Banks sign to finance low-income house development
By Nivedta Kowlessar
Guyana Chronicle
September 3, 2003
THREE banks yesterday signed agreements with the Ministries of Finance and Housing to provide mortgage financing for low-income home development.
Housing Minister, Shaik Baksh said the agreements with the National Bank of Industry and Commerce (NBIC), Guyana National Cooperative Bank Trust and Demerara Bank will "definitely have a positive impact on the (national) housing drive".
Baksh and Finance Minister, Saisnarine Kowlessar, sealed the deals with the banks' representatives, John Alves, Hughley Nelson and Roger Duff, at an afternoon ceremony at the Finance Ministry, Main Street, Georgetown.
Kowlessar said the lenders will benefit from fiscal concessions according to legislation amended a few years ago specifically for such purpose.
They will be exempt from reserve requirements for housing loans and corporation tax interest income, and will have to satisfy other conditions, for example, lending up to $2M instead of the previously stipulated $1.5M.
Borrowers get up to 20 years to repay and banks can lend up to 75 per cent of the estimated value of a property, but Kowlessar said changes are in the pipeline.
"We are looking at all these conditions with a view to making some amendments later on," he said.
The related legislation was amended to allow the designation of banks as mortgage finance institutions to conduct operations similar to that of the New Building Society, and to benefit from concessions as had been given to that company.
The Guyana Bank for Trade and Industry (GBTI) and Citizens Bank had expressed interest, but Kowlessar said only the latter joined the national housing drive. It has so far approved 207 mortgages and disbursed 184 totaling $263.1M.
Baksh said he was "disappointed" GBTI had not responded to the call to provide financing.
"...I'm hoping that we could work closely to try to smooth off any problems that may arise with the implementation of the granting of both low income and middle income (loans)," he told representatives of those banks signing on to the programme yesterday.
"...It is very important at this stage, that we attract and bring in other mortgage finance institutions to widen the housing loan market...I am glad that (more) are coming into the market...because...more competition can have an impact on the interest rates for mortgages," Baksh said.
The Government is building schemes in several areas, among them, Diamond/Grove, East Bank Demerara where some 5,000 lots and road, drainage and water networks are being developed; Tuschen, East Bank Essequibo with about 3,000 lots; La Parfait/Harmonie, West Coast Demerara with 57,000 lots and Wisroc with 1000.
There are also 12 private developers, whom the Government is trying to get to build larger homes.
"With this massive housing programme, we need to garner all resources that are available in the financing institutions to support the construction of...not only low income, but middle income houses...," Baksh said.
But NBIC representative, Alves, just ahead of signing the agreement yesterday, urged that attention be paid to the lack of infrastructure and delays in getting transport for land. He suggested that a quicker title system be used instead.
Baksh reported that infrastructure is being tackled through the Low Income Settlement Programme funded by the Inter-American Development Bank and work is being done in 12 schemes, and designs under way for another dozen.
The European Union is also providing Euros10M this year and more next year for infrastructure, and Baksh said he hopes this will encourage more citizens to build on their lots.
On the issue of transport and titles, Baksh said there have been several meetings over the last two to three months to solve some of the problems causing delays.
He advised that for the past two years, the Housing Ministry has been using the Land Registry system, which has proved much simpler and the Government had decided to delink that department from the Deeds Registry and house it at the Lands Commission office in Durban Backlands, Georgetown.
It has advertised for a Registrar, Deputy and Assistant Registrars and is receiving IDB support for computerisation. There are also plans to set up Land Registry units in various regions.
And Baksh said the IDB is supporting the recruitment of a mortgage finance consultant, who will look at the existing loan network and advise how more help can be given to low income earners.