The Premier and Minister of Finance, the Hon. David Burt, JP, MP, announced the signing of the “Approved Residential Scheme Kickstart Programme” Memorandum Of Understanding between the Government of Bermuda and Bermuda’s participating banks. Please see attached the remarks and photos from today’s occasion.
Present at today’s media briefing were:
- The Hon. Jason Hayward - Minister of Economy and Labour
- Geoff Scott – CEO of Bermuda Bankers Association
- Steve Banner – CEO of HSBC Bermuda
- Simon Van de Weg – Chief Banking Officer of Clarien
- Neville Grant – CEO of Bermuda Commercial Bank
Remarks:
Premier the Hon. David Burt, JP, MP
Good Afternoon to the Minister of Economy & Labour, Representatives of the Bermuda Banker’s Association, members of the media and the people of Bermuda.
In a concerted effort to address the acute housing shortage in Bermuda and further stimulate economic growth within our Economic Empowerment Zones, I am pleased to announce today the signing of a
Memorandum Of Understanding on behalf of the Government of Bermuda as part of what we refer to as the “Approved Residential Scheme Kickstart Programme”.
In June of 2022, the Approved Residential Scheme was established to increase the stock of available housing units, stimulate growth within the Island’s three Economic Empowerment Zones, address economic inequality, and empower entrepreneurs.
Features of the Approved Residential Scheme widen the scope of potential investment by removing certain ownership restrictions as well as providing Customs Duty and tax incentives.
However, despite the hard work and continued progress being made by the Bermuda Economic Development Corporation and other stakeholder groups, the cost of borrowing was identified as a barrier to prospective investors and developers which consequently impacted the takeup for this programme.
The Ministry of Finance, when faced with problems, looks to solve them and find ways to address this issue and provide an environment that encourages investment and development that will create more housing units in Bermuda - which will alleviate housing pressures.
This Government recognises the challenges posed by the shortage of affordable housing, which impacts families and young Bermudians and can impact our economic growth. Therefore, it remains committed to working with stakeholders to help mitigate these challenges through this collaborative initiative.
We are pleased to announce the launch of the Approved Residential Scheme 'Kickstart' programme, which will offer investors and developers a reduction in local borrowing rates for large-scale residential and mixed-use properties that meet the appropriate guidelines.
Under this initiative, the Government will provide an aggregate $50 million government guarantee to support Approved Residential Scheme opportunities within the Economic Empowerment Zones. In return for the reduced risk, participating banks, which include HSBC Bermuda, Clarien Bank, and Bermuda Commercial Bank, have committed to offer a preferred interest rate to eligible applicants.
The agreed terms within this MOU represent a collaborative effort between the Government and the participating banks to achieve our overall objective of increasing affordable housing, further spurring construction activity, which will provide more jobs and build on our Economic Development Strategy.
Key terms of this MOU include
- Total aggregate limit is not to exceed $50 million
- Any additional exposure would be subject to the agreement of the Government
- The Government Guarantee shall remain in place until the expiry of 6 years following completion of the construction period
- As with the Mortgage Guarantee Programme, the Government will not have any involvement and/or influence on the Banks’ credit underwriting or enforcement decisions
Participating banks will determine the discounted interest rates. As the size and scope of the potential development projects can vary, there is no agreed set interest rate; however, each bank has agreed to offer a discounted rate, which will help to materially reduce the cost of development.
Finally, I would like to take this opportunity to thank the participating banks, HSBC, Clarien, and BCB, for their efforts in working with the Government with this programme, which we believe will support our economic growth as the Government remains committed to executing our Economic Development Strategy.
I would also like to thank the teams within the Ministry of Finance and Bermuda Economic Development Corporation for working with the Government on this initiative.
Thank you.