Time to cut NHT contributions to 1% or even one better, change the approach to housing

If Jamaica is to grow and develop, we the citizens have to play a more important role in the governance of this country.

When the NHT was created in 1976 the idea is that we would have a body that would assist in the provision of affordable  housing solutions for the citizen of Jamaica, particularity middle and low income families.

Over the last few weeks and in particular last week, we heard news from the PAC that the NHT was not able to providing support to  77% of its contributors or put another way only 23% of all contributors of 400,000 qualified for housing solutions.

Since its existence the NHT has been raking in billions of dollars and now finds itself in a position, where it does not know what to do with all that money that is available to the organization.

The March 31, 2014 balance sheet shows the NHT having accumulated employers non nonrefundable contributions of over $90B  and accumulated surplus of $23B !

The PNP government based on a article last week has been the only one which has dipped into the coffers of the NHT on at least 5 occasions since the inception of the NHT to remove funds for projects outside the scope of the NHT ACT.

The NHT has way too much money and at the rate at which it is collecting, will continue to grow its balance sheet, while still failing to fulfill its mandate.

I am making the following suggestions to the NHT, either of which I believe will be beneficial to Jamaicans

1. Immediately cease collecting NHT contributions from persons  who earns less that $1.5m per year.
2. For those earning above $1.5m per year, drop the rate of contributions to 1% of the employee salary while keeping the employers contributions the same
3. Look at building rental apartments ( max 5 floors) since there exist a high demand for rental in Kingston and St Catherine.

I believe number 3 offers the best approach as it allows any contributor to qualify and provides living space for persons who are unable to qualify for loans from the NHT despite them paying contributions to the NHT.

Item  number three would bring strong competition in the rental market and given NHT huge financial position which would eventually lead to more competitive rental rates.

This would fulfill one of NHT mandates which is  INNOVATION
To constantly challenge ourselves to identify new approaches to meet the needs of our
customers, stakeholders and the organization

How would the rental system work ?

Persons desirous of rental units would apply to the NHT for either one, two or three bedroom apartments and must meet the following requirements:-

1. Persons must be employed to an organization or self employed
2. Persons must be a NHT contributor.
3. Combined income of the family must be able to safely cover the rental of the apartment being requested. Rental rates for the units being requested should be less than 25% on the combined income of the family
4.  Absolutely no subletting of apartments is permitted, where this occurrences the rental agreement will be terminated in 30 days after the breach has occurred and this persons will be barred from seeking any further rental benefits under this program.
5. A family can only obtain a single benefit at any one time ie a family cannot have more than one rental units. Where any such breaches occurs ie if it is found that a family has more than one units in different sections of the island, their agreement on both would be terminated and they shall be given 30 days to vacate the buildings. In addition they will be permanently barred from receiving any further benefits under this program.
6. Persons whose name is registered under the rental agreement must live at the dwelling for which they are registered.
7. All persons applying for such housing, will be required to sign salary deduction agreement and rental payments will be deducted at source.
8. Persons changing jobs will be required to notify the NHT so new salary deduction agreements can be signed to ensure payments continue trouble free.
9. Each beneficiary will be responsible for their own utlilities and these must be kept update. A beneficiary can lose his /her benefit if he/she does not keep their obligations to the utility companies. (More on that later).
10. A small fee will be included in the rental for upkeep of the property and collection and disposal of garbage.
11. No external modifications will be allowed to the units save and expect for installation of air conditioning units fans etc, which must be removed and walls refinished when tenants leaves the property.
12. A security deposit will be required to secure the accommodations and this will be reimbursed once the persons vacates the property, The reimbursed amount will be the difference between the amount deposited and what is left after cleaning is done at  apartment. This will be paid to the NHT contributors account and will not be a direct payment to the beneficiary.

More to come on my thoughts..

Suggestions welcome and we could put together a paper on the way forward for the NHT