The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must “take some tough decisions and break the norm” to solve its affordable housing crisis, a prominent developer is warning, with rents in some communities now higher than the mortgage payments.

Franon Wilson, Arawak Homes’ president, told Tribune Business in a recent interview that relaxing zoning restrictions - and breaking the long-held mentality that Bahamians are entitled to ‘own a piece of the rock’ by building vertically - are just two reforms that could ease the “12,000-plus” housing unit shortage recently identified by a Cabinet minister.

He said the consequences of the housing shortage were brought home to him personally when he was unable to find suitable rental accommodation for a contact able to pay $800 per month. A friend, who worked in the rental market, subsequently informed Mr Wilson he had just leased a two-bed home in Nassau Village for $1,100 a month and inquired of his contact: “Does he want a bullet proof vest or is it optional?”

The Arawak Homes president also told this newspaper that the phenomenon he noticed when he started working, with rental rates around half or 50 percent of what mortgage payments would have been, has now reversed in some Nassau communities with tenants paying more per month than homeowners. This, he added, was a sign of “where things have gone crazy” in the housing market.

Mr Wilson was backed by Leonard Sands, the Bahamian Contractors Association’s (BCA) president, who said the 12,000-plus affordable housing unit shortage identified by Keith Bell, minister of housing and urban renewal, did not appear inaccurate or exaggerated.

To ease the problem, he suggested that the Government partner with private sector developers in the construction of low-cost housing and subdivisions. Mr Sands argued that the Government should identify where the housing demand is, then convey a suitable Crown Land tract to a developer at a reduced or knock-down price.

In so doing, it would “take the land cost out of it” and considerably reduce the developer’s expenses. This would, in turn, lower the price of construction to levels that are affordable by lower and middle income Bahamians, enabling them to obtain any necessary mortgage financing, while still ensuring the developer and his contractors can generate a profit on the project.

Mr Wilson, who pointed out that the growing popularity of Airbnb and vacation rental investments has further exacerbated The Bahamas’ challenges by shifting significant inventory from long-term rentals to the short-term market, told Tribune Business: “There is definitely a challenge with home ownership development in The Bahamas. There’s a home shortage; absolutely no question about it......

“To that end, there are policies, there are ways we can try to address it, but it’s going to take some tough decisions and maybe break the norm now. For example, when looking at the number of communities which are zoned single family and you cannot have two meters.”

The Arawak Homes president said easing those zoning restrictions for certain areas would allow home owners to “add on to their home” with one or two-bed properties that could accommodate family members or be leased to others. “As it stands, you can have several generations staying in one home with one meter,” Mr Wilson explained of the current zoning consequences.

“Now you can give people options to add on to their home and rent it out for people who previously could not find a place. It’s definitely a challenge, but the good news is there is hope in so far as there are things that could be done. 

“It will take some tough decisions because there are long-established communities in Nassau zoned single family, and anyone trying to build anything other than single family is met with a harsh reaction because it has always been done a certain way. It will be a harsh reality for some, but God’s not giving us any more land.”

Mr Wilson said high living costs, and the shortage of affordable rental housing, was brought home to him in a personal way. “I can tell you a story,” he told Tribune Business. “Someone came to see me and said they really need to move from the particular situation they are in, and could afford to pay $800 a month.

“He said he couldn’t find anything, and I said: ‘Leave it to me. I’ll find something.’ I went around that night and couldn’t find anything for $800. I called a friend of mine in that particular part of the rental market, and said: ‘I have someone who wants to get somewhere for $800 per month. What are his options?’

“He’s just literally rented a unit in Nassau Village, a two-bed, one-bath, for $1,100. He said to me: ‘Does he want a bullet proof vest or is is it optional if you’re looking for something at $800 a month?’” This implied that $800 per month would only cover a unit in a crime-ridden area, and Mr Wilson said rising accommodation costs were a major factor in The Bahamas’ cost of living crisis.

“When I first started working, rent was roughly half of what the mortgage payment would have been. Today, rent is more than the mortgage depending on where you live,” he told Tribune Business. “I can given you several communities where the rent is more than the mortgage. That’s an example of where things have gone crazy.

“People need to start to save towards a mortgage. To be paying more in rent than the mortgage, that’s a sign of where the mortgage market is and why, in terms of home ownership, it makes more sense to own a home now as you are paying less in rent.”

Mr Wilson added that, with available land in New Providence rapidly running out, Bahamians will have to get used to vertical development and condo living to maximise space and keep prices keen. “One of the things we will also have to come to grips with, at least in Nassau for now, is the greater density of population,” he explained.

“You’re starting to see it with the establishment of condo living, whereas in the past everyone would want a part of the rock... Now, with condo living, we are starting to maximise the property by putting in more people and using less footprint. That’s something that’s going to have to happen for sure. Whatever heights we have now that’s going to keep going up and up and increasing. People need places to live.”

While there was also likely to be resistance to condo developments that keep increasing in height and scale, the Arawak Homes chief added: “These are the kinds of conversations we’re going to have. The reality we have is the situation the honourable minister mentioned is only going to go from bad to worse. People need places to live.

“It’s a very serious and complicated issue, but the great thing for Nassau at least is even though it’s an uncomfortable conversation we have options. As uncomfortable as those conversations may be, there are options to help. It won’t be overnight, but at least we can move in that direction.”

Mr Wilson said failing to resolve the housing shortfall will likely cause growing frustration as Bahamians are unable to achieve their home ownership aspirations, which could spill over into other social problems and further encourage Bahamian university and college graduates to remain abroad after completing their studies.

Mr Sands, meanwhile, said he did not believe the 12,000-plus shortage described by Mr Bell was “fabricated”, adding: “I believe it’s probably representative of what’s our there.” To stimulate housing development, and ease the supply shortage, he said: “Why doesn’t the Government take the land cost out of it, and give it to the developer for the sole purpose of constructing homes at the lower end of the spectrum.

“Allow the land cost not to be passed on to the consumer, and the developer will make their profit solely from the construction. The Government and the private sector are partners, and everyone makes money.”