Experts seek sustainable housing delivery

Built environment experts and other stakeholders have canvassed best ways to overcome housing and mortgage challenges in order to enhance home ownership among Nigerians and promote economic growth.

Real estate developers, architects, builders, promoters of building materials, bankers, policymakers and mortgage providers among others, called on the government to look at funding issues among other impediments to affordable housing delivery.

The experts, who converged on Abuja for a week long housing show, listed inadequate finance, high cost of fund and building materials, poor land administration, lack of creativity in architectural design and difficulty in accessing land as knotty issues militating against affordable housing delivery.

Themed: “Driving Growth and Sustainability in Nigeria Housing and Mortgage Markets through Improving Structures and Policies for Impact,” the forum was organised by Festus Adebayo-led Fesadeb Communications Limited.

Diverse views

Speaking at the forum, President of Real Estate Development Association of Nigeria (REDAN), Chime Ugochukwu, a surveyor, identified poor land administration process as one of the knotty issues in the sector.

According to Chime, land has a lot of characters such as registration, titling and restiveness in some communities, and in some places housing developers cannot have access to the land due to these issues. He tasked stakeholders to come up with recommendations that will enhance housing development in the country.

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The REDAN boss also called for vibrant policy to accommodate interest of financiers and investors not contained in existing laws and policies in the country. According to him, the 1999 Nigerian Constitution, Section 16, under the Fundamental Objectives of State Policy, compelled the country to provide suitable shelter for all citizens.

He urged the government to see housing provision as its primary responsibility by making policy framework and creating the enabling environment for real estate business to thrive.

President, Nigeria Institute of Building (NIOB), Mr. Kenneth Nduka, called for effective synergy between professionals in built environment to tackle challenges of housing.

Through the synergy, he said that professionals would ensure that only standard building materials were used in the provision of affordable houses.

Ghanaian Deputy Minister of Works and Housing, Mrs. Freda Prempeh, urged African countries to boost housing development by exploring local resources to achieve local content.

The deputy minister noted that despite the fact that the continent was endowed with natural resources such as timber, clay and granites among others, these have not been harnessed for housing development.

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She called on African governments to ensure collaboration with private sectors to acquire landmark and provide infrastructure needed for effective housing development.

Finance

Executive Director, Nigeria Mortgage Refinance Company (NMRC), Dr Chi Akporji, noted that NMRC had evolved a technology platform, which allowed the stakeholders and key players in the industry to come together with the goal of reducing housing cost and increase housing efficiency.

She decried cases of unoccupied houses in Abuja and other places in the country, adding that studies had revealed that the houses were used by corrupt people to dumb stolen money.

Some indigenous construction companies called on the Federal Government to assist them with loans to boost their businesses.

Managing Director of Window Story, Mrs. Helen Uchechukwu, an architect, urged government to reach out to Small and Medium Scale Enterprises (SMEs) for financial support.

She said: “The Bank of Industry and Central Bank of Nigeria should try and identify and assist the SMEs through the show because most of the SMEs in the built environment are just trying to grow.”

According to her, some of the SMEs are looking for loans and incentives to boost their businesses but due to some bottlenecks, they cannot achieve it.

Assistant Manager, SOLIGNUM Nigeria, Mr Gosife Etele, said that the company’s participation in the show had helped his organisation in boosting patronage through sensitisation and awareness being created during the show.

Other building material manufacturers also urged the government to assist local manufacturers for economic growth, noting that many companies are highly in need of steel to boost production.

Suggestions

Director, Centre for Housing Studies, University of Lagos, Prof. Gbenga Nubi, called on the governments to replicate the Jakande Mass Housing Scheme model in all the states of the federation, including Federal Capital Territory to bridge the estimated 17 million housing deficit in the country.

Nubi expressed worries over the country’s inability to do things right in housing delivery after the impactful mass housing scheme of Alhaji Lateef Jakande, a former governor of Lagos state between 1979 and 84.

Pointing out that the government has the responsibility to provide housing for its citizens, make infrastructure worthwhile and building materials possible to access, he said: “Every responsible government can follow employee housing scheme of Jakande to bridge accommodation deficit.”

According to him, Jakande housing scheme sold two bedrooms flat for N2, 500 as against N50, 000 being obtainable in the market then, insisting that if government could emulate such feat, it would guarantee affordable houses for civil servants and other accommodation seekers.

Akporji corroborated Nubi on the replication of Jakande housing scheme for states, saying that the government should make concerted efforts towards it across the country.

