Social Capital Is a Viable Alternative for Affordable Housing in Nigeria – Adelakun

With a struggling mortgage finance system, former civil servant and CEO, NISH Affordable Housing Limited, Yemi Adelakun has stated that Nigeria should begin to consider other sources of financing affordable housing in the country.

While speaking with Housing News, he said that since the existence of mortgage banking in Nigeria, it has only been able to initiate and finalise about 100, 000 mortgages. This he said is a far cry for a country of over 180 million people with a housing deficit of about 17 million.

‘’Mortgage finance is good, but it is not the only way,’’ he said.

According to him, other countries have used social capital to finance affordable housing through cooperative systems. ‘’In Zimbabwe and Kenya, they have done very well using social capital to support of affordable housing,’’ he said.

He also mentioned that another way of funding affordable housing is for the federal government to come out strongly with intervention funds like it is done in other countries.

‘’They have done it before in this country, especially in Abuja when federal government was selling houses. You can go to any bank at that time and obtain loan for 7%.’’

Another measure according to him is to also empower commercial banks to give preferential rates to off-takers to fund housing just like the farmers’ incentive.

‘’Any rate beyond 10% is not favourable for housing. We need a realistic method of financing affordable housing. And that’s why NISH Housing has been engaging with experts in this area. We have been holding Nigerian housing finance conference for two years now,’’ he said.

Equity financing, he said, is also one of the options, because the contractors themselves can finance.

‘’Presently most of our developers either depend on contracts to build or depend on off-takers’ advance payment to build the houses. They should consolidate their efforts and fashion a way to fund houses based on guarantees. That’s another way – bankable off-takers guarantee. Once you guarantee that, any developer should be able to go to site, build the houses with the hope and knowledge that as soon as he finishes the job, there is an exit strategy. The off-takers already have the fund waiting for him to purchase the house.

‘’So, for me, mortgage is very good, but it is not the only way. In fact if you look at it, only about 30% of off-takers can qualify for mortgages. So what happens to the rest? What happens to those who are in the informal sector who do not have regular income? For you to qualify for mortgage, there are certain regulations like collateral, evidence of income.

‘’We must find a solution to this housing finance problem. We are proposing that it must be a demand driven housing policy in Nigeria. We no longer want situations where developers go to site, build what they want to build in whatever location, and at the end of the day nobody wants to buy them; and even if they want to, they cannot afford them. So let’s figure out what people like and can pay for. So that at the time of constructing the houses you already know that you have buyers for those houses. I think this is the way, and it is possible through collaboration,’’ he advised

By Ojonugbwa Felix Ugboja

Kenya Mulls Legal Reforms to Boost Affordable House Supply

NAIROBI– Kenya is considering putting in place a series of legal and regulatory reforms that will boost the supply of affordable houses in the country, officials said on Wednesday.

Patrick Bucha, housing secretary at the Ministry of Transport, Infrastructure, Housing and Urban Development, told journalists in Nairobi that there are a lot of existing laws that impede the implementation of affording housing schemes.

“One of the laws earmarked for reforms include the Building Code which has stringent rules that don’t allow for use of alternative building materials that have been adopted in other countries,” said Bucha during the opening ceremony of a training program for property developers and contractors that was organized by Pan-African housing financier Shelter Afrique.

Bucha said that the Building Code has already being developed and will soon be presented to Cabinet for approval.

He added that the Sectional Properties Act will also be reviewed to ensure that apartment owners in high rise complexes can acquire appropriate ownership documents.

The official revealed that zoning laws that restricted development of affordable houses in certain areas will also be reformed so that the government can achieve its goal of developing at least 500,000 affordable houses by the end of 2022.

Source: Xinhua 

Impact of Import Duty Waivers on Affordable Housing

In spite of contrary interests, the Federal Government, under President Muhammadu Buhari, reduced import duties on more than 89 items in various sectors of the nation’s economy.

The reduction according to the government was to promote development in critical sectors of the economy including housing, and is part of its Fiscal Policy Measures.

At the time of announcement, the directive was made up of the Supplementary Protection Measures (SPM) for implementation together with the ECOWAS CET 2015 – 2019.

