Affordable housing on the cards for NY

Source : Business Times - 18 Dec 2008

Shaun Donovan, the New York official Barack Obama chose to lead the Department of Housing and Urban Development, has hands-on experience with an issue important to the president-elect: affordable housing.

As commissioner of the city’s Department of Housing Preservation and Development, Mr Donovan, 42, has received widespread acclaim for his leadership of an effort to add 165,000 reasonably priced homes to New York’s ultra-expensive housing stock by 2013.

The US$7.5 billion program has favoured an approach that eschews heavy taxpayer spending on big, bleak, government housing projects.

Instead, the city has favoured using various tools to help finance smaller, mixed-income developments built by private investors or non-profit groups.

Many of those plans have relied on leveraging smaller amounts of public dollars into much bigger investments by others.

‘He has moved our focus beyond the old public sector driven solutions by giving the starring role to the private and non-profit sectors,’ Mayor Michael Bloomberg said on Saturday.

He said that Mr Donovan ‘has shown that we can do more with less - especially in these difficult times’. Andrew Cuomo, New York’s attorney-general, issued a statement saying, ‘Secretary-nominee Donovan has a tremendous record of public service, integrity and strong leadership skills, and is the right choice to advance the Department of Housing and Urban Development under the Obama administration.’

‘I think he’s going to take HUD to another level,’ said Abby Jo Sigal, vice president of the Maryland-based Enterprise Community Partners Inc, an affordable housing group now overseeing US$1 billion in private capital as part of the city’s US$7.5 billion plan.

She suggested that New York’s housing programs could serve as a national model.

A Harvard-educated, native New Yorker with masters degrees in public administration and architecture, Mr Donovan has worked as an architect in New York and in Italy.

He was an assistant secretary for multi-family housing at HUD during the Clinton Administration, and then a visiting scholar at New York University.

Mr Donovan was appointed to head New York City’s Department of Housing Preservation and Development in 2004 after working at Prudential Mortgage Capital Co as managing director of lending and affordable housing investments.

As commissioner, Mr Donovan spearheaded initiatives to tackle the sub-prime and foreclosure crisis. He ran a city home ownership plan that, in contrast with others across the country, kept foreclosures low; of more than 17,000 new or preserved homes under this plan, only five owners have lost their properties to foreclosure.

‘He is smart, practical and knows housing like the back of his hand,’ said Senator Charles Schumer, a member of the Senate Committee on Banking, Housing and Urban Affairs.

Mr Donovan took a leave of absence as housing commissioner to campaign for Mr Obama.

Conrad Egan, president of the nonpartisan National Housing Conference, said Mr Obama’s selection of Donovan signals that he recognizes HUD can play a big role in the economic recovery.

‘It really needs to be a seat at the Cabinet table that is the principal point where housing and community development issues are brought together and resolved successfully,’ Mr Egan said. ‘HUD has been perceived as a second-tier participant in meeting that challenge.’

Beijing to cut taxes, ease home sale rules

Source : Business Times - 18 Dec 2008

The moves aim to contain the decline in the nation’s property market

China yesterday announced fresh measures to support the ailing property market, including cuts in business and transaction taxes for real estate sales and policies to make it easier for developers to obtain credit.

The State Council, or Cabinet, also said that it would shorten to two years from five the lock-up period during which home owners are subject to a business tax if they resell their homes and that the tax would be levied on their capital gains, not the overall value of the sold property.

‘We need to further encourage and support housing purchases, maintaining reasonable expansion in the property sector,’ the State Council said in a statement on the central government’s website.

The move by the Cabinet consolidates a series of steps that Beijing has taken in the past months to prop up the sector, including pledging to build more low-cost housing and an earlier cut in taxes on home purchases that focused on people buying their first home.

Economists said that reviving the property sector is vital to Beijing’s efforts to counter the current downturn, which has worsened in the past month, with factory output falling to the slowest pace on record.

The floor area of residential properties sold in the first 11 months of the year fell 18.8 per cent from a year earlier, while real estate investment growth slowed to 22.7 per cent in January to November, down from 24.6 per cent in the first 10 months.

‘These moves are much more significant than those announced in the past few months, and combined with our expectation of further significant reductions in interest rates by the central bank in the next few months, they are likely to help stabilise the property market,’ said Peng Wensheng with Barclays Capital.

The State Council also said that it will allow people to buy second homes on the same preferential terms normally reserved for those buying their first homes, such as lower downpayment requirements, as long as the floor space per person is lower than the average for the city in which the homeowner is living.

The Cabinet said that it would also scrap the urban property tax levied on foreign firms and individuals, which was levied at a rate of 1.2 per cent a year on the original value of the property.

The State Council encouraged financial firms to provide services and funds to help developers undergo mergers and acquisitions.

It said that it would support developers’ other ‘reasonable’ financing needs, and would increase credit help for construction especially of low-priced and small units, vowing to provide housing for 9.9 million low-income families in the next three years.

The People’s Bank of China said later on its website that developers building low-rent housing could enjoy a 10 per cent discount on lending rates, effective from January.

To achieve the end of creating enough housing for poor families, Beijing will allow some local governments, on a trial basis, to use the housing provident fund to build more modest homes, the State Council said.

It also gave local governments the green light to take more steps to stimulate their own markets.

‘Local governments, while implementing the central government’s policies, need to take further steps in line with their local conditions to promote a healthy development of the property market,’ it said.