Rent-to-own, a concrete step to homeownership - JN

Amid increasing real estate prices, inflation, and an uptick in mortgage rates, Earl Samuels, assistant general manager and chief development financing officer at the JN Group, has called for the government to revisit implementing a rent-to-own policy to improve the prospect of homeownership for more citizens.

Samuels made the call while responding to questions during a panel discussion, “Wealth Creation Through Real Estate” at the 10th Biennial Jamaica Diaspora Conference at the Montego Bay Convention Centre in St James.

In 2022, Prime Minister Andrew Holness announced that a rent-to-own programme would be coming to ease the demand for housing, but no timeline was provided. A similar initiative was also proposed by the Opposition People’s National Party (PNP) in its manifesto for the 2020 general election.

Samuels is urging further action on the promised arrangement, which has been touted by various experts dating back to the 1990s, noting that the policy can help people not yet in a position to purchase, or qualified for a mortgage, to buy a home in the current climate.

“In Jamaica, the demand for housing is still greater than the supply, especially for houses at some price points.The real challenge is affordability.”

“We’re in the tourism mecca and, for instance, when you look around there are several informal settlements built around these tourism areas. These people make a significant contribution to the economy, and I think they should be afforded decent housing. We can provide houses to them with a lease and establish criteria and conditions of how they can live in the house, and over time, give them an option to purchase the home. The rent they pay over the years could be considered as part payment for the house. This could be classified as a rent-to-own option,” he reasoned.

Acknowledging the efforts being made to address Jamaica’s various housing challenges, Samuels, a former managing director of the National Housing Trust (NHT), said equal focus must be given to all segments of the population, to ensure every Jamaican can get on the journey to wealth creation through property and home acquisition.

“The focus can’t only be at the middle and the upper end. Housing is not only to be looked at as an investment to provide timeshare return, but also an investment to provide a social return,” he said.

The development financier pointed out that of all the asset classes, real estate is the most attractive, noting that the sector continues to contribute significantly to the growth of the local economy. He noted that, at JN Bank, the development financing portfolio has grown some 200 per cent over the last two years.

STRICTER REGULATIONS

Samuels said investing in Jamaican real estate now is a bargain, but cautioned that prices won’t remain where they are now, especially with global interest rates being reduced or potentially months away from being cut in some jurisdictions, including Jamaica. If it becomes more affordable to access loans at lower interest rates, the demand for housing is likely to increase, which will push up prices.

“I’m encouraging everyone, not only persons in the diaspora, but those living here in Jamaica not to try at first to go after your dream property. Get your feet in and start where you can. If you require support, there are financial institutions here ready to assist you with preparing for and purchasing a home,” he advised.

Underscoring JN’s meticulous due diligence process for financing projects, Samuels joined the panel in calling for stricter regulations for the sector to address some of the challenges, including developers who continuously flout the rules. He also called on fellow financiers to be thorough in their duties when engaging potential clients.

“About 50 per cent of the projects that come to me for financing, I have to dismiss because they get the approval but when you go through all the documentation, you see that what they are planning to build is different than what is approved. This means they are putting the financier and investors at risk, so I encourage all my colleagues in the financing sector to make sure you understand what you are financing.”

The panel on “Wealth Creation Through Real Estate” also featured Dominique Silvera, head of sales and marketing at LCH Developments, the developers of the luxurious Pinnacle project in Montego Bay, Jamaica; Allison Morgan, CEO of VM Property Services, and Amanda Beepat, managing director for Allied Insurance Brokers. The session was moderated by financier, Rezworth Burchenson, CEO of VM Investments and VM Wealth Management.

The 10th Biennial Jamaica Diaspora conference was held from June 16-19 under the theme ‘United for Jamaica’s Transformation: Fostering Peace, Productivity and Youth Empowerment’. The JN Group has been one of three legacy partners of the conference since its inception in 2004.