It ranges between 6 and 8% of the total price of the property, the amount applied as a bonus, and is equivalent to the ITBIS (Value Added Tax) paid by engineers during construction
SANTO DOMINGO - Low-Cost Housing is a program created by the State to motivate families and individuals to acquire their first home; at the same time, it helps them fill the void of a basic necessity for human existence.
The label "low cost" tends to be misleading, as many believe it refers to housing for the most vulnerable segment of the population, which is a myth. The plan established by Law 189-11 for the Development of the Mortgage Market and Trusts in the Dominican Republic, dated July 22, 2011, is reserved for a portion of the population, despite the benefits it includes.
Alleny Garabito of TimeHoms Real Estate specializes in this area, and she speaks with authority on the matter. Selling a trust property isn't complicated, but it is unique because everyone thinks they can buy a low-cost property, which isn't the case. Currently, to qualify, the buyer must earn between 80,000 and 100,000 pesos.
Through the General Directorate of Internal Taxes, the government set the maximum price for the sale of low-cost housing developed by trusts at RD$3,829,454.43 for this year. However, the rise in construction material costs due to the coronavirus pandemic has led the Senate to approve a resolution raising the price to RD$4.5 million, a figure that has not yet been officially announced but is the one being used by leading developers.
The Trust Law is not exclusive to government housing programs. “What they do need are construction companies with established roots and financial solvency. These are companies that the trustees vet,” explains the experienced agent who currently manages around 15 low-cost projects.
Since the creation of the law, Garabito, with 21 years in the real estate industry, has been involved in low-cost housing projects. In fact, her real estate company ventured into this area in 2013, with one of the first projects built in Villa Mella, although her company offers a diverse range of housing options for different market segments.
The program isn't always appealing to real estate agents because, although extensive, it's complex. It's a long-term business; what you sell now, you might not get paid for for up to a year, depending on the agreement with the builder, the expert says.
The bonus, which ranges from 6% to 8% of the total property price, is equivalent to the ITBIS (Value Added Tax) paid by engineers during construction.
This facility is being massively exploited by Dominicans living abroad. “Because they do the calculations in dollars, they don't see it as so expensive, but here it's a fortune. Many don't qualify when they go to the bank, and the situation is getting worse now with the increase in project costs,” he explains.
The question is how many apartments will be returned in the coming months, from clients pre-qualified by banks based on their income, whose prices have now skyrocketed to as much as a million in many cases.
“All the low-cost properties have gone up. Some started by increasing by 400 and 500 thousand, but I manage one that went from 2.6 to 3.9 million. There is another one where they are changing the listing every day,” states the experienced agent.
He complains about the lack of protection given to brokers by trust companies and builders, despite the role they have played in promoting the trust program. “The trust companies have never gone to promote it and sometimes I feel that they don’t defend us as they should in terms of form; they should give us more support,” he says.
He understands that the Trust Law has revolutionized and changed the real estate market. "It's a legal structure that provides guarantees to everyone involved, both to the one contributing the land and to the final client, who is the buyer.".
And he concludes by pointing out that the plan offers a world of opportunity to people who never thought they would own property, including the 3% exemption from property taxes.