Then minister of Finance, Kemi Adeosun, explained that the ECOWAS CET, which will cover the 2017 to 2019 fiscal periods, is composed of three categories made up of an Import Adjustment Tax list of 173 tariff lines, a national list consisting of 91 items and an import prohibition list of 25 items, which is applicable to certain goods originating from non-ECOWAS member states.

Waivers, if well administered, are mechanisms for achieving set economic goals such as protection of local industries, job creation, export promotion as well as generation and preservation of foreign exchange. China, India, Malaysia, Japan and many other economies have at various times used waivers, concessions and grants to protect and build local manufacturing and agriculture. Sadly, none of such objectives has been met in Nigeria. Nonetheless, the interest of the local industry must be defended if the country would make any breakthrough or progress, and this is only possible if there is an enabling environment.

But there should be cause for optimism if the government’s commitment to due diligence, integrity and transparency is anything to go by.

Delivering affordable and adequate housing in Nigeria has always been a major challenge, with many policies, and sometimes lack of, posing as threats to achieving the goal of reducing the country’s immense housing deficit.

A lot of people believe that placing heavy import duties on imported products, especially those related to housing construction and development can help develop the local housing industry, but the reverse is actually the case.

The cost of local production and manufacturing in Nigeria is incredibly high, and only when those issues that lead to such high cost of production are resolved that we can argue more for the placement of heavy import duties.

Import Duty Waivers and Affordable Housing

It makes patriotic sense to place heavy import duties on importation, especially if there is an existent and vibrant local production industry, but it doesn’t make economic sense to do so if the local production and manufacturing industry lacks the capacity to operate independently with the ability to also minimize cost. Nigeria is grappling with perennial problems of infrastructure, which sometimes make local production an impossible dream. For those who can manage the local conditions, the quality of output is usually a far cry from what is acceptable as international standard. This has also been a bane for Nigeria export ambitions, as products usually fail to meet required standards.

Effective local manufacturing can only thrive and save cost if infrastructures like energy and power, water, market, roads, transportation and even personnel expertise are readily available. In the absence of this, it can even be cheaper to import quality products with the incentive of duty waivers.

The cost of producing building and construction materials in Nigeria are usually double the cost abroad because the manufacturers in Nigeria will have to bear extra cost of providing private power through the installation and fuelling of generators, building of private water supplies, company access roads, security, specialised transportation etc.

Manufacturing in Nigeria is definitely not a cake walk, and this is why local industry stakeholders would rather import finished products at lesser costs, and even better and cheaper for everyone, including the buyers when government can introduce temporary duty waivers.

These measures go a long way in reducing the cost of housing in Nigeria. Today, low and medium income earners who have between N5million to N10million can own their own homes. The demand for such low cost but high quality homes have spiked since these import waivers were introduced.

The Problem of Corruption

However, there have been concerns in some quarters that government policies like import duty waivers, concessions and grants tend to mainly favour cabals that are close to the government of the day. Worse still, the system has been too corrupted. Some beneficiaries are known to sell duly-approved waivers for essential goods to importers of other products that are of little or no benefit to the economy. Unfortunately, some defaulting companies in duties and levies to the Federal Government, notwithstanding their conduct, even got fresh waivers to import more in an era of impunity where monitoring was zero and the system was run without conscience.

This abuse got an official mention in 2015 at the Senate following a passionate submission by Senator Ibrahim Gubir. The upper chamber then decided on an ad hoc panel for a review to ensure full recovery of all government revenue related to the policy. Regrettably, as in most other investigations, the report has not been made public.

The expectation now is that such practises be reversed. A regime that favours economic cartels and selfish barons should have no place in the Nigerian economy. The controversies surrounding the import duty waivers are only present because of such backdoor practises.

Until Nigeria can fix its infrastructure problems like power outage, roads, water supply, etc., it will make more economic sense to import finished products. The purchasing cost, as we have seen in housing will come down and will create more economic stability. Of course the greater wish of Nigerians is for the country to have an active local industry where its goods and services can be made, but until a conducive environment is provided for that to happen, it will be cheaper to import, and import duty waivers are very important in that regard.

