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How to develop Nigeria’s real estate, by experts

Perturbed by the high level of homelessness among Nigerians, the Federal Government has been urged to establish a housing microfinance fund or shelter fund to provide affordable houses for those in need of accommodation. Establishment of housing microfinance fund, according to Social Housing Activist and International Housing Finance Specialist, Mr. Adekunle Faleti, will enable low-income earners enjoy quality housing. Faleti said if the initiative is well implemented, it will help to slow down the mushrooming of slums.

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He advised government that stakeholders in the low-cost housing value chain in Nigeria should be trained to be able to deliver more housing through housing microfinance solutions.

Faleti enjoined the Ministry of Lands, Housing and Urban Development and the Federal Housing Authority to play key roles in the initiative and strengthen it to provide the bulk of affordable housing for rent to salaried workers and others.
He noted that amongst major challenges facing the country presently, housing remains one of the biggest problems, especially for people in the bottom of the pyramid.

“A key problem in Nigeria, and indeed Africa today is that a large percentage of the citizens are in the lower class bracket and are unable to afford to acquire their own homes, and as a result are forced to rent, live in slums, squat or remain homeless,” he said.

He recalled a study carried out by the World Bank that only three per cent of Africa’s population had income viable for a mortgage, adding: “Worse yet, according to the UN Habitat (2010), about 40.32 per cent of Africa’s population live in slums.”

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Faleti emphasised that housing solutions in Nigeria addressed mostly the upper-middle to upper class, noting that financial institutions tend to ignore the lower class as they are deemed high-risk and are perceived not to offer any beneficial and consistent rate of return. He added that most microfinance institutions in Nigeria have not provided any specific solution that meet the need of lower to middle income class bracket.
The mortgage banking sector in Nigeria has been confronted with numerous challenges that have impeded the attainment of its policy objective of acting as a catalyst for the development and provision of affordable housing in the country.

Some of the challenges include: Delay in accessing NHF funds/dearth of long term funds. Most of the PMBs continued to find it difficult to provide the required bank guarantee to access the NHF.

Only four out of the 42 PMBs in operations were listed on the Nigerian Stock Exchange which meant that many others did not have access to long term funds through the Stock Exchange window. Another challenge is the Land Use Act, which has made the process of perfecting title to landed property burdensome, slow and costly.
That had affected negatively the foreclosure procedures on the properties pledged as collateral. Delivering a keynote address at a workshop for judicial officers on mortgage recently in Abuja, the Central Bank Governor, Mr. Godwin Emefiele, noted that the land tenure system as enshrined in the Land Use Act of 1978 has deterred proper development of a robust and sustainable housing sector in Nigeria.

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Emefiele also disclosed that difficulties in delivering affordable housing to low and middle income households wherein lies the greatest demand for housing as another major drawback.

The governor acknowledged limited access to housing and mortgage financing, complications in enforcing mortgage contracts and foreclosure on properties in Nigerian courts, slow bureaucratic procedures in land administration and high cost of land registration as serious impediments to adequate housing delivery in Nigeria.
He also identified high rate of population growth, high rate of rural-urban migration and exorbitant cost of construction materials as other problems militating against the robust development of housing and mortgage sectors in the country.

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