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Everson questions BHC’s logic over resale at Loughlands

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Chamber of Commerce director Peter Everson says owners of Loughlands properties effectively live with no housing costs, according to logic put forward by Bermuda Housing Corporation.

Mr Everson added his voice to the debate over a two-bedroom condo on the Paget development now being sold for $570,000 just three years after it was purchased for $450,000.

The Opposition claims the market is open to manipulation by “flipping”, with first-time buyers facing being frozen out as homeowners can quickly resell their units for profits.

BHC argues the homeowners of the property in question had not actually made a profit because of the costs they’d incurred since 2008, including interest on the mortgage repayments and monthly maintenance fees.

But Mr Everson said mortgage repayments and monthly maintenance fees have zero to do with the capital value of a house.

“They represent monthly living expenses of the owner or occupier for services received,” he told

The Royal Gazette.

A Public Works spokesman said of the unit in question on Wednesday: “There are additional costs to the original owner including legal costs, stamp duty, conveyance cost, interest on the mortgage to the bank, monthly maintenance fees as well as other miscellaneous costs.

“The BHC has assessed the unit in question and, when factoring in the additional costs, it has been determined that the unit has not made a profit in the current real estate market.”

However, Mr Everson responded: “The BHC perspective has the owner or occupier adding all of their housing costs for three years onto the original purchase price to determine the sales price.

“In other words, the individual has incurred no housing costs for three years, that is, lived rent-free for three years.

“If the BHC believe their route is appropriate they need to deduct the fair market rent for the unit from the sales price.

“If the FMV rent is, say, $2,500 per month then that would be $30,000 per annum or about $90,000 deduction from the sales price.”

The 96-home Loughlands development was set up to allow young Bermudians to take their first steps on the housing ladder.

But the United Bermuda Party and One Bermuda Alliance fear homeowners at Loughlands and other Government housing developments will take advantage of a lack of safeguards and resell their units for profit.

As Loughlands was being developed, the United Bermuda Party repeatedly urged Government to consider restrictive covenants against flipping to ensure future opportunities for entry-level families.

Harmony Close at Loughlands (Photo by Akil Simmons)
Harmony Close at Loughlands(Photo by Akil Simmons) November 16,2011
Harmony Close at Loughlands(Photo by Akil Simmons) November 16,2011

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Published November 21, 2011 at 8:50 am (Updated November 21, 2011 at 8:49 am)

Everson questions BHC’s logic over resale at Loughlands

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