GOVERNMENT should explain how it calculated the sale price for new "affordable" condos being built on the site of the former Loughlands hotel, says Shadow Housing Minister Kim Swan.

And Sen. Swan has called for clear conditions to be attached to the sale of the 96 units, to ensure they remain in the affordable housing sector if they are resold in future.

Sen. Swan said the Opposition United Bermuda Party (UBP) supported the scheme, which is the result of collaboration between developer Gilbert Lopes and the Ministry of Housing.

But he fears the scheme has not been fully thought through and said Housing Minister David Burch should learn from the collapse of another affordable housing scheme, Bermuda Homes for People (BHP).

The $80-million former BHP scheme to build low-cost homes at Harbourside Village, St. David's, has been taken over by the Bermuda Land Development Company.

Mr. Lopes will start work on the Loughlands scheme next month. The former hotel, a grade three listed building, will be converted into a day care centre. It will be ringed by 28 three-bedroom homes and 68 two-bedroom homes available at $450,000 to $500,000 each ? much lower than the average Bermuda condo which now fetches more than $800,000.

Sen. Swan gave his backing to the project and said he wanted to offer constructive comment.

"The Government has announced the price of the new condos without telling the public how it arrived at that price," Sen. Swan said. "There are many questions that need to be answered."

He suggested that a formula needed to be drawn up that would protect the condos' status as affordable housing while allowing owners to have some benefit from rising property values, if they were to move.

"I would suggest an Adjusted Loughlands Value formula," Sen. Swan said. "If the market value of one of the condos is $750,000 and the sale price is $450,000, then the adjusted sale price is 60 per cent of market value.

"So if the owner gets a better job or wants to move to a different home for whatever reason, if he sells the unit, he should get 60 per cent of value.

"That way, if the housing market has gone up by 20 or 30 per cent, the owner can still benefit when selling it. But the formula will protect the spirit of the project."

Clear guidelines also needed to be drawn up to ensure that those offered the housing could afford the cost of the mortgage, he added, with consideration allowed for fluctuations in the interest rate.

For example, a qualifying buyer who put down a $50,000 down-payment on a $500,000 condo would have to service a $3,300 per month mortgage over 30 years, if the interest rate was eight per cent, Sen. Swan said.

"Hence, modern lending practices would dictate that a household income in excess of $72,000 per annum would be required to qualify, unless the applicant had a greater down payment," he added.

Other covenants that new owners should have to sign up to include owner occupancy ? no renting out ? and a minimum ownership period. Sen. Swan suggested working families should be preferred over qualifying single people to make best use of the number of bedrooms.

"With these recommended covenants, we feel the long-term objective will continue to preserve the 96 units as an opportunity for first-time home ownership," Sen. Swan said.

"We have been given a sale price, but what if the housing market goes up or down before the condos are sold? Will that make a difference? Can people pre-buy or do they have to wait for the units to be completed?"

"We can appreciate that the plan is not quite ready for public consumption, as the final details are being worked out to secure the necessary approvals and meet the required standards.

"However, we believe the Progressive Labour Party (PLP) Government must identify the qualifications that Bermudians will be required to meet to become an owner."

Minister Burch unveiled the project last week. Mr. Lopes will develop the seven-acre site and then Government will buy the condos from him.

Mr. Lopes has described it as a low-profit venture for him and the Government says it will make no profit.

Minister Burch said last week: "More than housing, this project represents genuine economic empowerment.

"Those young professionals who struggle to understand how their collective household income of $150,000 still cannot afford them a home need look no further.

"Making homes available to first time homeowners at prices that are simply unavailable in the ordinary market place represents the 'hand-up' that honest, hardworking young Bermudians so desperately need."