By Ojonugbwa Felix Ugboja

Re-think of Enfield flats over affordable homes money

Councillors have called for a rethink of plans for a new block of flats because of lack of support for affordable housing.

Enfield planning officers had recommended giving the go-ahead to proposals to knock down two detached houses on The Ridgeway and build a two-storey block of flats on the site.

They said the nine flats – a mix of two and three-bed homes – would “optimise the site to its greatest extent” without harming the character of the surrounding area.

But councillors raised concerns over a financial assessment that stated the developer only needed to pay around 60 per cent of the expected sum of money to provide affordable homes in the borough.

Steven Woods, who lives in neighbouring Woodridge Close, spoke out against the plans at a meeting of the planning committee on Tuesday (April 23).

He said: “These properties are luxury apartments – why are the council proposing to take lower payments?

“I would ask the people on this committee, ‘do they think this development is going to benefit many people in Enfield or few people?’

“I am someone who looks at the many, not the few.

“Only a few people are going to benefit and make hundreds of thousands, if not millions – and we are compromising the money we are going to be taking from them in contributions.”

Enfield Council has a target of ensuring half of all homes on new developments are classed as affordable.

When this is not possible – such as on smaller sites with lower profit margins – developers are asked to pay a sum of money to help build affordable homes on other sites.

The applicant, Landvest Developments, submitted a viability report drawn up by Arebray Development consultancy – which was independently assessed by a commercial surveyor – stating it could make a contribution of £161,730 towards affordable homes.

That is only 60 per cent of a “normally expected figure” of £271,296 for developments of a similar scale.

Cllr Chris Bond, Labour member for Southbury, told the committee: “We should be getting £271,000.

“At this austere time that we are still in, I think it is amazing that someone is getting away with £100,000 less.

“Quite simply, they are not paying us the right amount of money.

“I will be looking at this figure more closely in future.”

Andy Higham, the council’s head of development management, said: “Officers take the issue of affordable housing contributions very seriously.

“It is not always possible on a scheme to get what we require. We have secured a good position using the same consultant we used on a scheme up in Cockfosters.”

But Labour member for Lower Edmonton Cllr Sinan Boztas said: “The affordable housing contribution needs to be higher for an area like Highlands.

“These figures need to be reconsidered.”

Councillors voted by a large majority to defer the application so the affordable homes contribution could be reconsidered.

The issue of developers making low contributions towards affordable housing was recently raised at a planning meeting in neighbouring Barnet.

Labour councillors there called on planning officers to drive a harder bargain after one developer backed down on claims it could not pay the full sum demanded by the Barnet Council and pledged to up its previous offer by more than £200,000.

Source: By Simon Alin

430 homes and retail units plan for Stafford

More than 400 homes and retail units are set to be built in Stafford if planning bosses give the development the nod. green light.

The outline application for 430 homes and up to 575 sq m of retail space for land off Fairway in Littleworth has been recommended for approval by Stafford Borough Council’s officers, and the planning committee is set to make a decision next Tuesday week at a special meeting.

St Modwen Developments Ltd submitted the plans more than a year ago, and it has been called in to be considered by the committee by ward councillors over concerns that the area will cope with the extra traffic.

But officers have recommended the outline plans are approved at the meeting on April 30, subject to conditions.

The application site covers 23ha of land and is bounded by St Leonard’s Avenue/Fairway to the west, the West Coast Main Railway Line (WCMRL) to the south and by open land to the east and north, leading to the River Sow, with housing on Tixall Road beyond.

The application said the development would offer: In the plans it says: “In summary, the proposed site offers a full range of public amenities within a 1km distance.

“It has excellent transport links which make it a viable place to live for people of all ages and physical abilities, with higher than average railway connections and within walking distance from the town centre.

“It has numerous safe and convenient cycle and pedestrian routes that connect with local developments and facilities.“A wide variety of opportunities for employment with the town centre only 1km away, plus good access to facilities outside the town, such as the university, hospital and numerous leisure opportunities.

This would be in addition to “An opportunity to provide new build housing that is designed for modern standards of living in a location where there is little new development.”