Govt’ response

Minister of Power, Works and Housing, Babatunde Fashola , stated that Federal Government’s new policy would ensure local production of building materials to bring down the cost of housing in the country.

The minister said the new policy would make the housing sector vibrant and also create jobs.

Special Adviser, Property and Investment, Ogun State, Babajide Odusolu, called for concessions towards provision of affordable homes such as a reward system and tax credits.

Odusolu also advocated pioneer status for players in real estate sub-sector fiscal incentives, use of technology in construction, review of planning guidelines to encourage planned density enhancement and provision of concessions on fiscal terms for developers of affordable homes and critical supply items.

He also canvassed for the revisit of vocational training policies and procedures, and making mortgage repayments for first homes/primary homes below N15million, a tax-deductible expense.

Odusolu, who is also the Managing Director of Ogun State Property and Investment Corporation (OPIC), stressed the use of technology such as formwork technology in construction, adding, “it is durable, reusable, more efficient, increased quality, faster construction and reduced labour costs.”

Besides, he said that the use of formwork technology was 25 per cent to 40 per cent cheaper through time and cost savings.

The OPIC’s managing director identified critical supply challenges as material sourcing, huge labour skills gap, infrastructural deficit/financing and constraining tax/fiscal policies.

Last line

Efforts should be made by organisers of such forum to package their findings and all suggestions should be packaged in a communiqué and forward to the government for necessary action.

Dayo Ayeyemi

 

Dangote pledges collaboration with FMBN, supports N500bn recapitalization

Africa’s richest man and President/CEO, Dangote Group, Aliko Dangote, has pledged collaboration with the Federal Mortgage Bank of Nigeria (FMBN) in the bank’s renewed drive towards affordable housing delivery for the largely un-housed Nigerian citizens.

Dangote who was at the apex mortgage bank’s office in Abuja on courtesy visit along with Isyaku Rabiu, chairman/CEO, BUA Groups of Companies, expressed preparedness to partner with FMBN to boost affordable and social housing delivery for Nigerians.

This development has brought both excitement and hope in the nation’s housing sector given that the two business moguls are frontline cement producers. What they can do to the housing sector using their cement product which is a major component of housing development can only be left to the imagination.

“Dangote, who ranks as Africa’s richest business man and investor, and Rabiu, a leading Nigerian businessman with vast investment in manufacturing, infrastructure and agriculture, are Africa’s two largest producers of cement, a critical input in the housing construction industry”, a statement from FMBN obtained by BusinessDay at the weekend noted.

Dangote told members of the FMBN board during the visit that he was in total support of the proposed

N500 billion recapitalization of the bank, explaining that it was a much needed development that would help power FMBN’s efforts at more effectively discharging its mandate.

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Recently, the federal government announced plansto inject N500 billion (about $1.4 billion) into FMBN over the next five years in an effort to spur homeownership that has failed to take off in the country.

Expectation is that the inability of the mortgage industry to bridge the huge housing deficit estimated at 17 million units may soon turn the corner following this intervention. The support for the fund coming from Dangote has given fresh hope for the fund and its purpose.

Experts in the mortgage industry expect the N100 billion annual fund intervention to make housing more affordable as it is expected to encourage Nigerians to take mortgage as a preferred choice of raising fund for owning homes.

Interestingly, Dangote also assured that his company was ready to collaborate with FMBN towards reducing the housing deficit by increasing the tempo and scale of social housing provision across the country.

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“Count me as a friend of FMBN. We are open to collaborating and supporting the good work that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria”, he said, advising the management of the bank to consider adopting mass housing models that have worked in other countries such as Ethiopia.

In the same vein, Rabiu also said he was committed to a close partnership with FMBN. “I am committed to forging a partnership that will add value to FMBN’s work and I look forward to further engagements in this regard”, he said/

Adewale Adeeyo, FMBN’s board chairman, commended the two business moguls for their visit and good intentions to partner with FMBN, assuring that the bank would work closely with them towards the consolidation and implementation of the partnership.

Endurance Okafor

How weak bank loan slows real estate performance

The real estate industry in Nigeria seems to depend heavily on commercial banks’ funding, as the decline in lending rate to this industry has contributed in pulling it in downward trajectory.

Total bank lending to construction and real estate sector declined by 11 percent from N4.81 trillion in 2015 to N4.2 trillion in 2017.

On the reasons for the decline in lending to the sector within the period under review, analysts attributed it to the nation’s five quarter recession which was experienced between first quarter of 2016 into the first quarter of the following year.

“The economy was in recession, and even the sector is still in contraction. So, lending to most sectors declined.

