After decades of neglect, the newly inaugurated 9th National Assembly, especially the Senate and its new leadership under Senator Ahmed Lawan, must realize that a lot of legislation is needed to develop Nigeria’s housing sector. This call is being made by the Housing Development Advocacy Group of Nigeria who believe that with good legislation, some of the perennial problems – notably land use act – bedevilling the sector will be ameliorated.
In the face of mounting unemployment and insecurity, such legislations will enhance the real estate sector operating environment, and enable its capacity to be used as a catalyst for employment generation, inclusive socioeconomic growth, multiplier effect in the local economy, and not just shelter provision.
The critical areas of legislation for the 9th NASS and its leadership noted by the Group are stated below.
Land Use Act
According to leading stakeholders in the Advocacy Group, the single most important factor in Nigeria’s housing crisis is the gross misapplication of the Land Use Act, 1978, and the resultant denial of access to land to the poor. Offered to harmonize pre-existing customary land tenure systems and free up land for new development, the Act constitutes the most aggressive and far-reaching declaration of the power of eminent domain over urban and rural lands in Nigeria.
It provides that: “all land comprised in the territory of each State in the Federation are hereby vested in the Governor of that State and such land shall be held in trust and administered for the use and common benefit of all Nigerians in accordance with the provisions of the this Act”.
Although the Land Use Act preserves the right of the holder of a right of occupancy to the sole and absolute possession of all improvements on the land, it provides that such improvements may be transferred, assigned or mortgaged only subject to the prior consent of the Governor.
The most significant and controversial power vested in the Governor by the Act is the power to revoke a right of occupancy or to compulsorily acquire land for “overriding public interest” subject, in some cases, to compensation.
Prior to the enactment of the Land Use Act, land was generally owned and controlled by individuals, families and communities under the customary land tenure system. Under the Act, as technical ownership of land became centralized in the office of the Governor, most undeveloped urban lands were expropriated by the Governor for sundry purposes leaving little land in the hands of families and communities. Consequently, many poor and low-income citizens (who, by virtue of their membership would normally gain access to family or community land for housing development) are stripped of access and entitlement.
This dispossession is often aggravated by a poor compensation regime that is calculated on the basis of an arbitrary valuation of structural or economic crop improvements on the land. As indicated above, land taken in this manner is sold at near prime market value by the government to land speculators and affluent developers, further putting land and housing far out of reach of the poor.
Another major feature of the land-use policy constraining housing development and optimal economic use of land resources is the mandatory requirement of the Governor’s consent to land transactions such as sale, assignment, transfer or mortgage of land in urban areas.
First of all, the consent process is fraught with great difficulties: it is costly (with fees assessed at upwards of 35 per cent of the market value of the underlying land), corrupt, laced with bureaucratic delays, and outright exploitative with the result that only a very small percentage of land or property owners ever bother applying for such consent. Without the consent, the land owner remains without a valid title (evidenced by a certificate of occupancy) to the land and without valid certificate of occupancy such that the land owner cannot convert landed assets to economic value through a mortgage or other means of capital generation.
Reviewing the National Housing Fund
The 8th National Assembly had passed the National Housing Fund (Establishment) Bill 2018 in February 2019. The NHF Bill was sent to the President for assent but was declined for certain reasons. The 9th NASS according to the Group will have to ensure that the reasons that prevented the president from signing the bill into law be resolved in order to have a better law that will provide for additional sources of funding for financing housing development in Nigeria.
The President had rejected the Bill in April 2019 for legal and economic reasons. President Buhari cited several grounds, ranging from infractions on extant laws, duplication of responsibilities of existing agencies, to financial constraints for refusing assent to the bills.
According to the President, the various levies and obligations imposed by the NHF Bill would be disruptive and punitive to the Nigerian worker and to sectors such as cement manufacturing, banking, insurance and pension. The President also stated that the provisions of the Bill directing PFAs to invest in the NHF undermines the powers of the National Pension Commission and adversely affects the safeguards that protect the pension industry from unreasonable investment risks.
There is also a public sentiment against the bill in line with that of the President, and also for the fact that there was no wide-sector consultation in the formulation of the Bill.
The opinion of many is that the NHF be open, accessible to all, transparent and accountable because the housing sector is not only an access to housing but to job and investment markets.
This should be a major agenda for the 9th NASS and its leadership as a new tenure begins.
