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.
A few points, dont argue with me because you will loose!
1) Fedee is right despite using an outdated 2014 report as evidence. Affordability is the biggest issue and present govt has no clue on how to tackle the issue; maybe NOT having a housing ministry caused this ignorance of the current housing situation ..no Minister no PS….just a costly circus of missing in action theives.
2) the VaT off selected building materials is a failed initiative. Why? It is because the price of material increase in tandem with this so called relief. Who is ensuring that merchants did not jack up their prices?
3) the price of labour is not static. With development comes a hefty long term consequence. So many massive hotel projects paying premium price for labour. This inflated the cost of labour across the construction sector, therefore making housing construction Firstly less desirable since it is short term compared to a multi year hotel project. This phenomenon impacts affordability as labour accounts to 40 to 50% of housing cost.
THIS giant loan by govt sldb is good however this will not dent the market. Government needs to be the ones building those houses or else the price of building will dissipate this loan and force load beneficiaries to overpay!!! Government must use its perks and build houses duty free, with concessions and at a large scale!
Dont argue with me….i know what i am talking about!!
Simply put. The person who thinks this 20 million dollar loan is helping is very delusional. PJP mentioned a wider plan. WHy didn’t he tell us what’s the wider plan? Last election someone asked me WHo am I voting for and I replied, Is not who it is Why am i voting i said. My vote will cast only for a Better Housing and Transportation Sector. Unless a govt cannot outline it’s policies and plans for these 2 sectors Me Nah Vote.
Either way, the loans will be expensive and uunaffordable for most. The employment situation in St Lucia is dire. You look at the population, the government has ignored half the island in its development from vieuxfort to soufriere, young people who could have contributed businesses and built homes are instead drawn to the ghettos of Castries. No government is seeing this and seriously addressing the problem. Next, the level of informal labour is quite high, so its difficult to meet loan commitments. Three, it is not only the material cost thats a factor, most construction workers with no formal training, now asking for several hundred thousand dollars to build. No regulation of that informal sector either. And lots of people lose money to shoddy individuals. You even have architects demanding 5000 or more for a basic house plan. Government has not found it fit to make those services, available beyond Castries to the South. There are so many issues affecting housing in this country other than the obvious. And government must have a firm plan in place to address them all. And implement those plans.