Banks saw other sectors viable enough to give credit to because they were more certain to get their return from those sectors in order to prevent bad debt which is not good for their books,” an analyst commented on the condition of anonymity told Business Day by phone.

Like other commodity dependent countries, Nigeria has had to weather the storm of declining petrodollars, following a lengthy collapse in oil prices which started mid-2014 and production disruptions caused by disgruntled militants who damaged oil pipelines in their clamour for better compensation for the oil extracted from their region.

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This resulted to the country’s longest contraction in more than 25 years, although it emerged from the negative growth when oil prices increased, and as such has expanded for four consecutive quarters into 2018.

Bank lending to construction and real estate sectors in Nigeria has remained dismal when compared to the likes of South Africa, the continent’s most-industrialized economy.

With a population of about 55 million, mortgages in South Africa account for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about ZAR5.14 trillion ($382 billion) at the end of January, according to central bank data.

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Negative and weak growth in construction and real estate sector of Africa’s largest economy continues to drag growth in the country’s GDP even as it slowed down in the first quarter of 2018 to 1.95 from 2.11 in the previous quarter owing mainly to weak bank lending to the sector.

Meanwhile, Africa’s most populous nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 percent for the National Housing Fund (NHF) and between 15-25 percent for commercial mortgage institutions which is considered by industry experts as one of the highest in the world.

Another analyst however pointed out the importance of bank lending to the real estate sector, saying, “this sector of the economy is the kind that is in steady need of liquidity and long term capital; when not available , it will continue to be in the position it is now,” the analyst who asked not be quoted said.

The economy, he added, needed to grow more in order for the property sector to feel the impact. “However, the economy has to expand more as this will rub off on the purchasing power of the citizens and, as such, there will be the demand for the products produced by the sector; so making funds available to the sector is not just enough, because if there are no demands to meet their supply, the sector will still be doing as badly as when it lacked funds,” the analyst added.

According to the National Bureau of Statistics, real growth rate of the real estate sector, real GDP growth recorded in the sector in Q1 2018 stood at -9.40 percent, lower than growth recorded in Q1 2017 by 6.30 percentage points and lower by 3.48 percentage points relative to Q4 2017. Quarter-on-quarter, the sector grew by -30.57 percent in the Q1 2018.

It contributed 5.63 percent to real GDP in Q1 2018, lower than the 6.34 percent it recorded in the corresponding quarter of 2017 and lower than the 7.03 percent in the preceding quarter.

This has been ascribed to the constraints placed on foreign exchange access that affected the construction and real estate industry, which is profoundly import-based, and the unbalanced economic climate, which has affected the general inclination to invest in the country’s real estate sector.

“The government has a larger role to play in the aspect of policy. If the government is able to develop and implement policies that are favorable to these sectors, definitely, they will see a boom. The prevalence of a lot of taxes and additional charges that are being put on construction companies and real estate developers is not helping and it frustrates the entire process of being able to initiate and complete a project,” Hakeem Sadiq, Founder of Zama,a real estate advisory firm, said

Endurance Okafor

Comfort for investors as CBN deepens efforts at growing mortgage market

More than ever before, efforts at driving growth in the fledgling mortgage market in Nigeria is
gaining traction and expectation is that, if there is no drop or relaxation in the tempo of
activities, it won’t be long before the market stats seeing the impact and fruits of those efforts.

The mortgage market in Africa’s largest economy remains in slow growth due to a plethora of reasons some of which are now being addressed in the new efforts which involve major stakeholders in the mortgage industry.

The Nigeria Mortgage Guarantee Company (NMGC), Model Mortgage Foreclosure Bill, and the Uniform Mortgage Underwriting Standards for both the formal and informal sectors of the economy are the
most outstanding of the new initiatives in the industry.

The partnership among the Central Bank of Nigeria (CBN), the Nigerian Mortgage Refinance Company (NMRC) and the Mortgage Banking Association of Nigeria (MBAN) is more than enough comfort for both investors and home seekers that it is a new dawn in the market.

To address the problems associated with land processes, the CBN is partnering with NMRC, which spear-headed the drafting of a Model Mortgage Foreclosure Bill, as well as MBAN and other strategic partners, to encourage the passage of a Model Mortgage Foreclosure Law in every state of the nation.
The apex bank has even provided states with the draft MMFL, and has held an MMFL workshop with their key representatives to ease their task to passage of the law.

