The Tribune

By LEANDRA ROLLE

Tribune Chief Reporter

lrolle@tribunemedia.net

A NEW research study says while rental housing in New Providence is unaffordable for lower-income households, targeted policy interventions could revitalise the market and increase the availability of affordable units.

The study argues that affordable rental housing is essential to address the island’s growing housing crisis, which has forced many lower-income families into informal or substandard living conditions.

The study, written by Abigail Knowles and Randy Hield, reveals that most lower-income households spend a significant portion of their income on rent, far exceeding recommended affordability ratios. However, middle-income households appear to have more manageable housing costs. For instance, the fifth income group, regarded as the middle class, spends less than the recommended amount on housing. The findings suggest that once an individual enters this income bracket or higher, rental housing becomes a reasonable and sustainable option.

To tackle unaffordable rental housing, the study outlines several policy recommendations aimed at increasing the stock of affordable rental housing and addressing the imbalance in New Providence’s rental market. Chief among these is the implementation of mandatory inclusionary zoning (IZ) programmes, which would require developers to include affordable housing units within medium- to large-scale residential projects. The government could incentivise compliance by offering density bonuses — allowing developers to build more units than normally permitted — and expedited permits, easing the cost and time burdens on developers. Unlike direct subsidies, these measures would not require significant government expenditure, making them a practical option given the nation’s current fiscal constraints.

In addition to IZ programmes, the study recommends adopting aspects of Austria’s rental housing model, which includes limited-profit housing associations.

These associations would oversee the construction and management of cost-capped rental housing, ensuring affordability for lower-income households. To support these efforts, the government could provide discounted building land, low-interest public loans, and tax incentives for developers. Such a framework could establish a competitive rental market that serves both public and private housing needs.

Another key recommendation is supply-side subsidies, which directly support the construction of affordable housing units. According to the study, these subsidies have been shown to be more effective in increasing housing stock than demand-side measures like vouchers. In constrained markets like New Providence, where housing supply is limited, subsidies could help reduce prices and expand availability.  The study emphasises that such subsidies should be carefully managed to ensure they benefit lower-income households without inflating market prices or creating inefficiencies.

The article further critiques the government’s existing housing policies, which prioritise home ownership through subsidised mortgages and rent-to-own schemes. While these programmes may benefit middle-income households, they fail to address the needs of those who cannot afford home ownership, leaving a significant gap in the housing market. The lack of attention to rental housing has resulted in a fragmented and poorly regulated market, with most rental units being offered informally through platforms like Facebook groups or word of mouth. This informal structure complicates efforts to gather data and implement effective policy solutions.

The study also highlights the impact of amenities on rental prices, using data collected through a hedonic price model. Units located in gated communities or with beach access were found to be significantly more expensive, with gated communities increasing rental prices by 56.2 percent and beach access adding 37.9 percent. These premiums and the high demand for rental housing further restrict options for lower-income households.

The report concludes that solving New Providence’s housing crisis will require both short-term and long-term strategies. In the short term, the government should implement mandatory IZ policies to quickly increase the supply of affordable rental units. In the long term, a comprehensive overhaul of the rental market, inspired by Austria’s model, could provide the stability and affordability needed to serve lower-income households. This would involve fostering limited-profit housing associations and introducing structured financing mechanisms to fund the construction of affordable units.