The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

A Bahamian realtor said there is no appetite for the private sector to start its own rent-to-own programme and developers would need “considerable capital overlay” for it to be successful and profitable.

Matt Sweeting, chief executive at 1oak Bahamas, told Tribune Business while the government’s rent-to-own programme being organised by the Ministry of Housing and Transport has promise and he is excited for new homeowners to be able to invest in a home, the matter for private sector following suit is not so clear cut as things need to be more favourable for developers to enter into the market with their own programme.

Despite the initiative being “timely” in terms of filling the huge demand for homes and overarching need to help a “marginalised demographic of Bahamians trying to maintain the cost of living while simultaneously trying to purchase a home”.

JoBeth Coleby-Davis, minister of transport and housing, announced the government’s rent-to-own initiative during the Budget debate, which she said will give Bahamians the opportunity to save up for their first dream home while living in it at the same time.

The programme will allow for prospective home owners to pay rent for up to two years and then be transferred to the Bahamas Mortgage Corporation if they satisfy further requirements.

Mr Sweeting said: “I think there’s a huge opportunity for a private sector, developer or company to do a rental, but it requires considerable capital outlay with long return objectives. I just don’t know if the developers that we’ve been working with that have done considerable development in The Bahamas, have that long-term ten- to 15-year appetite for hold on to financing.”

Further, while the government has tabled legislation for its own rent-to-own programme, they have not put in place legislation that governs the private sector and how it should treat a rent-to-own programme, which leaves the matter up to the courts to adjudicate if and when there is a dispute of any kind.

Mr Sweeting added: “I can’t see any legislation being put in place that would create additional appetite in the private sector for a rent-to-own programme. There might be consideration if the government created some tax concessions around developers doing rent-to-own initiatives related to Value Added Tax and the costs associated with that. This may be something they may want to give a second thought to.”

The rent-to-own market in The Bahamas has been likened to the Wild West with individual property owners often drafting their own contracts and lease agreements, promising tenants the opportunity to purchase the home after a certain period of time. However, these contracts are sometimes done without legal advice and even in the face of legal advice, and some can be onerous to the renter or tenant.

The standard practice in real property in The Bahamas is that the owners of the conveyance or title is the bonafide owner of the property and until that changes hands officially, the tenant does not have a true stake or equity in the property and the landlord can alter the property as they see fit.

Mr Sweeting said: “I think the government’s thought was that the sliding scale they produced in the last Budget would be substantial enough. I know one of the things that are still a considerable hurdle for a number of purchases in this market, is the fact that financial institutions require them to have the VAT amount in savings in lieu of exemption.

“And again, that’s a tremendous hindrance because we’re now talking anywhere from two percent to four percent that you would need to have in savings in addition to the already exorbitant costs associated with purchasing.”

Meanwhile, he further noted that notwithstanding the challenge ahead for the rent-to-own market, the real estate market is “booming” right now. “Things are really busy. We are in a super strong sellers’ market where properties are appropriately priced on the market for days, not weeks. People are getting market value or slightly above just because of how competitive the market is. There’s an abundance of qualified buyers in the market,” Mr Sweeting said.