“A settlement opportunity that is both accessible to existing amenities and town centre, whilst also on the edge of large green spaces leading out to open countryside.”

The site was previously occupied by the company Aviva, which had industrial buildings covering approximately 50 per cent of the overall area.

Only details of access have been submitted for approval at this stage. Current access to the site is off the roundabout that connects Fairway (north) and St Leonards Avenue (west).

Minor amendments will be made to the access road within the site in order to provide wider footways and grass verges.

If the outline plan is approved by councillors next week, the finer details will have to be approved in a reserved matters application at a later date.

Source: By  Jordan Reynolds

Study: 8 Million Middle-Income Seniors Will Struggle To Afford Housing

More than half of U.S. seniors considered “middle income” won’t be able to afford assisted living and other forms of senior housing a decade from now, according to new research published Wednesday in the journal Health Affairs.

The study, led by NORC at the University of Chicago and researchers from Harvard Medical School, shows a critical void in future U.S. housing needs at a time when more than 10,000 baby boomers are turning 65 each day.

Though the housing market for Americans in need of assisted and independent living has greatly expanded, the cost is often out of reach for an increasing number of people considered middle income who are 75 and older.

“There’s a huge underserved market here,” Robert Kramer, founder and strategic advisor at the National Investment Center for Seniors Housing and Care, a nonprofit that provides data and analytics and works with investors and providers of senior housing. National Investment Center funded the NORC and Harvard research.

The study said 54% of middle-income seniors, or nearly 8 million people, will not be able to afford annual costs of $60,000 for assisted living, independent living or other housing related costs even if they allocated all of their annual resources to such housing. “Even assuming that seniors draw from their housing equity in addition to their income, 7.8 million (54 percent) middle-income seniors in 2029 will have annual financial resources of $60,000 or less,” the study shows.

1.5% of Kenyans gross salary to subsidize the Affordable Housing Scheme

The Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works in Kenya released a public notice directing employers to start deducting 1.5% of their staff salaries as housing levy and submit the deductions to the National Housing Development Fund (NHDF).

The employer is also required to send the deduction together with other payroll statutory deductions to the Kenya Revenue Authority (KRA) by the 9th of every month starting on May 2019.

The directive states, “Both the employer and the employee shall each contribute 1.5% of the employee’s gross salary, so long as the sum of the total monthly contributions shall not exceed five thousand shillings. Failure to forward the contributions on time shall attract a penalty of 5 percent of the contributions payable by the employer for each month or part of the amounts remain unpaid.”

How the levy shall be put into work

The Housing Fund Levy is intended to back up the Affordable Housing Scheme which is set to deliver 500,000 houses in five years’ time to the low income earners. Mr. Peter Karanja, KPMG Kenya tax partner expounded the idea saying that 2.4 million Kenyans who earn not more than US $100 qualify for a mortgage under the affordable housing scheme.

About 77,000 high-earning Kenyan employees will not be eligible for the mortgage however they will make the monthly contributions anyway. Following a 2017 statistical index by Kenya National Bureau of Statistics, the government can collect US $473m annually from the house levy. Half of this amount is collections from the employers which goes to aid affordable housing while the rest is contributors’ funds dedicated to the cost of the house.

Just in case a contributor is not shortlisted for a home under the scheme, his/her levy can be transferred to a pension scheme, to another person under the affordable housing scheme or cash out after exit.

Source: By  Patrick Mulyungi

Namibian Housing Agency Commits $10m to Informal Housing

NHE spokesperson Eric Libongani told The Namibian last week that the proposed pilot project would be implemented in Windhoek’s Katutura and Otjomuise townships before it is rolled out to other towns.

The NHE is the entity with the mandate for housing provision countrywide.

According to a public notice issued by the NHE this month, the proposed project would only benefit people who have plots registered in their names, or those with lease agreements with the City of Windhoek.

Such plots, the notice stated, should be connected to basic services such as water and electricity.

“Information sessions will be arranged and announced in due course,” the public notice read.

“Katutura and Otjomuise were strategically selected because there are many households in these areas that have plots but do not have formal structures on them,” Libongani stated. Beneficiaries would be chosen on a first-come-first-served basis, the notice said.