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The bank says it is encouraged by the recent surge in housing policy adjudication, led by the most housing-friendly states in Nigeria, citing the Lagos High Court which has delivered ground-breaking decisions positively impacting the industry and giving comfort to intending homebuyers as well as investors.
The judiciary had always been castigated for its slow justice delivery, but the decision by the Court of Appeal in the Thomas Wyatt & Ors matter is an arbiter of the increased sensitivity of the judiciary to
mortgage contract relationships, and it is applauded forthat brilliance and clarity.

Standardization in mortgage processes is also being addressed head-on as could be seen in the Uniform underwriting standards for the formal sector, informal sector, and non-interest sector which have already been adopted, and are being used by the larger section of the industry.

NMRC has launched the MMS mortgage platform, which has been endorsed by the CBN and is encouraging all parties to utilize. This platform will standardize documentation, loan processing and underwriting, property valuation, closing and many other areas.

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The current effort is however not unmindful of the cultural biases towards mortgage loans. The CBN in particular believes that cultural aversion to mortgage loans is actually one of the toughest battles in
the housing sector, but has decided to continue to engage with the public in order to destigmatize mortgage finance, using the positive effects on employment,internally generated revenue (IGR) and generational wealth enhancement.

The bank says it is encouraged by the interest shown at state government levels, and so expects to see significant progress in mortgage friendly legislation in future.

A significant challenge in the market is lack of knowledge and awareness regarding mortgage loans. The bank’s National Housing Finance Programme (NHFP) national campaign ‘My Own Home’ has been focused on creating such public awareness, and the states and industry are expected to do their part.

There has been a significant uptick in public curiosity regarding various types of home financing, and the bank assures it will continue to encourage all industry players to invest in advertising, education and incentivization to ensure the continued viability of the housing sector.

CBN believes the entrance of a robust and viable mortgage guarantee product into the housing market is clearly a win for all parties concerned, pointing out however that its existence and/or viability will be directly related to the effort the industry operators invest in ensuring a suitable environment for its development, deployment and administration.

Chuka Uroko

Mortgage finance, Land Use Act resonate as experts chart course for housing sector growth

Developing housing cheaply and delivering same at affordable prices remain thorny issues in Nigeria that seem to have defied quick-win solutions, limiting investment and constraining growth of the sector.

But when experts and sundry stakeholders gathered in Abuja last week, seeking ways of ‘driving growth and sustainability in Nigeria’s housing and mortgage markets’, despite varied views, they had a common focus on mortgage finance and Land Use Act as major barriers to growth.

The experts, who gathered for the 12th edition of the Abuja International Housing Show (AIHS), described as the largest housing and construction sector stakeholder’s platform in Africa, identified Land Use Act of 1978 as the most critical constraint to the growth of the housing sector in Nigeria.

The place of these two factors in the housing sector is quite critical. No housing market can be said to be mature as those of UK and the US without a well developed and functional mortgage system while there can be no functional mortgage system without a good and flexible land administration system.


In Nigeria, both of these are lacking. The growth of the mortgage system in the country has been greatly hampered by very rigid, inflexible and primitive land laws as encapsulated in the Land Use Act.

Passed by a decree in 1978 and inserted into the 1979 national constitution, the provisions of the Act can only be changed through a constitutional amendment, necessitating a two-thirds majority of both the federal and state legislatures. Multiple attempts have been made to influence a revisit of the Act, but the process has been too cumbersome to succeed, causing the intending parties to drop their plans in frustration.

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But developers have to produce houses and mortgage operators have to continue in business. So, “it has become clear that we must create an enabling environment in which a sustainable mortgage market can thrive, and one of the most important drivers of this is a well established land administration process”, said Adedeji Adesemoye, Head, Project Administration Team, Nigeria Housing Finance Programme, and Deputy Director, Other Financial Institutions Supervision Department (OFISD) at CBN.

Adesemoye who spoke on ‘Managing Unintended Consequences of the 1978 Land Use Act’ at the AIHS, highlighted efforts, including the setting up the Nigeria Housing Finance Programme (NHFP) and the Model, Mortgage & Foreclosure Law (MMFL), being put in place to grow the housing market.

NHFP is being implemented by the federal government through its relevant ministries, departments and agencies (MDAs) and this is supported by the World Bank International Development Association (IDA). The objective of the programme, Adesemoye explained, was to increase access to housing finance by deepening primary and secondary mortgage markets.

The MMFL is a draft bill designed to make delinquency in mortgage repayment unattractive to mortgagors and reduce losses from mortgage loans. It is expected to create a more attractive and vibrant environment, thereby attracting investors providing long term, low cost and more available capital to the market.

Its main strategy is to encourage the use of administrative procedures to address some of the most negative provisions of the Act.

