HDC bond to fund house building

A HOUSING Development Corporation (HDC) bond will be used to fund construction of public housing and as an opportunity for the small investor, said Finance Minister Colm Imbert. He piloted the Government Savings Bonds (Amendment) Bill 2019 yesterday (Friday) in the House of Representatives.

Imbert said the HDC needs $1.8B over the next year to fund its operations. The bonds will be tax-free and there is no limit on the value of a house that the bonds can be used to buy. Imbert listed the amount of government bonds sold in past years under previous investment schemes. “Some people may hold old bonds. We’ll protect them.”

He said the bill raises the ceiling on the total sum of bonds of various types the Government can sell under Government Savings Bonds Act from an existing $2 billion up to $3 billion. Imbert said over the years the HDC has had a big challenge in converting rent-to-own cases into outright house purchases. “The Government’s intention is to create a revenue stream for the HDC.” Imbert also said a person accruing $36,000 in bonds by buying $1,000 worth each month for three years can put the total sum down as a deposit on a housing unit purchase. “We are helping the little person. This measure is designed to encourage people to save. There is no culture of savings in this country.”

Listing the HDC’s revenues and expenditure over recent years, Imbert said the HDC suffers an annual shortfall of $800 million to $900 million.

All this even as MPs constantly hear constituents’ pleas for housing.

He was mulling a 4.5 per cent interest payment on five year bonds, and a bit less on three year bonds, but both at much higher rates available elsewhere to small investors. ‘Bonds will be issued as soon as the bill is passed in the other place (Senate.) We’ll make this as simple as possible.”