The NHE credit policy dictates that only people who earn no more than N$20 000 as monthly salary (gross salary including housing allowances and subsidies) can qualify for up to a N$600 000 housing loan.

The current maximum loan repayment period is 20 years, and beneficiaries are required to at least put down a 10% deposit of the value of the property.

The entity, however, did not disclose the number of houses to be built under this project.

Libongani said the availability of funds would determine the number of houses to be built and/or upgraded, and the type of housing clients may choose.

The pilot project, he added, would only target people who cannot obtain a bank loan.

He also did not explain where the NHE would get the projected N$10 million to fund the proposed project, expected to be completed within one year.

Critics, including the Affirmative Repositioning (AR) movement and some opposition parties, argued that the proposed project was a ploy to deceive the public into thinking that the current administration was concerned and committed to solving the housing crisis in the country.

AR activist Job Amupanda said it was a ploy by the ruling party’s government to deceive the electorate into believing that Swapo was concerned about solving the housing problem in the country.

Amupanda added that the proposed project shows that the government was not serious about housing provision because “the fundamentals such as the Flexible Land Tenure Act and other enabling legislation that would have dealt with the housing issue are not handled”.

“What is scandalous and laughable is that they are talking about the informal settlements, but they don’t have a framework to deal with that in terms of housing finance. For an institution like that, you don’t just intervene for the sake of it, but you need to have an institutional framework. So, all those things are not explained to us,” he said.

Amupanda furthermore claimed that the ruling party was using the issue of housing provision for electioneering purposes because some NHE board members, such as chairperson Sam Shivute, were part of the Swapo think tank, who also drafted the party’s election manifesto. “All we see is just an electioneering poster. This is all that they needed to do to mislead people. It gives them room to say – this is what NHE is going to do, and they put it in their manifesto to mislead people to vote for them,” he said.

RDP parliamentarian Mike Kavekotora, who criticised the government’s housing provision efforts to low-income-earners, said the NHE needed to reintroduce the concept of “incremental housing that was successfully implemented before” to demonstrate that it was serious with addressing the housing issue.

He proposed that the government should also introduce a benchmark ratio to ensure that adequate resources are allocated to housing provision.

“If we need 10% of the national budget to be allocated to housing, so be it, and let’s stick to that ratio until the housing challenge is duly addressed,” Kavekotora urged.

Shivute told The Namibian on Monday that the NHE came up with the housing project last year as a selective board decision and not pushed by him. He added that he had not been elected to be part of the Swapo think tank at the time.

He further argued that this project has nothing to do with elections as they want to assist those with erven who do not have assistance financially to build a home. “Let people come forth with land and see what happens,” Shivute said.

In defence of the project, Libongani also dismissed the electioneering claims, saying the project was among many of the NHE’s measures to ensure that “every eligible Namibian has access to quality and affordable housing”.

He said the NHE was committed to its mandate of providing and financing housing, whether during an election year or not.

The parastatal’s last major project was former president Hifikepunye Pohamba’s 2013 mass housing programme’s answer to Namibia’s housing crisis, with a promise to build 148 000 houses by 2030.

The Namibian reported last year that around 360 houses completed under the programme in Windhoek had not been handed over to beneficiaries, two years after most of them were completed.

The urban development ministry was allocated about N$2 billion, which is an increase of 6,5% on the previous year’s allocation.

Urban development minister Peya Mushelenga said in the National Assembly last month that his ministry wants to spend N$561 million on the servicing of urban land this year.

He added that about N$100 million would be spent on rural infrastructure and sanitation development.

The ministry, according to budget documents, would receive N$5,8 billion for its development budget over the medium-term expenditure framework.

Source: By Okeri Ngutjinazo and Sakeus Iikela

Calgary Gets More Affordable Housing Despite Short Fall in Major City

CALGARY—Affordable housing advocates in Calgary hope a new downtown housing complex will offer a place to land for people falling through the cracks in the city’s housing network.

