The Bermuda Housing Corporation's lack of financial management has resulted in the taxpayer picking up “substantial” bills for housing repairs that should have been paid by individual clients - or not paid at all.

Under the Vacant and Derelict property programme, the Corporation, as agent for the property owners, enters into contracts with construction companies to refurbish private properties.

When work is complete on a property, the cost of the refurbishment is then converted into a loan to the owner, and the Corporation then facilitates a mortgage with a financial institution to secure the loan.

Afterwards, the Corporation lets and collects rent for the property on behalf of the owner, and remits the mortgage payments to the lender.

However, Auditor General Larry Dennis said deficiencies in the system have caused problems and, in some cases, have resulted in the corporation incurring “substantial costs”.

He said: “The problem stems from the informal manner in which property owners are notified of the likely costs of refurbishments - costs that they will ultimately assume in the form of a mortgage loan.”

He said sometimes, these costs were communicated to the owner verbally, sometimes in a letter, and sometimes in a lease agreement. Sometimes refurbishment work even began before the owner was notified of the estimated costs.

“When the actual refurbishment costs substantially exceed the originally agreed estimate, property owners are understandably unhappy,” said Mr. Dennis.

“Some property owners were persuaded to assume - in their mortgage loan - those extra costs. Others have refused, and the Housing Corporation has had to write them off.”

In his report that was leaked to The Royal Gazette, Mr. Dennis said in one instance, the property owner was informed that refurbishment would cost $390,000. The eventual cost, however, was more than $750,000.

“The owner refused to assume the additional costs and the corporation - and the taxpayer - therefore will likely have to bear these costs,” reported Mr. Dennis.

“This was not an isolated instance. In seven similar cases, the owners have so far agreed to pay only $145,000 of cost overruns totalling $320,000, and the Corporation may well have to absorb the difference. In my view this illustrates ongoing mismanagement and a disregard for financial consequences.”

The Royal Gazette reported last year two cases where property owners complained that they had not received itemised bills for work carried out by contractors on their homes, as organised by BHC.

Cobb's Hill resident Jennifer Simmons claimed the contractors had botched her renovations and that, as a result, her home was not worth living in.

And another woman, who asked not to be named, said while she was happy with the work carried out on her home, she was never given a detailed account of what had been carried out.

She said: “I have repeatedly asked BHC for an itemised list and I still don't have one. It is always excuses.”

The homeowner said, in the face of allegations of corruption and kickbacks, she was left wondering what she had actually been billed for.

She added: “Did I really pay for two doors, or did I pay for three? How can I know? All I got was a blanket price. I had to pay, I want to know what it was for, exactly.”