By Ephraim Oseji
Managing Director of Chateau Royal Real Estate Limited, Scott Harris Realtor, Shortlet-Lagos, Lagos Realtors Hub, Oluwatobi Osonuga, in this interview with Ephraim Oseji, speaks on how Chateau Real Estate Limited was incorporated out of the need to provide affordable luxury property to Nigerians.
A major area of concern has been housing financing, which has often been fingered as one of the most formidable constraints in the housing sector. What are the issues and solutions?
Finance for housing development has become a perennial problem for certain categories of individuals in Nigeria. Some of the challenges of housing finance are the cost of development, high cost of land, and high-interest rates. To solve some of these underlying issues, the authorities can formulate policies that will bring about flexible requirements for obtaining housing loans through the Primary Mortgage Institutions and other financial institutions. The budgetary allocation for housing should be reviewed so that more funds can be allocated to boost the National Housing Fund (NHF).
What about the high cost of financing in the building sector?
Working and leading a real estate firm, I get to meet several people across different income streams daily all with the same goal—property ownership. However, only a few can afford an outright payment not to talk about the partial payment. The issue of financing is one that is begging to be solved.
Although the government has put several plans and policies in place to rectify these issues, there seems to be no silver lining. As the housing deficit continues to upsurge, there is a need to satisfy the growing population in the state. Hence, the need for the government to take stringent actions to solve the issue.
What is the level of government involvement in housing finance?
In Nigeria, housing is typically financed through several institutional sources such as budgetary appropriations, commercial banks, National Housing Fund, state housing corporations and the Federal Mortgage Bank of Nigeria (FMBN).
In as much as there are also informal institutions such as thrift and credit societies and money lenders, governmental institutions play a more prominent role
Executing housing projects in Nigeria involves huge capital. What are the strategies that can be adopted with minimal financial problems?
No doubt the cost of building houses in Nigeria, especially in highly populated cities like Lagos and Abuja are high. However, If more houses are to be built and less dependence placed on the resources of government only, then there is the necessity of finding new sources of money for housing construction.
There is a need for total overhauling of the country’s mortgage system to make it relevant to the country’s housing industry.
There is also a need for the reduction of interest rates on mortgage loans and the encouragement of commercial banks to lend long term loans to prospective homeowners to finance the construction of houses.
It has become increasingly glaring that most of the urban population in Nigeria live in dehumanizing housing environments while those with access to average housing do so at an abnormal cost. What is your take?
Urban areas have been experiencing rapid and continuous growth over the years, as people tend to migrate from rural areas to urban centres. However, there has been the inadequacy of the necessary infrastructures to meet the needs of the increasing urban populace.
The cost of housing in states like Lagos, Abuja and Port-Harcourt has been on the rise with the majority unable to afford them.
This can only change if the government makes provision for affordable housing for low-income earners, as well as the construction of habitable homes to replace slums.
Rent in major cities of Nigeria is about 60 per cent of an average worker’s disposable income. What can be done to assist average Nigerian workers?
Unfortunately, this is very accurate. The average Nigerian earner spends the majority of his income on rent making. As a player in the real estate sector, providing affordable luxury homes to working individuals who have a desire to own property with a flexible payment plan is one way to encourage property ownership.
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And we at Chateau Royal Real Estate Limited have put in place workable opportunities to own properties with an initial deposit of N100, 000 and flexible payment plans for over 12months in most of our fast selling estates.
Previous attempts by stakeholders, including government agencies, planners and developers to provide the necessary recipe for solving the housing problem have yielded little or no success. Why?
The continuous increase of the basic building components and almost stagnated wages of average Nigerian workers, especially those working in the public sector constitute a serious impediment to access to housing in the country.
Even with the introduction of the National Housing Fund (NHF) by the government over almost two decades ago, most Nigerians are still not empowered to acquire houses of their own due to the stringent conditions attached to the accessibility of the fund.
One of the conditions is for the interested or prospective borrower to have saved at least 25 per cent of the cost of the house desired before access to the housing loan fund from the National Housing Fund. For a county with N30, 000 minimum wage, less than 10 per cent of its populace can afford to buy a property.
To provide affordable housing for Nigeria’s low-income earners and bridge the housing deficit in the country, industry stakeholders have recommended policy review, restructuring and innovative mortgage products…
All of these are great initiatives for the greater good. However, the problem lies in the execution of these plans. The issue of policy formulation has never been the problem in Nigeria but that of policy implementations. To properly address the problem of housing accessibility in the country will require the government to take another critical look at the National Housing Fund.
How can the mortgage system in Nigeria be made more functional?
With an effective and efficient Mortgage system in place, property/homeownership can be practical to millions of Nigerians. It is also a great means of correcting the outrageous housing deficit in the country.
However, to make this work, proper actions must be put in place to eliminate corruption and bureaucracy as it may disrupt the mortgage system.
With housing shortage of more than 20 million units, are you optimistic that an efficient mortgage system is needed alone to provide homes for over 64 million who do not earn enough to buy a house?
I believe it is a step in the right direction. An efficient mortgage system allows many who may necessarily not earn enough to afford proper housing, to spread their payment over a long period, whilst still maintaining a good quality life.
The National Housing Fund through the FMBN has been set up for this purpose. I believe if the funds are utilized appropriately, it would encourage many Nigerians to actualise their homeownership goals.