The Chamber of Construction Companies in Nicaragua has requested an adjustment to the maximum setting to qualify for benefits for social housing, in relation to the current costs of construction.
Laprensa.com.ni reports that "Law 677, or the Special Law for the Promotion of Construction of Access Housing or Affordable Housing, is almost obsolete. In practice the rationale for such legislation, passed in 2009, no longer has a strong impact on the mortgage market in Nicaragua because its content is not adjusted to the reality of this sector. "
Over the next three years, the Government plans to build 4,000 new social housing units.
Additionally, the program aims to renovate 4,250 housing units, deliver 5,000 titles and improve basic services for 4,000 families.
"The Housing and Integral Habitat Enhancement Program (Prohabitat) provide direct subsidies to families with monthly incomes of up to $370 (8,700 cordobas) and is executed by the Nicaraguan Institute for Urban and Rural Housing (INVUR)", reported La Prensa.com.ni.
In the first three months of this year 2012, private construction reached an annual average growth of 46.8%.
According to the Central Bank of Nicaragua, the sectors that contributed the most to this growth was the construction of residential housing with an increase of 59%, construction services (hotels, warehouses, hospitals, etc.), with an increase of 9.1% followed by industry with 6.2%, and commerce with 4.9%
The National Housing Plan is paying off, and the Chamber of Developers and the government is working to make banks more flexible with credit for urban social interest projects.
Employers and the government are moving towards common positions regarding measures that could ease mortgage lending for low-income families (less than $521 per month) and the construction of affordable housing.
The idea is to build houses worth less than $20,000 in order to facilitate the purchase of decent houses by low income families.
This solution is currently being discussed by representatives of private companies, banks and the Nicaraguan government and an agreement could be reached within weeks, reports Laprensa.com.ni.
An idea which has consensus is to promote housing projects of social interest which are valued at less than $20,000, in order to help families with very low average monthly incomes. Another idea is that banks accept long-term finance from households earning from $301 per month. And while private builders are asking to limit the value of a social housing unit to $26,500 at most, the government has agreed only for the Nicaraguan Institute for Urban and Rural Housing (INVUR), to check on a "case by case" basis.
Construction industry representatives have asked the government to raise the ceiling applied to subsidies for the purchase of social housing.
The government maintains the position of not raising the price ceiling of $20,000, saying that it would not benefit low income families.
"The Special Law for the Promotion of Construction, Housing and Access to Affordable Housing defines as such those ranging in size from 36 to 60 square meters, but now the 60 square meters homes, because of rising costs of construction materials, are being sold between $22,000 and $27,000, falling outside the remit of the subsidy", reported Laprensa.com.ni.
They were built to be sold using government subsidies, but an increase in the cost of building materials has pushed their real price above the limit established by the law.
The Government is maintaining its position of not raising the price ceiling of $20 000, stating that this would not benefit poor families, but recognizes that it must find a solution to the problem.
The rising costs of materials and the government's refusal to raise the ceiling price on affordable housing could derail the National Housing Plan.
The Government is maintaining its position of not raising the ceiling price of $20 000 to $26,500, saying that would not benefit low income families.
The Speaker of the Chamber of Developers (Cadur), Alberto Atha, argues that it is impossible to construct houses on a mass scale that cost between $10,000 and $15,000, considering the increase in construction costs. Atha says another problem is the lack of financing for this segment in the financial system.
An IDB loan will support a program of housing and neighborhood improvement, focusing on low-income families.
A press release from Inter-American Development Bank (IDB) reads:
the Initiative will focus on low-income families and progressive construction
The Inter-American Development Bank (IDB) announced the approval of U.S.$20 million in funding for Nicaragua to support a program of housing and neighborhood improvement focusing on low-income families.
The Government will raise the ceiling of the subsidy value to include homes whose value is less than $30 thousand.
Currently the subsidy is granted for home purchases of less than 60 square meters and that are priced at less than $20 thousand.
Lucia Navas writes in his article for Laprensa.com.ni, "The business chambers argue that the value of building houses in the country has increased in general as a result of the price of construction materials reporting strong increases, therefore houses worth less than $20 000 no longer exist. "
The changes in criteria as to what is consider social housing has contributed to the development of the sector.
The state subsidy, the increase in the ceiling of $ 10 thousand to $ 20 thousand for housing to be considered of social interest and the fact the Nicaraguan Institute of Social Security (INSS) made funds available for banks were factors which led to a recovery in the industry," said Alfonso Silva, vice president of the Nicaragua House Builders (Cadur).
Development companies expect the Government to allocate $ 40 million for the construction of social housing by mid-year.
The Builders Chamber of Nicaragua (Cadur) said the funds will achieve the goal set by the Nicaraguan Social Security Institute, INSS, of 4.000 homes for 2011.
El Nuevo Diario writes, "...the chamber is asking for longer housing loan periods, or lower interest rates, so Nicaraguan families have more options to buy a home, announced the president of Cadur, Alberto Atha."
The resources of the Inter-American Development Bank will go towards the construction of social housing.
The announcement was made by representative of the IDB in Nicaragua, Mirna Liévano, with the Ambassador of Spain Antonio Pérez-Hernández Torra, a country which provided the resources to conduct the study of the housing project to be implemented this year.
The housing deficit is on the rise and the country currently needs to build 500,000 new homes.
During the third National Housing Forum held in Managua, both the government and the private sector agreed that what is needed is more social housing projects.
The president of Nicaragua's Chamber of Developers (Cadur), Ingrid Herrera, insisted on the need to reduce bureaucracy: "we need institutions to adapt to the "Housing Law" and to enable permits to be obtained within 90 days, as established in the law," reports Elnuevodiario.com.ni.
In the next couple of days a new tender process will begin for the construction of 258 social interest dwellings.
The $39 million integrated development project is funded by the Spanish agency for International Cooperation in Development (AECID) and includes parking facilities, a school and a health clinic, as well as the housing.
"In parallel to the housing project, both organic and inorganic waste processing plants able to cope with 1,300 tons of the Nicaraguan capital's daily trash are to be built, providing jobs for the residents of the new neighborhood, Acahualinca," reports Diariocolatino.com.