan facility forms part of a wider housing push, with several other projects already underway.
