Homeownership is thought to be an essential ingredient of living a good life, the “American Dream.” Living in one’s own home is central to the conception of a secure and successful life.
A journal on housing studies conducted in several states in the US stated that for most buyers, homeownership leads to wealth creation as home equity increases, some homeowners may decide that they have the financial resources to secure additional education for themselves or their children.
Here in Guyana, almost every week, articles on house-lot allocations are being published in the local media as the Government aims to meet its target of 50,000 distributed.
Of recent, the Central Housing and Planning Authority (CH&PA) has been handing over keys to new homes under the Inter-American Development Bank (IDB) programme and Government’s hinterland initiative. Under the IDB programme, beneficiaries are required to be landowners and contribute $100,000 towards the construction costs and under the Government’s hinterland initiative, 20 by 25 foot houses, which cost some $3 million each, are being built at no cost to the beneficiaries. Some 400 of these houses will be built in Regions One (Barima-Waini), Seven (Cuyuni-Mazaruni); Eight (Potaro-Siparuni), and Nine (Upper Takutu-Upper Essequibo).
The stories of joy and excitement of owning their own homes, as being told in the local media, by the beneficiaries is heartwarming.
If one can recall, the Opposition scoffed when, during the campaign, the People’s Progressive Party (PPP) declared it would be delivering 50,000 house lots during the next five years were it to get into office. In the Administration’s previous iterations, the housing sector was one of its glowing successes, and it was not coincidental that much of that success occurred under the watch of Irfaan Ali, who was then the Minister of Housing. With him becoming President on August 2, 2020, the promise was almost guaranteed, since he knows exactly what needs to be done.
And now, we can see from the trajectory of house-lot allocations that the goal is well within sight.
This compares with the 7089 lots allocated over the five years the A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition was in office. However, the Government is not stopping at house lots, but has set its sights on their owners becoming homeowners. It has done this by encouraging easier access to loans with lower interest rates, increasing the number of institutions granting mortgages and reducing taxes on construction and building materials.
But the benefits from the Government’s overall facilitation of housing for the entire population go far beyond the tax exemption, etc. One of these is that a mortgage is a form of long-term forced savings. Many persons have great difficulty in saving directly from their pay cheques or wages, which is not just a problem for the individual, but for the nation. Developing countries need savings to make investments, and when individuals take out mortgages, the banks can count on a steady income stream, which can be invested. For the homeowners, rather than paying rent, they accumulate increasing equity in their houses; which, historically, has always tended to go upwards.
Homeownership also has immediate spinoff benefits for the rest of the economy, as owners seek to furnish and constantly upgrade their properties. Businesses that cater to this trade typically employ a large number of unskilled persons as well as give a boost to local manufacturers of furniture and other household goods. The Neighbourhood Democratic Councils (NDCs) can now collect rates and taxes to provide various services to the area.
But just as important are the social benefits that give families a sense of stability and security. The moment someone owns a home, the family acquires pride in homeownership, and typically sees itself as having a stake in the community. This leads to the development of social capital in the form of trust between residents. If countries do not have this kind of social capital, it is almost impossible for them to mobilise their citizens for the sacrifices a sustainable developmental thrust demands.
The success of a developing country depends on the development of a growing middle class. There can be no middle class unless they are facilitated to own their own homes. There is no uncertainty that the benefits of homeownership are indisputable.