The deal that gets affordable homes built

Kingston, Jamaica, 16 August 2023

The National Housing Trust has leaned increasingly on a model that lets private developers build while the Trust commits in advance to buying some or all of the homes, a mechanism designed to get more affordable housing built faster. Under the Guaranteed Purchase Programme, the Trust guarantees the purchase of units, reducing the market risk that often deters developers from affordable projects. The approach has become central to the Trust’s drive toward tens of thousands of housing solutions.

How the programme works

Developers submit proposals to the Trust, which evaluates them on marketability to contributors, taking into account location, proposed selling price and design, including lot and unit sizes. Proposals are measured against established price points for studios, one-bedroom and two-bedroom units, and developers are assessed for compliance with professional standards and tax obligations. Where a project is approved, the Trust’s commitment to buy gives the developer the confidence to proceed.

The logic is to harness private capital and construction capacity that the Trust could not match on its own, while steering it toward the affordable end of the market through price-point requirements. By absorbing the demand risk, the Trust makes affordable projects bankable that might otherwise never leave the drawing board.

The promise and the caveats

The model has clear strengths. It expands supply without the Trust having to build everything itself, it draws private expertise into affordable housing, and it shortens the path from proposal to construction. By 2025 the framework had delivered thousands of housing starts and a growing number of completions, with several large projects in the pipeline representing thousands more proposed solutions.

But guarantees carry obligations and risks. The Trust must monitor projects to ensure they comply with approved plans and standards, and it has signalled a firm posture, stating that it will pursue non-performing contractors through the courts to protect contributors’ interests. The quality of delivery, the discipline of oversight, and the accuracy of price-point targeting all determine whether the programme serves buyers well or simply transfers risk onto the public purse.

Why the model matters

Public-private partnership of this kind is one of the more promising tools available to a supply-constrained market. It aligns the incentives of private builders with a public goal, affordable homes, by removing the uncertainty that usually makes such projects unattractive. If executed well, it can accelerate delivery in a way neither the public nor the private sector could achieve alone.

Dean Jones, founder of Jamaica Homes, said the guaranteed-purchase approach is a sensible answer to a real problem, that affordable housing is often too risky for developers to build unaided. Its success, he noted, rests on rigorous oversight and on holding partners to the standards the programme promises.

As the Trust pursues ambitious housing targets, this model is likely to carry more and more of the load. Whether it delivers affordable, durable homes at scale, rather than merely shifting risk, will be one of the clearest tests of Jamaica’s housing strategy in the years ahead.

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