By Jude Njoku

Top estate surveyors and valuers, private property developers and mortgage operators have decried the absence of a virile mortgage finance system which has led to the “cash and carry” syndrome in housing transactions in the country.

They also called on the Federal government to intervene in the secondary mortgage market by harnessing all floating funds and making them available to the market.

The experts who spoke at a one-day workshop on Mortgage Finance and the Nigerian Property Market: Challenges and Opportunities organised by the International Real Estate Federation FIABCI Nigeria, were the President of the Real Estate Developers Association of Nigeria, REDAN. Mr Olabode Afolayan, the Managing Director of Safetrust Savings & Loans Limited, Mr Yinka Adeola and a former Secretary of the Nigerian Institution of Estate Surveyors and Valuers, NIESV, Mr Akin Olawore.

President of FIABCI Nigeria, Chief Kola Akomolede used the event to call for the establishment of a virile mortgage system in the country. He noted that because of the capital intensive nature of building or owning a property, it is not often that one can muster the savings from his legal income to buy or build a house. “In the civilized world, nobody expects you to pay fully at once to buy a house. But here in Nigeria, it is “cash and carry” even for houses built and are being sold by the government.

In other parts of the world, all that is required of you is a proof of employment with steady income and five to 10 percent of the cost of the house and you can secure a mortgage for as long as 30 years repayment and a reasonable interest rate of between four to six percent per annum. But what do we have in Nigeria, an interest rate of about 18 percent and 22 percent where applicable,” he lamented.

Chairman of the occasion, Mr Joe Idudu described mortgage finance as crucial in the delivery of houses. “It is only in Nigeria that you are expected to pay cash and carry a property. Elsewhere, especially in the civilized world, houses are bought through mortgages and the balance is structured in a way that it doesn’t impinge on your income. Here if you are buying a property of N200 million, you will be expected to pay cash,” he lamented.

Idudu who is a past president of both the NIESV and Estate Surveyors and Valuers Registration Board of Nigeria, ESVARBON, stated that the phenomenon of advance rent is not the creation of the estate surveyors but the financiers (banks) who demand repayment of loans in two years at very high interest rates.

According to him, the only way to get out of the problem is to pass it unto the tenant in form of advance payments. “Mortgage finance is the sinequa non to housing delivery. Although land, materials and labour are costly, you can pay for them and solve a lot of the problems that go with housing if you have money,” he said.

REDAN president, Mr Afolayan enumerated a plethora of factors affecting the mortgage industry in the country. According to him, the 100 million Naira capital base for primary mortgage institutions PMIs, and N5 billion for the Federal Mortgage Bank of Nigeria FMBN, are inadequate to do effecting mortgage banking transactions.

The REDAN boss who posited that there are no foreclosures in Nigeria, also faulted the operations of commercial banks who are only interested in giving out hot funds for real estate development. Afolayan also decried the judicial system which favours tenants, noting that this hinders investment in housing production.

The REDAN boss who described the present administration’s policy on social housing as untenable, berated the Federal government for always making bogus claims on its housing targets but failing to realise them.

He however submitted that “the property market/mortgage finance in Nigeria has a lot of prospects considering the population, demand and the economic capacity of the people.  Even though there are challenges, if properly addressed, the sub-sector is capable of stimulating other sectors of the economy and therefore, it could be said to be the future of the Nigerian Economy”.

In his own contribution, Mr Olawore called on the Federal government to intervene in the secondary market funding by harnessing floating funds and making them available to the market. Such floating funds according to Olawore include remittances, unclaimed dividends from quoted companies, the balance in dormant accounts with banks and repatriated proceeds from criminals.

He also called for alternative funding strategies for the lower end of the gap market as as Micro-finance for housing, and Csooperative housing finance.