“We’re not there yet in terms of putting restrictions in place because it should be one’s personal choice. But if you ask me my opinion, I would prefer a Bermudian family residing in a property rather than a tourist staying there on a temporary basis.”

— Jason Hayward (Minister of Economy and Labour)

On April 24, The Royal Gazette ran a story about the Government’s plans to “shake up” tenancy laws to encourage landlords to rent their properties to Bermudians rather than tourists. Mr Hayward was speaking at a Progressive Labour Party town hall event and he made several comments that I found somewhat offensive. I felt as if he was insinuating that Bermuda’s affordable housing crisis was the fault of Bermudian landlords who don’t care about Bermudian families. This notion needs to be challenged, especially when you consider the Government’s housing actions both before and after the pandemic.

To put things into perspective, before the 2008 credit crisis, Bermuda had 40,000 total filled jobs. By 2018, ten years later, filled jobs had fallen to 33,810. That’s a reduction of more than 6,000 filled jobs.

It should come as no surprise that unemployment rates were similarly dismal. By 2012, four years after the credit crisis, unemployment was 8 per cent. Although it dropped to 6 per cent in 2013, it rose again to 9 per cent in 2014. By 2018, two years before the pandemic, the unemployment rate had dropped back to 4.5 per cent.

When you consider the fall in the number of filled jobs, the rollercoaster ride in unemployment, and the obvious emigration movement, I would say that Mr Hayward’s comments were significantly divorced from Bermuda’s socioeconomic reality. The farther our economy falls, the harder it is going to be for tenants to pay rent. By extension, it is logical to expect that some landlords would have been experiencing a decrease in demand and others would have been experiencing an increase in rental delinquencies.

Mr Hayward gave the easy answer that allows the Government to avoid taking responsibility for its own actions. His comment didn’t consider the landlords who can’t meet their mortgage payment without the income of an apartment. His comment didn’t consider the landlords who were made redundant and who are trying to save for their child’s education. His comment didn’t consider the senior who relies on rental income to cover monthly medical insurance. His comment also didn’t consider the landlords who have had to deal with antisocial and criminal behaviour.

Some additional perspective is useful here. Bermuda’s tourism industry has been in decline for decades, and by 2010 multiple hotels had either folded or become dormant. Given the absence of hotel options, and Bermuda’s declining population since 2008, it is no surprise that some landlords rose to fill the industry gap. I would imagine that those with large mortgages would have been very enthusiastic to jump into the holiday property market.

By 2014, it was reported that Bermuda landlords were listing properties on Airbnb. The world had embraced this travel alternative, so why not Bermuda, especially given the state of our economy? Consequently, in 2015 the Bermuda Tourism Authority held a tourism summit that fully embraced Vacation Rental Properties. Holiday properties had to be registered annually, they would be advertised on the BTA website, and complaints would be dealt with by the BTA. The BTA summit presentation also contained the following critical stipulation:

“Residential homeowners, who are not governed by rent control and who meet the VRP Criteria, can officially become part of Bermuda’s visitor accommodation product.”

I assume that the reason for excluding rent control properties was to ensure that the supply of Bermuda’s most affordable rental property segment is not reduced. This is Economics 101 — if you reduce the supply of rent control units, you drive up the price of rent-controlled units.

Even though rent-controlled units were excluded from the holiday property market, I strongly believe that the One Bermuda Alliance should have monitored the impact of holiday homes on the broader housing market. After all, reducing the supply of properties above the rent control line could easily increase the demand for properties above and below that line. Without question, Bermuda was in desperate need of foreign capital, but it was also critically important that we avoid driving up the cost of living, especially for those who could least afford a rise in housing costs.

The PLP returned to power in 2017, and by 2018 Airbnb had become the platform of choice for renting residential properties. In July, the Government enacted the Vacation Rental Act. Not only did this Act introduce taxation of holiday rental units, but it also made it possible for units under rent control to be rented as holiday units.

I can easily sympathise with landlords, especially mortgagees, during a protracted recession. Indeed, I can easily make an argument for why owners of rent-controlled properties should also be able to take advantage of opportunities in the holiday rental market. But we must not forget that Bermuda’s need to research, measure and monitor housing was identified by the PLP almost 20 years ago.

Our small size and high cost of living have always required proper, ongoing analysis. One would think, hope even, that if the PLP government was going to add rent-controlled units to the holiday rental property market, it would do so only after researching it and implementing measures to monitor the impact. It might have even made sense to gradually introduce rent-controlled units to the holiday rental market. As far as I can tell, neither controls nor monitoring were put in place.

Short-sighted housing policies, even those with the best of intentions, can create self-inflicted wounds.

Additional short-sighted housing policies, especially those enacted during a pandemic, had the potential to elevate Bermuda’s housing challenges to a full-on housing crisis.

• Bryant Trew can be contacted via e-mail at bryanttrew@mac.com