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Property firm considers setting up mortgage bank for increased access to housing

Worried that a good number of Nigerians still find it difficult to access mortgage facility to enable them buy or build their own houses, Pertinence Properties, an investment and development firm says it is considering setting up a mortgage bank to give more Nigerians access to housing.

A relatively young property firm that came into business six years ago, Pertinence Properties aims to reach all income levels—low, middle and upper levels with special focus on low income earners who corner not less than 60 percent of their products and services offering.

“That shows you where our heart is; we really want to be part of the solution to Nigeria’s housing deficit. We all don’t have to leave everything to the government”, Sunday Olorunsheyi, Executive Director, Admini/Operatoions at Pertinence, told newsmen in an interview.

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“Part of our long term vision is to own a mortgage bank so that the bank can help our clients buy our properties by giving them the opportunity to pay over a long period of time. We want to make profit as a business but we also want to impact lives”, Olorunsheyi assured.

For Nigeria’s 200 million population, homeownership level is a little above 10 percent while housing deficit is expected to hit 20 million units by 2025 unless there is a dramatic government policy that will encourage more investment in the low-end residential properties.

Experts note that there are two major issues with the housing deficit in the country. The first is lack of a functional mortgage system while the second one is the absence of a social security system in the country. Again, there is no system that is dedicated to funding housing for low income families.

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In developed economies, people don’t save to buy houses. They take mortgage facilities instead. But Nigeria does not have a well developed and functional mortgage system. Interest rate on mortgage loans is double digit, making it not in any way different from commercial loans given by deposit banks.

“This means that there is something fundamentally wrong with the country’s mortgage system. There are some basic problems with the mortgage system in Nigeria. One is accessibility and the second one is clarity. Talking about accessibility, you find that when you approach a mortgage bank for loan, they will ask you for things that you cannot provide. So, the mortgage is simply not accessible for those that actually need it”, Paul Onwuanibe, CEO, Landmark Group, explained to newsmen.

He explained further that, in terms of clarity, there is no unified system. There is nowhere the government has published a mortgage rate which the mortgage banks have to use or a mortgage standard or process which the banks have to fit into.

Expectation is that by setting up a mortgage bank  as a property developer with a rich stock of housing, Pertinence will be taking a good number of ‘homeless’ Nigerians out of the crowded housing market.

Olorunsheyi noted, however, that in seeking sustainable solution to the housing deficit, there should be collaboration between the public and the private sector operators, pointing out that the recent signing of the Executive Order 7 by the federal government was a good development as it allows the private companies to provide infrastructure such as roads and rail tracks.

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“If this had been in existence long ago, we would have seen a lot of developments in the country. In most of the places we have projects, we are the ones fixing the roads and we spend a lot to get this done.

“We are really doing our best to service the low income group but government should do its own beat. One major challenge we in real estate is documentation which government makes so difficult for developers like us. If technology is driving some of these things, we wouldn’t have this headache because the processes would have been faster and cheaper”, he said.

At the moment, Pertinence is developing The New Badagry Homes which, it says, will be dedicated to its rent-to-own housing initiative for low and mid-income home seekers in that area of Lagos. The New Badagry Homes is designed to rise three floors comprising one, two and three-bedroom apartments.

Source: Businessday

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