Tripoli, 3 July:
By Husni Bey
Dear Editor,
With reference to your article entitled ‘900,000 housing units urgently needed: Housing Committee chairman’ dated 1 . . .[restrict]July, I wish to ask if the chairman of the Housing Committee realizes the following:
That we only have a total of 1.2 million dwellings/houses/flats in Libya today? Does he realize that an extra 900,000 units would amount to an 80 percent increase?
Does he realize that to have an extra 900,000 including their basic infrastructure of roads, electricity, water etc will cost about US$ 180 billion (at about US$ 200,000 / unit)?
Where are we going to get this money from? We are already running an LD 10-15 billion budget deficit in 2012.
I therefore wish to put forward my vision for ‘Kick Starting the Libyan Economy using The Real Estate Catalyst’:
The Pledge
- The National Transitional Council, Temporary Government and related ministries pledged to engage with the private sector and support it to become the major driving force in the economic and financial growth of the country.
- The current challenges being faced by the nation, particularly in the development of housing, utilities and infrastructure sectors can be turned into opportunities for the Libyan private sector to stimulate growth and make progress.
- Potentially, actively involving the private sector in the housing, utilities and infrastructure sectors will increase the private sector contribution to the Libyan Gross Domestic Product by at least 75%.
- Regrettably at this time, neither the Temporary Government nor the competent ministries have fulfilled this pledge. The prevailing sentiment is that the private sector remains incapable of performing.
Vision: ‘private Real Estate development’
The Government is to:
- Concentrate on its primary role – which is to govern.
- Stop switching and mixing roles, at times acting as the owner, at other times acting as the contractor, or both.
- Focus on the provision of essential infrastructure needs of the nation. These include the provision of water, sewage services, roads, education, health, security, defense and border protection.
- Become the guarantor for housing mortgages and loans to be available and granted to all eligible citizens.
- Issue laws that govern the dispensation of loans and mortgage guarantees. This must include the requirements for repayment either in full or in part, so as to encourage the localization of the economy, and stimulate the migration out of congested cities.
Encourage growth of local economies
The Government is to:
- Provide the loan or mortgage facility to eligible citizens willing to buy only from authorized developers within zoned and planned areas. Set a national strategy and road map to finance, guarantee and recover loans and mortgages to be available to all eligible citizens.
- Allow all eligible citizens the freedom of choice. Citizens should be able to chose between potential alternative urban, suburban and rural options.
- The percentage of loans and mortgages to be repaid, and the terms of repayment, are to be determined in accordance with demand and the need for the localization of the economy and density in population. This is to undertaken in co-ordination and consultation with all Non Governmental Organizations.
- Develop flexibility and options for eligible citizens. For example, repayment terms can be provided over periods ranging from 60 to 240 months. Alternatively, repayment amounts can be discounted depending on location (urban/suburban/rural).
Potential Benefits
- Developers, banks and land owners will get involved in, and stimulate the real estate investment market. The financing being guaranteed by the government loan guarantee scheme.
- Competition will create higher quality performance, finish and standards through developers competing for business.
- The Government can issue loan guarantees for 200,000 housing units in the first year. Thereafter, a further 100,000 housing per year.
- Purchase prices can be extended in time as the developers raise financing from local Libyan Banks. The Government need not pay upfront to any contractor.
- The annual housing guarantee budget allocations will not exceed LYD 7 billion per year. This scheme, within 10 years, can encompass the creation of one million new housing units.
- The buyer will monitor and control the contractor’s performance, the quality of materials, work progress and efficiency .
The government will retain the right to monitor compliance, observe quality and develop the standards of the materials and construction
Strategies for planned outcomes
- The loan and mortgage guarantee value can be set at a maximum of say LYD 150,000 for each eligible citizen.
- A simple database will register eligible citizen borrowers to prevent abuse and fraud.
- The installment payments to the developers can be provided over a period of 60 to 120 months, with local banks willing to provide finance on the back of the Government guarantee.
- Repayment discounted loans can be extended for up to 75% of the loan for rural areas, 50% for suburban and 25% for urban development areas (e.g. for centers with more than 500,000 inhabitants)
- Citizens with their own independent resources can enjoy and abundance of better quality, higher standard properties.
Husni Bey,
Tripoli, Libya [/restrict]
