Mort­gage fi­nanc­ing: Land laws need re­view

Daily Trust - - PROPERTY - By Us­man A. Bello

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.

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