The National Housing Trust (NHT) takes note of recent news articles on the status of an agreement under its Guaranteed Purchase Programme (GPP).
The NHT responds as follows:
1. The public has a fundamental right to information about the use of public resources.
2. Confidentiality is consistent with the process of mediation and is a requirement of the rules of court.
3. The NHT complies with government policy on confidentiality and access to information.
4. The NHT’s funds are secure and are being recovered. Importantly, the NHT will not lose any funds.
5. All developers are subject to the same approval process under the GPP which was conceptualized in 2018 as a way of meeting the growing demand for housing units at more affordable prices.
6. Prior to January 2023, approval for participation in the GPP was undertaken using the NHT’s established internal approval processes. Neither the portfolio Ministry, nor the portfolio Minister, would have been directly or indirectly a part of the approval process.
Matter of Confidentiality
As has been reported, the NHT commenced a claim against Dexim Holdings Limited in September 2022. The claim proceeded to mediation. The process of mediation requires negotiation and mutual agreement between the parties in order to arrive at a resolution, which is more expeditious and less costly than litigation. The rules of court require that what takes place at mediation and documents prepared for or in the course of mediation are kept confidential, and not disclosed in any other context except as allowed by those same rules. The non-disclosure and confidentiality provision in the settlement agreement is consistent with those requirements from the rules of court.
This does not mean that the terms of the settlement agreement would be, or were intended to be, unavailable for viewing by contributors or members of the public. After the settlement agreement was signed by the parties, the agreement was annexed to the Consent Order. Orders of the Court can be accessed at the Supreme Court. This facilitates the NHT’s ability to enforce the terms of the agreement on application in Court, if necessary.
Arising from this matter, no payments will be made from the NHT’s funds. Importantly, the NHT has called on the bond which secured the sums advanced to purchase the units.
Guaranteed Purchase Programme
The NHT believes more clarity may be needed on the principles of the Guaranteed Purchase Programme (GPP) to help interested parties better understand how it supports the NHT’s mission and to allay some concerns that have been expressed.
The NHT has the mandate to develop and make available housing solutions for its contributors. In pursuit of fulfilling this mandate, the NHT facilitates the development of housing solutions for purchase by contributors through various strategies and initiatives.
Amidst a growing demand for housing units at more affordable prices, the NHT conceptualised the Guaranteed Purchase Programme in 2018. This programme was designed to encourage private sector participation and stimulate development in the low-income segment of the housing market. Under this initiative, the NHT agrees to purchase a specific number of housing units built by real estate developers on their own land for onward sale to NHT contributors.
The developer undertakes the risks associated with planning, designing, financing and completing the housing solutions. The NHT accepts the sales risk for the number of units the Trust agrees to purchase. The developer benefits from the arrangement by having a ready market for take-up of the units upon completion, and the NHT benefits by having more housing units available to its contributors.
The GPP has delivered a total of 2,229 housing starts and 1,115 completions to date, representing thousands of housing opportunities for Jamaicans.
The GPP Approval Process
Developers submit proposals to the NHT for consideration under the programme using a combination of press advertisements as well as targeted presentations through the associations in the real estate community.
Proposals submitted by developers for assessment are evaluated based on their marketability to NHT contributors taking into consideration the project location, proposed selling price and building design; including building and lot sizes and finishes. Proposals are also evaluated against established price points for lots, studios, one-bedroom and two-bedroom units. These price points come under periodic review.
As part of the NHT’s process of determining a developer’s eligibility, the Trust assesses their compliance with the standards of professional associations in the real estate sector, tax compliance status, the experience of the project’s technical team and the financing arrangements for the project. All proposals are subject to the same process.
Once a proposal is considered viable by the NHT, it is put through a review process to include site suitability assessments, status of regulatory agency approvals, consultation sessions and a thorough review of the project details. Proposals under the programme have been approved using established internal approval processes which guide the overall acquisition of property by the Trust. In these instances, the NHT’s approval processes did not include approval by the Portfolio Minister or Cabinet.
The NHT conducts continuous reviews of the guidelines and terms of the GPP, in order to deliver a more efficient programme. To strengthen the oversight and framework of the GPP, Cabinet directed and approved a revised GPP framework in January 2023 to guide how proposals are approved. The revised terms include final approval by the Board of the NHT or Cabinet (through the portfolio Ministry) based on the number of units and value of the development and increased due diligence to enhance the “Fit and Proper” evaluation of principals of prospective entities under the programme. This shift from the NHT’s internal approval framework to add a new layer of oversight has strengthened the management of the programme which continues to grow.
Safeguarding Contributors’ Funds
Upon approval of a proposal, the parties execute a Guaranteed Purchase Agreement which sets out the responsibilities of each party, performance standards, and other terms and conditions to guide the arrangement. Under the terms, the NHT may advance sums to the developer representing a percentage of the development budget, subject to certain pre-conditions being satisfied by the developer. Any sums so advanced are secured by a bond from a reputable financial institution acceptable to the NHT. The bond entitles the NHT to recover the sums advanced, in the event that there is a termination of contract.
The GPP framework is designed to protect the interests of all parties, and importantly, to ensure the good stewardship of the NHT’s resources.
As stated by the NHT’s Portfolio Minister, the Most Honorable Prime Minister Andrew Holness at a groundbreaking ceremony in August 2023, “the NHT will maintain a very strict posture in these agreements. We will carry all our contracts to court to be adjudicated if the contractors do not perform, and that should be absolutely clear. We will protect the interests of the Jamaican people, and we will protect the Trust”.
Development projects under GPP Agreements are monitored by the NHT to ensure compliance with approved building plans and conditions of approval for the projects issued by the regulatory entities involved in the approval process.
A total of four GPP projects, representing over 5,300 proposed housing solutions have been submitted by developers for approval under the new framework. Improvements to the framework include the revision of the standard Agreement and a more streamlined application process and shortening of the approval process overall.
Housing solutions completed and delivered to the NHT, are advertised by the Trust for sale to qualified contributors. Qualified contributors are identified using the NHT’s Priority Index Entitlement System (PIE) which guides the sale of scheme units or Serviced Lots by the NHT. NHT contributors are able to purchase these units using the Trust’s 100% financing facility and other enablers; as applicable, usually reserved for NHT scheme purchases.
The NHT is making a deliberate push to increase the housing supply amidst increasing demand by contributors for NHT housing solutions. In 2021, the NHT completed a five-year housing programme which achieved more than 22,000 housing starts over the period. The NHT’s medium term housing programme targets 43,000 housing starts. To this end, the NHT is building partnerships and collaborating with developers under the GPP. Through this programme, the NHT is able to leverage the efficiencies within the private sector to deliver more high quality housing projects at reasonable costs and within faster timeframes, and maintaining a high quality product.
The NHT’s commitment to increasing housing supply reflects the NHT’s mission to provide accessible, affordable and quality homes for contributors, and through these innovative programmes, the NHT is making significant strides toward achieving that goal.
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