Thou­sands of home­own­ers in T&T are fac­ing the prospect of a dis­mal 2024, with a sharp re­duc­tion in their dis­pos­able in­come, as a re­sult of the rein­tro­duc­tion of the tax on prop­er­ty, the pro­posed es­ca­la­tion in the price of elec­tric­i­ty and high­er home in­sur­ance pre­mi­ums.

Tak­en to­geth­er, the in­creased costs will hurt all home­own­ers, but they will be par­tic­u­lar­ly painful to re­tirees and peo­ple on fixed in­comes, such as pub­lic ser­vants and mem­bers of the pro­tec­tive ser­vices.

The con­se­quences of the three added ex­pens­es for home­own­ers are like­ly to be a de­cline in the stan­dard of liv­ing for thou­sands of cit­i­zens, Busi­ness Guardian in­ves­ti­ga­tions have re­vealed.

The knock-on im­pacts of the Prop­er­ty Tax, the high­er elec­tric­i­ty rates and the hike in home in­sur­ance are like­ly to in­clude in­creas­es in rents through­out the coun­try, a soft­en­ing of the re­al es­tate mar­ket, less mon­ey go­ing in­to the stock mar­ket and oth­er as­sets and a re­duc­tion in the pur­chase of goods and ser­vices per­ceived to be non es­sen­tial. That, in turn, could have an im­pact on the en­tire re­tail sec­tor, in­clud­ing gro­ceries, ap­par­el stores and restau­rants.

Last Sat­ur­day, as more and more peo­ple start­ed to get no­tices of val­u­a­tion in the mail, Min­is­ter of Fi­nance, Colm Im­bert, is­sued a news re­lease tak­ing “note of a mis­un­der­stand­ing re­gard­ing the mean­ing and ef­fect of the No­tices of Val­u­a­tion which are be­ing post­ed out to res­i­den­tial prop­er­ty own­ers.”

Im­bert said al­though these no­tices of val­u­a­tion do not re­fer to Prop­er­ty Tax and are not is­sued by the Board of In­land Rev­enue, it is be­ing er­ro­neous­ly pro­mot­ed by mis­chief mak­ers that the an­nu­al rental val­ue is equal to the prop­er­ty tax that own­ers will have to pay.

“For the record, the Prop­er­ty Tax Act makes it clear Prop­er­ty Tax is on­ly three per cent of the an­nu­al rental val­ue for res­i­den­tial prop­er­ties, af­ter first de­duct­ing 10 per cent from the an­nu­al rental val­ue. It is NOT the same amount as the rental val­ue,” ac­cord­ing to the news re­lease from the Min­istry of Fi­nance.

The for­mu­la for the cal­cu­la­tion of the Prop­er­ty Tax is an­nu­al rental val­ue (ARV) x 0.9 x 0.03.

Ac­tu­al ex­pe­ri­ence

A home­own­er in west Trinidad, a re­tired se­nior pub­lic ser­vant who has lived in her house for more than 30 years, showed the Busi­ness Guardian her no­tice of val­u­a­tion, which in­di­cat­ed her an­nu­al rental val­ue is about $150,000. Us­ing the for­mu­la pro­vid­ed by the Min­istry of Fi­nance: $150,000 x 0.90 x 0.03, the home­own­er de­ter­mined that her po­ten­tial an­nu­al prop­er­ty tax li­a­bil­i­ty was $4,050 or $337 a month.

“That $337 a month may not sound like a huge amount to some peo­ple, but it is sig­nif­i­cant to me as I am al­ready liv­ing re­tire­ment cheque to re­tire­ment cheque. The $337 is close to what I spend on phar­ma­ceu­ti­cals each month,” said the home­own­er.

Last month, the Reg­u­lat­ed In­dus­tries Com­mis­sion (RIC) re­leased its fi­nal de­ter­mi­na­tion of the re­quest by the T&T Elec­tric­i­ty Com­mis­sion (T&TEC) to in­crease its elec­tric­i­ty rates.

The RIC rec­om­mend­ed that elec­tric­i­ty rates to res­i­den­tial cus­tomers should in­crease by be­tween 15 and 64 per cent, de­pend­ing on their us­age.

The com­mis­sion al­so rec­om­mend­ed that T&TEC is­sue elec­tric­i­ty bills on a month­ly ba­sis rather than every two months.

The pro­posed rate in­crease is now be­fore Cab­i­net with the Min­is­ter of Pub­lic Util­i­ties, Mar­vin Gon­za­les, sug­gest­ing last week, that the rates are like­ly to be in­creased in 2024.

“As min­is­ter, my re­spon­si­bil­i­ty is to make sure all of the de­tails and all of the in­for­ma­tion that is re­quired by the cab­i­net sub-com­mit­tee is pre­sent­ed to them so that we can make a de­ci­sion as quick­ly as pos­si­ble,” he told a news­pa­per, adding.

“But based on the process, I don’t an­tic­i­pate, as I’ve in­di­cat­ed in a re­cent in­ter­view, that this can hap­pen, mean­ing the im­ple­men­ta­tion of the rate as ap­proved by the RIC, I don’t think that can hap­pen be­fore the end of 2023.”

