While still committed to its Guaranteed Purchase Programme, GPP, which was introduced five years ago to improve the pace of delivery of residences to the market, the National Housing Trust is now prospecting for new developers of low-income housing.
The fresh call was made in April.
“The GPP is, in fact, being used for low-income projects,” said the NHT, “The call for developers is associated with the developers programme, which is a separate programme for which proposals are invited from developers for the development of lands owned by the NHT,” the agency said in explanation.
Under the Guaranteed Purchase Programme, the NHT buys entire schemes on completion, or parts of schemes, thereby reducing or eliminating market risk for private developers.
The programme focuses on providing a guaranteed market for whole or a portion of the units being constructed at a pre-agreed price point, allowing the developer to focus on the project execution.
NHT contributors access units the using the agency’s 100 per cent financing facility for scheme purchases, plus other NHT benefits, such as low interest rates and grants.
The GPP replaced an older joint venture model, which had poor developer take-up. Under the joint venture programme, the trust provided up to 100 per cent funding of the construction costs for development at concessionary interest rates. Concessions were expected to be reflected in the base selling prices of the housing solutions. But developers walked away from the programme, over time, as they had to sell houses at NHT recommended prices.
Under the GPP, developers are not required to sell the units to home-buyers, but are paid by the trust after developing their properties.
The current developers programme for which proposals are being invited is different in that it involves lands that NHT owns but is seeking private firms to develop.
However, the price point for the schemes being targeted by new developers and the GPP is the same. Both are expected to deliver two-bedroom units priced at $11.5 million and one-bedroom units for $8 million.
In an update in April, NHT said that since the implementation of the Guaranteed Purchase Programme, the trust had entered into contracts for eight projects, valued at $31.25 billion.
Those eight contracts encompassed 3,170 housing units.
Regarding the plans for this fiscal year, the housing agency said $10.93 billion had been allocated to acquire GPP homes. Over the medium term, NHT aims to complete 43,000 residential units.
Asked why the Guaranteed Purchase Programme could not be used for the new low-income programme and why the NHT was advertising for new developers in this area, the housing agency said it’s because the programme was devised around utilisation of property in the NHT land bank.