Home' Trinidad and Tobago Guardian : May 11th 2017 Contents BG10 | VERBATIM
BUSINESS GUARDIAN guardian.co.tt MAY 11 • 2017
Affordable housing, construction
reforms on the agenda for T&T
Increased investment in low-cost
housing, improved access to home
loans and streamlined procedures for
building applications should feed into
a stronger performance from T&T's
construction sector in the near term.
However, delays in payments for work com-
pleted, plus lengthy bureaucratic procedures,
continue to pose challenges to expediting con-
With the economy in recession since 2015
and capital expenditure falling $2 billion
($296.4 million) short of the $7 billion ($1
billion) allocated in last year's budget, the
construction industry had a difficult year in
2016, posting a 7.6 per cent reduction in ac-
tivity, according to Ministry of Finance data.
The residential component of the sector,
however, could rebound from the lows of last
year under government plans to accelerate the
development of low-cost housing programmes.
In early February, Randall Mitchell, min-
ister of housing and urban development,
announced that work would begin this year
on 2500 residential units; a project that the
ministry expects will provide opportunities
for local housing contractors, as well as in-
frastructure providers and suppliers.
While the new residential units will help
ease the housing shortfall somewhat, some
estimates put the number of applicants on the
waiting list for affordable housing at 120,000,
leaving a sizeable deficit.
To further narrow this gap, Mitchell also
announced reforms to the state mortgage fi-
nancing scheme, measures that should allow
more citizens to obtain loans for housing and
stimulate growth in the construction sector.
Under the changes, the monthly income
ceiling to qualify for a loan from T&T Mort-
gage Finance at the lowest two per cent rate
has been lifted from $10,000 (US$1,475) to
$14,000 (US$2,066), while the maximum
value of a property for a loan at this rate was
raised from $850,000 (US$126,000) to $1.2m
To obtain financing at the higher five per
cent rate, the income bar has been moved from
$14,001 (US$2066) to $30,000 (US$4430) a
month, with the limit on property value raised
from $1.2 million (US$177,150) to $1.5 million
These changes should give far more people
access to the housing market, and in turn boost
demand for the construction of new units.
Payment flow concern
While the sector will welcome new projects
to the housing development pipeline, some
state agencies might experience strain on ca-
pacity amid extended delays in payments for
completed construction work.
In the fourth quarter of last year, the govern-
ment paid out $530million (US$78.2 million)
to cover some of its outstanding debt to con-
tractors. Despite this outlay, the total remains
at $1.9 billion (US$280.4 miilion), according to
a recent statement from the T&T Contractors'
Association, a body that represents a number
of firms in the building industry.
This may make some constructors wary
about committing to new projects until fur-
ther progress is made in clearing the backlog.
Convoluted bureaucratic procedures that
extend project delivery times are also seen as
an obstacle to sector growth.
In its "Doing Business 2017" report, the
World Bank found it takes 253 working days
to complete the 16 procedures required to build
a standardised warehouse in T&T, ranking it
149th of 190 countries under the "dealing with
construction permits" metric.
By comparison, the average time needed in
the Caribbean and Latin America region was
181.1 days, with the gap between T&T and
high-income OECD countries even wider at
152.1 days. Such a disparity, especially at the
regional level, could put T&T at a disadvan-
tage in the eyes of investors, for whom time is
a critical factor when considering launching
or expanding operations.
In a move to address
this problem, the Min-
istry of Planning and
in mid-February that
it would be moving the
building application pro-
The ministry said that
the digitalisation of the
process would lead to
improvements in effi-
ciency, ease the logistical
burden for applicants and
and customer service
Among the features of
the automated system
will be online registra-
tion and submission of
applications, e-mail noti-
fications, web monitoring
of the progress of appli-
cations and electronic
While the planned re-
forms should help address
a key weakness in T&T's
ment chain, a timeline for
their implementation has
not yet been made clear.
This T&T economic
update was produced by
Oxford Business Group.
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