Ac­tu­al ex­pe­ri­ence

The Busi­ness Guardian reached out to a home­own­er in east Trinidad, who said his last T&TEC bill re­flect­ed two-month con­sump­tion of 3,038 kWh. That re­sult­ed in his last month­ly bill be­ing $1,188.07 for two months or $594.04 a month.

As­sum­ing his month­ly con­sump­tion does not in­crease, this home­own­er would re­ceive a new month­ly bill for $812.72, which is $218.68 more, or an in­crease of 36.81 per cent.

Musa Ibrahim, man­ag­ing di­rec­tor of Tatil, con­firmed that home in­sur­ance pre­mi­ums in T&T have in­creased.

In an in­ter­view with the Busi­ness Guardian last week, Ibrahim said the sig­nif­i­cant changes in cli­mate ac­tiv­i­ty and cat­a­stro­phe loss­es have in­creased world­wide, which has a di­rect knock-on ef­fect on the Caribbean in­clud­ing T&T.

“T&T has been a pre­dom­i­nant­ly low mar­ket be­cause we are not tra­di­tion­al­ly a hur­ri­cane-af­fect­ed coun­try.

“How­ev­er, the same rein­sur­ers that sup­port the Caribbean coun­tries, which are af­fect­ed by hur­ri­canes, sup­port our coun­try. So, they look at it on a port­fo­lio ba­sis and in­crease rates. We have seen dou­ble-dig­it price in­creas­es over the last cou­ple of years.

“I would say in the vicin­i­ty of 10 to 15 per cent on the re­tail mar­ket for com­mer­cial and res­i­den­tial prop­er­ties. It’s not a Tatil or Colfire con­ver­sa­tion, this is an in­dus­try con­ver­sa­tion,” Ibrahim ex­plained.

Putting the 10 to 15 per cent in­crease in con­text, the in­sur­ance ex­ec­u­tive said if one were to look at a house cost­ing $ 1 mil­lion, gen­er­al­ly the pre­mi­um lev­el of $2.50 to $3 per thou­sand of in­sur­able val­ue would amount to be­tween $200 and $300 more per an­num.

Asked in what cir­cum­stances the in­crease would be more, Ibrahim said that de­pends on the type of per­il.

“If you are in a flood zone, there are dif­fer­ent ways of un­der­writ­ing port­fo­lios, there would be op­por­tu­ni­ties for some rein­sur­ers to con­sid­er high­er de­ductibles. But gen­er­al­ly, those flood-prone ar­eas are known, so it may not nec­es­sar­i­ly man­i­fest it­self on­ly in a price in­crease. It could be price in­crease along with de­ductibles, so on­ly in the event of a claim would the in­sured have to pay a high­er de­ductible to trig­ger the pol­i­cy,” he de­tailed.

Last De­cem­ber, the As­so­ci­a­tion of T&T In­sur­ance Com­pa­nies (AT­TIC) said in a news re­lease that its mem­ber in­sur­ance com­pa­nies were brac­ing for a hard­en­ing rein­sur­ance mar­ket.

A spokesper­son for Guardian Gen­er­al In­sur­ance said that on av­er­age, cus­tomers’ pre­mi­ums have in­creased by be­tween 10 and 20 per cent for mo­tor in­sur­ance and be­tween eight and 20 per cent for home in­sur­ance.

On the is­sue of home in­sur­ance, Guardian Gen­er­al added: “We note that some cus­tomers have been un­der-in­sured, i.e. the sum in­sured for the ve­hi­cle or re­place­ment cost of the prop­er­ty is be­low in­sur­able val­ue, and there are those who have tried to cor­rect their sums in­sured, and as such their in­creas­es could be high­er than the av­er­ages above.”

Asked when did cus­tomers start re­ceiv­ing their no­tices for the in­creased home pre­mi­ums, the com­pa­ny, which is part of the Guardian Hold­ings Ltd group, said: “The tim­ing of the cus­tomers re­ceiv­ing no­tices of in­creased pre­mi­ums varies de­pend­ed on the an­niver­sary date of their spe­cif­ic pol­i­cy. How­ev­er the first of our no­tices of in­crease were is­sued in Feb­ru­ary of this year.”

Ac­tu­al ex­pe­ri­ence

A home­own­er in south Trinidad paid $3,792.15 for the 12-month pe­ri­od end­ing in De­cem­ber 2023 for a house val­ued at $1.4 mil­lion.

The re­new­al no­tice for the pe­ri­od De­cem­ber 2023 to De­cem­ber 2024 in­di­cat­ed an an­nu­al pre­mi­um of $4,550.58. That is an in­crease of $758.43 a year, or $63.20 a month, which is an in­crease of 20 per cent.

In­sur­ance pre­mi­ums are cal­cu­lat­ed based on a fixed rate. In 2023, this home­own­er paid $2.50 per thou­sand of the in­sur­able val­ue of his home, where­as in 2024, he will pay $3 per thou­sand, which is al­so an in­crease of $20 per cent.