Latest indications have shown that the cost of properties in Nigeria may continue to rise amid calls by stakeholders for government to legislate on the sector. Already the laws made to regulate the real estate sector and the entire built environment have remained ineffective. In civilised societies, law guide the practice of real estate. But in Nigeria it is as if the poor is always the target of every law.
Government has as a tradition of including the housing sector in the yearly budget but once the budget is passed and allocations made, nothing is heard about the sector again until the next budget. Ordinarily, government ought to put in place the means of checking the veracity or otherwise of the budget proposition on the real estate sector. This will spell out what remained to be implemented and what needed to complete it. But this is not the way because the budget has always not been implemented for reasons best known to the authorities.
If government and Ministries, Departments and Agencies (MDAs) utilise the windows they have to aid housing sector, at least civil servants will have their own apartments. If they have their own accommodation, then the efforts of private sectors in providing shelter to the rest of the population through the real estate sector would have made great impact. However, because government failed to execute its roles, it finds it difficult to regulate the sector. A non-regulated programme is like an unorganised party where everyone sits anywhere and does anything he likes. Government’s interference only in promulgating laws in the property sector has remained the greatest handicap of the sector.
Another aspect that has been worsening the cost of properties in Nigeria is lack of infrastructure. If a developer created road that leads to his estate, provided electricity, water, security, recreational facilities, earmarked a large chunk of space for market, waste maintenance space and possibly religious institutions from the land he bought, then it will be impossible for the buyer of the apartment to buy it cheap. The developer will have to factor the cost of all these facilities he put in place into the final selling cost. This definitely would add extensively to the cost of the property. If government creates roads that lead to the estate, provides all those amenities listed above, not only will government regulate it, the developer will have no reason to raise the cost of the buildings.
Government should also release its hold on land because since the major factor in property development is land, the cost of properties will not be low as long as cost of procuring land is high. An instance is the Land Use Charge (LUC). Whether in Lagos State or anywhere in Nigeria, the cost of procuring land for development is always high. Aside land on its own, documents upon documents, which the developer is expected to collect, certification of this and that, provision of this and that by various government authorities are capital intensive. What of Omoniles’ charges that start with clearing of the area, laying the foundation, casting of pillars and decking. The Omoniles charge the cost of decking by the number of floors, yet government cannot protect the developer who has paid all the various charges from the activities of illegal authorities. What of a situation where a plot of land is bought more than three times? Is it possible that Omoniles are stronger than government security that they do not obey government rules or that government connives with them to swindle the public? These are riddles that baffle the public.
The National Housing Funds (NHF) scheme was designed to assist public servants own homes while saving a percentage of their income. The private sector employees were also captured under the Act. Similarly, the government, through mortgage institutions, is expected to provide loans to real estate developers to build low cost houses for the people. Unfortunately, both programmes have not yielded the desired results as houses are still not within the reach of the generality of Nigerians. Indeed, the provisions of the National Housing Fund Act and Federal Mortgage Bank of Nigeria Act are observed more in breach by most stakeholders mandated to perform one responsibility or the other under the laws. The proposed amendments capture virtually everybody including self-employed persons.
The other aspect is the cost of building materials and labour in the country. Most people go to China to import industrial roofing sheets so when they add cost of importation, excise duties and other port charges, the cost of the materials get tripled. Other people who manufacture these materials locally have monopolised the system such that they peg the prices as it suits them. If there are other manufacturers who manufacture some of the building materials, competition will force some of them to drop their prices and that will trickle down to the eventual cost of the property.
For the prices of building materials to crash, government must liberalise the production of building materials and jettison monopoly. As long as monopoly is still in place, there will be no regulation. Cement production has remained a monopoly in Nigeria, iron production is monopolised, wood is open but it is not regulated. Even those that import these materials are severely treated. While some are treated with kid gloves, others are treated as dangerous species. This does not work well in an open market economy.
The Federal Mortgage Bank of Nigeria (FMBN) commenced operations in 1978 following the promulgation of the FMBN Decree No. 7 of January 1977 as a direct Federal Government intervention to accelerate its housing delivery programme. The FMBN is expected to expand and coordinate mortgage lending on a nation-wide basis, using resources from deposits mobilised and equity contributions by the Federal Government and the Central Bank of Nigeria (CBN) at rates of interest below the market rates.
In the past years, FMBN said it has financed the construction of the following estates among others: Suntrust Housing Estate, Lugbe, Abuja; Trademore Mega City Housing Estate, Lugbe, Abuja; Aper Aku Housing Estate, Makurdi, Benue State; Ata-isi Supplies and Services Company Ltd Housing Estate, Cross River State; TMA Integrated Services Ltd Housing Estate, Uyo, Akwa Ibom State; and Honey Fill Construction Company Ltd Housing Estate, Asaba, Delta State.
Others are Ogun State Housing Corporation Housing Estate, Abeokuta; Tola Tos Housing Estate, Odonis Elewa, Bota Village, Ibadan; Liberation Housing Estate, Awka, Anambra State; Unity Garden Estate, Osisioma, Abia State; SY Global Business Links Ltd Housing Estate, Lafiyawo, Tunfure Area, Akko, Gombe State; Adasolid Property Limited, Yola, Adamawa State; Benue Investment and Property Co. Ltd, Nyiman, North Bank Tse-Ayu, Makurdi, Benue State; Delrot Nigeria Ltd Housing Estate, Kulende-Sobi Road, IIorin, Kwara State; and Taraba Investment and Properties Ltd, Jalingo, Taraba State.
The rest are Mamako Investment Ltd, behind Federal Housing, Dong New Layout, Jos, Plateau State; Terraquest Dev. Co. Ltd Housing Estate, KM 13, Banchi-Jos Road, Dungai Village, Bauchi; Lape Construction Company, Juwapye, Ado-Kasa, Karu LGA, Nassarawa State; Ebonyi State Housing Dev. Corporation, Abakaliki, Ebonyi State; El-Tabera Housing Estate, Nsukka, Enugu State; Copen Services Limited (Goshen Housing Estate), Independence Layout Annex, Enugu; and Jubilee Housing Estate, Independence Layout Annex, Enugu. Many of these housing estates are said to have been completed and sold to NHF contributors or are currently under construction. Although the FMBN probably did all the construction, it has not helped to reduce the housing deficits in the country. If it has done, fewer people would be chasing building materials and apartments.
For a lot of these shortcomings, stakeholders in the recent past called for the repeal of the laws establishing the mortgage bank and the creation of another institution that can complement the job of the bank.