The Cabinet has increased to $2M the low-income mortgage threshold at which the concessionary rate of 8% would apply and yesterday granted three other financial institutions, tax breaks to allow them to offer such mortgages.

These are the National Bank of Industry & Commerce Limited (NBIC), Demerara Bank Limited (DBL) and the Guyana National Co-operative Bank (GNCB) Trust.

Additionally, new housing schemes now going up will be created under the Land Registry System (titles) and not the Deeds Registry System (transports) so as to expedite the ownership process for land and the execution of mortgages, Housing Minister Shaik Baksh said yesterday.

This means that allottees of house lots would in a matter of two months be able to secure a title to their property as against waiting many months to secure a transport.

The system of securing transports from the Deeds Registry has been the single most criticised feature of the housing drive and has been blamed for the delays in the execution of mortgages by financial institutions.

With the exception of the Diamond/Grove Housing Scheme where some 5000 homes are to be constructed, all of the roughly fifty new housing schemes to go up, would benefit from titles, as opposed to transports, Housing Minister, Shaik Baksh told Stabroek News. This includes the 6000 lots at Parfait Harmonie. Already 4000 titles were issued under the Land Registry System with a target of 8-10,000.

Baksh and Minister of Finance, Saisnarine Kowlessar, yesterday signed the agreements with NBIC, DBL and GNCB Trust to allow these institutions to benefit from the fiscal package in place for mortgages up to $2M.

These institutions would now be exempted from the 45% corporation tax applying on income from mortgages up to $2M. Those amounts in mortgages would also be excluded from the Central Bank’s reserve requirement. For every dollar held by a commercial bank in deposits, $12 has to be deposited in the Central Bank as reserves, earning no interest.

The New Building Society had initially been the only institution to benefit from these concessions but the government sometime ago changed the laws to allow for commercial banks to enjoy similar benefits for low-income mortgages.

The initial threshold on the low-income mortgage had been $1.5M.

The first two financial institutions to benefit under the regime were the Guyana Bank for Trade and Industry and Citizens Bank (Guyana) Limited. But while Citizens has approved 207 low-income mortgages and disbursed $162.1M attached to 184 of these, GBTI is yet to use the facility.

The exemptions were designed to encourage commercial banks and other financial institutions to enter into the mortgage market to create competition and drive rates lower.

John Alves, head of credit at NBIC yesterday indicated that the bank had three months ago begun providing mortgages at the rates, though there would be no retroactive treatment.

Humphrey Nelson, head of GNCB Trust said his institution was happy to be adding to the national stock of houses while Roger Duff, head of credit at DBL, said the agreement reflected an example of a bank working with the government for the benefit of the population.

Alves also suggested that the government move from the transport system, which had been a major bottleneck to the housing drive, and switch to the more efficient titling system.

Baksh later told reporters that the new schemes were being created under the Land Registry System and not the Deeds Registry System.

He noted that the government had some 3000 houses at Tuschen close to completion as well as the scheme at Parfait Harmonie. A new scheme is to be launched at Wisroc with 1000 house lots this year. He also mentioned 12 private developers including World Homes and Barama Company Limited, which are involved in the housing drive.