Gov’t to take on housing challenge
The premier has announced a number of measures that he claimed his government will be introducing over the next two years to tackle the mounting problem in the Cayman Islands of unaffordable housing.
With rents soaring and developers concentrating on building luxury condos, working Caymanians can no longer afford to buy a home and the army of supporting expat workers are struggling to find places to live, as rents have become so high.
During his budget statement in the Legislative Assembly on Friday, Premier Alden McLaughlin described the property problem as unsustainable and said that the increasing cost of homeownership and the escalating costs of rents were major contributors to the high cost of living. Home ownership is a justifiably Caymanian aspiration but the dream was becoming beyond the reach of hard working young Caymanian families, he said.
While existing homeowners are benefitting from the strength of the property market, those wanting to buy for the first time are being priced out. McLaughlin said that in the new budget period his government had included new measures to bring home-ownership within the reach of more families.
He confirmed the continuation of stamp duty concession for first time Caymanian buyers on homes valued at $400,000 or less, which he said has proved effective. It was therefore being extended to include the first $400,000 on any home, regardless of its total value, he said, adding that government would continue to review the stamp duty concession and increase it if necessary.
McLaughlin also made a commitment to reinvigorate other programmes, such as the Government Guaranteed Home Assisted Mortgage Programme, which gives banks a government guarantee of up to 35% on the money they lend to local home buyers.
“Historically this programme has been very successful with negligible levels of default,” he said, as he also announced a review of the Build on Your Own Property Programme to help those with land find the money to build.
He also said his government would be funding the National Housing Development Trust with more affordable homes in East End West Bay and George Town, which, he said, “represent an important route to home-ownership for Caymanian families”.
But he accepted that the Trust alone cannot meet the need among Caymanians for affordable homes, with developers building more and more housing units aimed exclusively at the luxury end of the market. While he said there was an economic logic to developers’ choice, his government was going to work with them to look at how they might be encouraged to deliver more affordable homes, though he did not say what could entice the developers to do so.
The premier also noted the situation with the rental market and the problems at the lower end of the market, including for the families seeking housing support through the Needs Assessment Unit.
“We need to work with potential landlords to look at ways government might approach the market differently in order to encourage more supply,” he said, adding that government will talk to the housing trust about renovating or redeveloping some existing government-owned properties and bringing them back to the rental market.
Rents have proved a major problem for the economy for a while. With work permit holders struggling to find somewhere to live, given the low wages of many jobs in Cayman, even the Chamber of Commerce has labelled it as a priority that the government should address. Inflation has been fuelled by accommodation costs after a 20% increase in rents this year.
One of the reasons for the rent increases is the surge in local accommodation been placed on Airbnb and other social media platforms, where owners can command considerably more by renting rooms, studios, small apartments and even family homes to visitors rather than to long-term tenants.
The premier described the emerging a housing crisis, the increasing cost of living and low wages, coupled with Grand Cayman’s major traffic congestion issues, as “problems created by success”, which he said he sometimes refers to as “growing pains”.
McLaughlin said he would rather be contemplating these issues than the problems of the recession and hardship his government had inherited in 2013, as he lauded what he claimed was the success of the last two administrations he has led.
During his budget statement in the Legislative Assembly on Friday, Premier Alden McLaughlin described the property problem as unsustainable and said that the increasing cost of homeownership and the escalating costs of rents were major contributors to the high cost of living. Home ownership is a justifiably Caymanian aspiration but the dream was becoming beyond the reach of hard working young Caymanian families, he said.
While existing homeowners are benefitting from the strength of the property market, those wanting to buy for the first time are being priced out. McLaughlin said that in the new budget period his government had included new measures to bring home-ownership within the reach of more families.
He confirmed the continuation of stamp duty concession for first time Caymanian buyers on homes valued at $400,000 or less, which he said has proved effective. It was therefore being extended to include the first $400,000 on any home, regardless of its total value, he said, adding that government would continue to review the stamp duty concession and increase it if necessary.
McLaughlin also made a commitment to reinvigorate other programmes, such as the Government Guaranteed Home Assisted Mortgage Programme, which gives banks a government guarantee of up to 35% on the money they lend to local home buyers.
“Historically this programme has been very successful with negligible levels of default,” he said, as he also announced a review of the Build on Your Own Property Programme to help those with land find the money to build.
He also said his government would be funding the National Housing Development Trust with more affordable homes in East End West Bay and George Town, which, he said, “represent an important route to home-ownership for Caymanian families”.
But he accepted that the Trust alone cannot meet the need among Caymanians for affordable homes, with developers building more and more housing units aimed exclusively at the luxury end of the market. While he said there was an economic logic to developers’ choice, his government was going to work with them to look at how they might be encouraged to deliver more affordable homes, though he did not say what could entice the developers to do so.
The premier also noted the situation with the rental market and the problems at the lower end of the market, including for the families seeking housing support through the Needs Assessment Unit.
“We need to work with potential landlords to look at ways government might approach the market differently in order to encourage more supply,” he said, adding that government will talk to the housing trust about renovating or redeveloping some existing government-owned properties and bringing them back to the rental market.
Rents have proved a major problem for the economy for a while. With work permit holders struggling to find somewhere to live, given the low wages of many jobs in Cayman, even the Chamber of Commerce has labelled it as a priority that the government should address. Inflation has been fuelled by accommodation costs after a 20% increase in rents this year.
One of the reasons for the rent increases is the surge in local accommodation been placed on Airbnb and other social media platforms, where owners can command considerably more by renting rooms, studios, small apartments and even family homes to visitors rather than to long-term tenants.
The premier described the emerging a housing crisis, the increasing cost of living and low wages, coupled with Grand Cayman’s major traffic congestion issues, as “problems created by success”, which he said he sometimes refers to as “growing pains”.
McLaughlin said he would rather be contemplating these issues than the problems of the recession and hardship his government had inherited in 2013, as he lauded what he claimed was the success of the last two administrations he has led.