Construction is set to start next month on a 74-unit building on the west end of downtown. By fall 2020, charitable developer HomeSpace hopes that the empty lot near the CTrain’s red line track on 5 Ave. S.W. will offer affordable rental spaces for people who are homeless or at risk of becoming homeless. Calgary Centre Liberal MP Kent Hehr announced Tuesday that Ottawa would contribute $9.77 million toward the project as part of the federal government’s National Housing Strategy.

Calgary Homeless Foundation president and CEO Diana Krecsy said she hopes to see the development become a place where people can get access to services they need where they live. Her organization wants to co-ordinate different agencies to provide health services or financial supports for the people who eventually move in.

Krecsy sees the housing as a place for people who don’t necessarily need 24/7 supportive care, but who also don’t have quite enough stability to live somewhere without close access to help.

“They might be cycling through unstable housing over and over again. The support model and the housing just isn’t getting the right mix for them — that group that circulates through, that’s the group we’re targeting here,” she said.

“We saw the gap and now we’re going to build to it.”


Want to Own Your Own Home in Your 20s? Here’s How

Buying a home early in one’s career, has several advantages. We offer a list of dos and don’ts for young home seekers, to realise their dream of owning their own home

Owning a home is a dream for many and being able to buy a home early in one’s career, can give you lots of joy. Experts point out that very few youngsters take the plunge into this big purchase, as the entire process is often challenging and complex. Although it may seem like a challenging task, if the process is managed smartly, the benefits are worth it.

“A house is one of the most expensive investments, as compared to other purchases. Hence, buying such an appreciating asset early, helps in correctly setting one’s financial goals. Earlier the investment, higher the opportunity to reinvest and multiply your returns,” says Samson Arthur, branch director – Hyderabad, Knight Frank (India) Pvt Ltd.


Benefits of buying a home in the 20s

For a millennial, buying a home is an investment in the financial future, says Rajat Johar, head of residential services, India, CBRE, who explains some of the advantages of buying a home in the 20s:

  • Future investment: It allows youngsters to invest in their future, as it provides them with an asset that can be sold, when they are ready to move on.
  • Youngsters tend to learn better spending habits: It changes the young buyer’s decision-making process, as they learn how to save and spend money in the most effective and efficient manner.
  • Tax benefits: As home buyers get tax credits, youngsters can use it for lowering their tax liability.

“Also, owning a house is a huge responsibility, which can make youngsters more responsible” he says.


Planning aspects that a buyer in his/her 20s should keep in mind

Planning the budget for a home, is more important than evaluating the maximum loan eligibility. For a first home purchase, set aside a budget that is affordable and in-line with your career growth and pay scale. Ensure that you have savings of up to 20-25 per cent of the value of the house, prior to purchase, while the rest could be from a home loan. Maintain sufficient balance in your savings, for emergencies and other investments like marriage, family, vacations, further education, vehicle, etc.

While most banks provide loans of up to 85 per cent of the property value, youngsters need to first check the EMI that they would be comfortable paying each month.

Sunil Sharma, VP – marketing and CRM, Mahindra Lifespace Developers Ltd, offers some suggestions for property buyers in their 20s:

  • Loan planning: Consult at least two to three reputed banking institutions, to understand the nuances of the home loan process, including documentation, interest, repayment terms, tenure implications, EMIs, etc.
  • Project location and connectivity: Work hours tend to be longer at an early career stage and thus, connectivity to core the business districts is important.
  • Social infrastructure: Nearby retail, dining and entertainment options must be considered, given the fact that youngsters give significant importance to recreation avenues.
  • Clear titles and other documentation: A younger buyer may need extra guidance on the various legal aspects of a property, such as land titles, statutory approvals, RERA compliance, etc. A consultant or expert can help evaluate the feasibility of a project in this context.

Inculcate financial discipline, by prioritising savings and asset building and you can end up becoming a smart real estate owner. If you get it right the first time, there is a good chance you will know the pitfalls during future investments.


Why buying a home in the 20s is a wise decision

  • Longer loan-tenure eligibility.
  • More tax saving, due to income tax deduction benefit available against home loan interest and principal repayment.
  • Risk appetite is higher, for which the rewards can be better.
  • A youngster has more time, to balance other financial objectives.

Source: By Amit Sethi

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