Affordable Housing Legislations
The Advocacy Group is demanding that the 9th NASS should introduce policies that will enable affordability of housing in Nigeria. Legislative interventions that can reduce the cost of building materials give incentives to attract investors on the supply and demand sides as is being done for another critical sectors like Agriculture, Power etc, and also encourage local production are very critical at this time.
The introduction of schemes like the Family Homes Funds which is intended to deliver about 500, 000 homes in 2023 has been commended by a lot of stakeholders, and the 9th NASS is urged to offer it more support so that the objectives of the fund are achieved, and sustainable, even as more of such initiatives are being advocated for.
Other measures that can also increase affordability include social capital. The 9th NASS should enable legislations that will make it easier for cooperatives to pull their resources together and contribute to national funds on housing.
Law to Enable Housing Sector Regulation
According to the Group, Nigeria has the biggest and most promising housing market in Sub-Saharan Africa, but it is ironically the least developed in terms of defined transactions dynamics and operating conditions. Often fraught with challenges like substandard development, incompetency, building collapse, fraud and responsibility conflicts, a case is being made for the establishment of a supra regulatory entity that will oversee the activities of practitioners, developers, professional bodies and agencies in the sector.
When it comes to regulation, the housing development and finance sector in Nigeria is having an oversight dilemma. For example, the Federal Mortgage Bank of Nigeria (FMBN) is by function and design a bank, however, the regulatory control of the institution is being contested by the Central Bank of Nigeria (CBN) and the Ministry of Works and Housing. This is because it is intervening in two folds. It is intervening in housing development and housing finance at the same time. This is a misnomer.
The need for a supra regulator is also important in order to check the individuals and organizations that frequently venture into the sector without meeting any form of proper governance, ethics, standard or requirements. While stakeholders agree that there is the need to have a lot of investments and investors in the sector, it is also equally necessary that they operate in an environment with control and regulation.
Currently, there is no entity saddled with the task of handling problems associated with developers and housing finance fraud that is rampant in the sector. Fraudulent developers and some unscrupulous mortgage banks have swindled a lot of people because the kind of regulation that should have been in place to check their excesses and nip it in the bud is absent. The activities of some Federal/State Government MDAs responsible for key acts in the sector has introduced massive disruptions via corruption, bureaucratic bottlenecks and gross ineptitude.
There are also a lot of concern about the fact that there is no regulation with regards to the amount of interest charged by housing financers. While the CBN can intermittently intervene in special or urgent areas of concern, it is more focused on macro-economic issues and inflation.
The 9th NASS has to, in a collaborative effort with the executive, see to the establishment of this supra-regulatory agency that can bring order and development in the housing sector. A National Housing Council comprising of the public and private sectors stakeholders, and involving professionals/players from the supply and demand sides will ensure a holistic approach to goal attainment.
And in addition, there is need to introduce legal reforms that will enable timely resolution of housing and investment cases in the law courts. These legal reforms should also make it impossible for lawyers to abuse the system. Generally, enforcement of law and order should be improved.
Adoption of the Mortgage
Legislation on Model Mortgage and Foreclosure Law(MMFL), the Multidoor Court process should be a condition precedent for project investment in Nigeria.
The interest rates, both for public and private mortgage institutions ought to be affordable, and the Housing Advocacy Group believes that it should be within a single digit rate.
The current rate is very expensive and is affecting affordability for many Nigerians willing to key into the mortgage plans in the market. An intervention in this area is urgently needed, even if it will require stakeholders’ engagement.
The 9th NASS should consider legislations that will embolden public and private mortgage institutions in Nigeria to consider the option of lowering mortgage interest rates in order to increase housing affordability.
To address Nigeria’s housing problems, especially its deficit which many sources put at about 17 million, it has been rightly argued that it will take a collaborative effort for reasonable results to be achieved. This forms one of the major criticisms of the 8th NASS by housing stakeholders who think there was no concrete partnership with stakeholders to forge an all-encompassing housing agenda.
More would have been achieved these past years if the several public and private sector stakeholders contributing significantly to housing development in Nigeria have been engaged in a forum of ideas and professional support to fashion out a unitary agenda for tackling the problem of housing in Nigeria.
It would greatly benefit the National Assembly to learn from these stakeholders about their peculiar challenges and how best to confront them. Other areas of collaborative support from the government, especially in terms of regulation and policy would have eased the work of these stakeholders and reduce the attendant hindrances to performance.
By Ojonugwa Felix Ugboja