Breaking the housing chains

With the acute shortage of housing in the country, it would take more than mere promises by politicians to help revive the nation’s mortgage industry and effectively cater for housing needs of citizens.

According to industry experts, to deliver adequate housing, effective structural layout would have to be created for the industry in line with adjusted economic variables, if the industry is to perform its primary duty of addressing the nation’s housing challenges.

Bismarck Rewane, managing director, Financial Derivatives Company, a finance firm, said unless some structural challenges are addressed, the mortgage industry may remain ineffective.

“There are structural challenges that cannot permit the industry to progress now. An effective structure for the mortgage industry has not been laid out yet,” Mr. Rewane said.

Breaking the mortgage jinx

According to him, some economic parameters such as interest rates would have to be addressed before any advancement can be achieved, as the industry may not survive under this present structure.

“The availability of credit will boost real estate growth. The kick off of the Asset Management Company will be a driver. The industry’s challenges remain regulatory, financial, and operational,” Mr. Rewane further said.

The Federal Mortgage Bank is presently not meeting the yearnings of low and middle income earners, neither has the government rated it a priority. Many buildings in slums are not checked by the urban and regional planners and many are erected without approvals, due to the pressure of people seeking for a place to lay their heads. This is not helped by corruption, which has pervaded the planning system.

On the back of a hopeless housing situation, real estate experts have called on the Federal Government to review the act setting up the Federal Mortgage Bank of Nigeria such that it would enable the masses to benefit from its services.

Just last week, while campaigning, the Lagos State governor, Babatunde Fashola, said housing would be set as a top priority in his agenda if voted in for a second term. “I am determined to break this mortgage jinx,” he said.

According to him, “To own any of these houses (2000 low cost houses located across the state), you will only pay thirty per cent of the one you like and complete the payment over 10 to 15 years. And as the mortgage business expands, the number of years will be extended to 25 years. But the house becomes yours the very day you pay the 30 per cent deposit.”

Mr. Fashola said the promise is no longer a dream, as 2000 low cost houses, out of which about 200 are sited in Ibeju Lekki, have been built across the state as a pilot test of the planned housing mortgage.

He explained that the state government has already secured the needed land for the housing scheme in twelve locations across the state. He added that the least of the lands is 30 hectares while the biggest is about 400 hectares.

Being the former capital city of Nigeria, it is agreed that Lagos houses a vast majority of the productive capacity of the country. As is with most urban centres across the world, demographics of Lagos are such that a large percentage of the people that live there are those that are expected to drive the nation’s economic growth.

The Lagos State government has on several occasions stated that it is doing everything to address the state’s housing problems. However, many wonder if Mr. Fashola was not only engaging in rhetoric, as many governments, both at states and federal levels, have made such promises in the past without fulfilling them.

Ben Akabueze, the commissioner, ministry of economic planning and budget, Lagos State, said earlier in the month that the biggest challenge to affordability of housing is the cash and carry acquisition system.

“The government is finalising a mortgage scheme partnership with some financial institutions to enable gainfully employed residents pay for their homes over 15 years or longer at reasonable interest rates.”

According to him, the Lagos State government is currently developing stocks of houses to be put on market to launch the mortgage scheme and is also establishing a housing disputes arbitration system to take such matters out of regular courts.

“The expectation is for the private sector to step up and embark on wholesale housing development,” as there is a need of an estimated one million housing units.

The success of the mortgage plan would, however, depend on the proper structuring of interest rates and other economic variables.

Arbitrary prices

Tunde Leye, an upcoming musician, says the issue of the appropriateness of the pricing of the houses is not as amazing, as the issue with the myopic attitude of agents, landlords, and caretakers that demand an advance payment of two or more years from house seekers.

“I have an even greater issue with the blind eye that the government turns to these issues, while making a show of driving business and economic growth. Government has no business creating actual jobs. That model has been proven as unsustainable over and over again worldwide.

“What has been shown to work is a government creating an environment where the capital in the people’s savings can be freed up from surviving and meeting the basic necessities to more creative and entrepreneurial activities,” Mr. Leye said.

“I just got an apartment which I had to pay a rent of two years in advance. If I didn’t have to pay that much advance, I would have shot a music video now. Think about the value chain that would create. The video director would get paid. Those that would supply the costumes would get business. The equipment people would get business,” he said.

According to him, those models that depend on such income to fund their education would get some.

“And at the end of it, I would have had a product to sell, creating value. Now that all my capital is tied up in rent, I cannot do that, at least not in the immediate. The government loses. The landlord loses. The agent loses. The house seeker loses. The graduates lose. The nation loses,” he said, lamenting.

However, Demola Ajayi, an estate agent, said though the cost of raw materials are generally expensive, the people who built some of the houses are not helping matters.

“Some of the people who built these houses are senators, ministers, and top executives in the public and private sector. They build and want to rent out to public whom they know would be low or income earners and they still make the prices high. I don’t know what they have in their minds when they do this.

“These are the people that should actually work on how housing would be affordable. As agents, there is nothing we can do. They can say a one bedroom self apartment should go out for N150, 000 and the interested person must pay for three years. It is a case of those who are rich getting richer and the poor getting poorer,” he said.

He said the high cost of rentage is not the fault of agents, but the owners, and the high cost of building materials.

The recent and ongoing revolutions in some countries in the Middle East and Africa, if anything to go by, brings to the fore the grave consequences awaiting any government that attempts to empower its people educationally but totally ignores housing, employment, and creating the environment for people to utilise their acquired knowledge to make decent and appropriate livelihood.

Source : 234next