Mortgage financing: Land laws need review
Dr Victor C. Onukwugha is the Executive Chairman Bauhaus International limited, a real estate developer in Nigeria based in Abuja. He has built several estates all over the country. In this interview with Daily Trust, he spoke on issues hindering the provision of affordable housing in Nigeria, how it can be addressed and other sundry issues. Excerpts:
Now we have a new government in place, how do you think government can chart a new way forward for the housing industry?
Housing has remained a very big problem that challenges every government all over the world and Nigeria should not be an exception. We have a perennial shortage of housing in Nigeria, the housing shortages has to be addressed by this government. The last government tried to grapple with the problem by setting up mortgage refinancing institutions that are supposed to drive mortgages. The problem we have with housing in the country is financing and if government can make mortgage available and provide an enabling environment, it would be wonderful. We need to revisit laws that hindered the provision of housing in the country. For instance, the Land Use Act has to be revisited, also foreclosure laws and all other laws that has to do with land title has to be revisited. Once that is done and create good funding for construction loan and mortgage loan that would drive the construction of housing, it would be good. This has to be addressed through real estate and private developers partnering with the government on the provision of affordable housing.
How can affordable housing can be achieved in Nigeria?
Affordable housing is just mere semantic, it is supposed to be a government programme, the cost is the same whether you are building for the rich or the poor but governments all over the world when they want to construct affordable housing would have to define the social strata they want to provide for, either subsidize the purchase of those housing by funding real estate developers to provide houses which they are going to sell to the social strata at subsidize prices. So affordability does not means substandard housing, it means a government programme and it is possible to have affordable renterhousing and affordable- for- saleshousing. Most time when we talk about affordability people always think of how do we construct housing at a very low costs, but the cost of cement has remain constant whether it is being purchase by a multi billionaire or by a poor person. So when you aggregate the cost of building even a hut can never be affordable. For example, if you build a one-bedroom or two-bedroom hurt for N100,000, I can tell you that those that would want to live in that place cannot afford it at N100, 000. So what government should do it to create a programme where it has social housing which would be affordable. Social housing is a programme where government concentrate on providing social housing through affordable social programmes that would be enacted by the government and making them available to the low income strata while the real estate developers would concentrate on providing affordable housing for the medium and upper income strata.
How does the Land Use Act hinder mortgage financing in the provision of housing?
Land Use Act warehouses all the land in the country with the government whether at the federal or state level but especially at the state level, so it is not easy for a developer to acquire land without passing through the bureaucracy that is involved with the government. The second is the even when land is made available for private developers at reasonable cost you find out that cost of development is high and therefore the only way a developer can develop is by going to commercial banks or mortgage banks to get construction loan which should not be less than between five and ten years period.