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For property investors, this is a good development. But in addition to these efforts, developers also owe it as a duty to themselves to, according to Hakeem Oguniran, the outgoing managing director of UAC Property Development Company (UPDC), be creative in managing the limiting impact of Land Use Act.

He advised that developers should de-emphasize the traditional way of raising development finance, explaining that they should go to the capital market to raise funds by floating bonds which offer much cheaper rates at longer tenor.

To also address the problem of mortgage market growth, the CBN has come up with an initiative known as mortgage guarantee programme which is mortgage given to a borrower by a lender where an identified third party will take responsibility for the loan if the borrower defaults. Expectation here is that this will push up housing affordability because, withthe new programme, once a borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage.

“A quality mortgage guarantee programme is used to provide credit loss protection to lenders in case of borrower default”, explained Tokunbo Martins, Director, Other Financial Institutions Supervision Department (OFISD) at CBN, who also spoke at the Abuja International Housing Show.

“Mortgage guarantee products incentivize lenders to accept loans with lower down-payments, thus increasing affordability”, she added. The implication of this is that borrowers who, ordinarily, would not have qualified for mortgage loan by reason of their low income, can now obtain loans which enhances their affordability.

From the government angle, Babatunde Fashola, the minister for power, works and housing, was of the opinion that one of the surest ways of making housing affordable and growing the housing sector was by industrializing housing development by laying greater emphasis on locally produced building materials.

Industrializing the sector, in the opinion of the minister who was keynote speaker at the housing show, would not only drag down the cost of construction, material wise, but would also create jobs for those involved in the housing value chain including input manufacturers, professionals and artisans.

But the experts tasked the government on providing infrastructure and coming up with policy frameworks in the financial sector that will make mortgage accessible and affordable through a significant reduction in interest rate.

“The housing market behaves in a particular way; it gravitates where there is effective demand. Government should recognize that the weakest demand comes from the low end market and so should direct regulatory system towards that end with policies to address that problem”, said Femi Adewole, managing director, Shelter Afrique, Kenya.

Adewole added that the government should also adopt the zoning system through which it would discover areas where housing need is highest and the type of housing needed, just as it should impose heavy tax on houses that are unoccupied to discourage further development in that area.

CHUKA UROKO

 

5 Tips On Saving Space in Your Home

Moving into a new home can be quite challenging. Whether you are moving the old sofas and kitchen utensils, or you’re buying everything anew, managing space can be quite demanding. Asides making the home more pleasant, adequate space in the home can promote ventilation and a healthy lifestyle.

Here are a few tips to help on saving space in your home.

GET RID OF UNWANTED/UNUSED ITEMS
As typical Africans, we tend to store up old and used materials around the house. Old newspapers, unwanted CD cases, broken mugs and torn table mats. To create more space around the house, we need to get rid of all these items.

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Do you want to know how to determine what items you need to get rid of? Ask yourself these questions: Can I do without this? Is this useful? Do I use it for the purpose to which it was designed? If you answered No to at least 2 of these questions, it needs to go in the trash! You can even make a few bucks by selling those old newspaper and irons.

GO MINIMAL
Going minimal with your house designs is the new cool. This does not just save space but makes the house quite beautiful. You know what they say; less is more.

DOUBLE DUTY FIXTURES
This is a great way to save space in your home. Beds with drawers, Stairways with bookshelves, bunk beds, draw out/foldable ironing boards. There are several affordable and creative multi-functional furniture available in furniture stores around Nigeria.

One way to get open storage that’s also visually appealing is by using unusual and creative items as storage containers. Things such as baskets mounted on the wall are like functional works of art—and they’re cheap to boot.

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USE ALL THE SPACE AVAILABLE
Floors, ceiling cabinets, ceiling hangers, roof storage, there are just a few of the many ways to use up all the space available. They do not even have to appear clustered. Ceiling hangers are very good for kitchen utensils.

The space under the beds can be used to store shoes and toys. You see houses these days with very high ceilings, and this space is totally unaccounted for! You can have those paintings taking up all the wall space, over at the stairs.

BE CURRENT
Technology has come a long way over the last several years. Keeping current with the latest advances is not only a great way to save space in your home; it’s an effective method for greening up your home. New designs for home appliances, such as washers, dryers, refrigerators, bathroom fixtures and water heaters, use less energy and water and take up less room in your home. To save space, use stack able appliances where possible. We even have energy saving air conditioners available for sale.

These are great ways to not only save space in and around the house but to also make the home even more beautiful while creating a healthier environment.

Niyi Ademoroti

Tips to help you avoid a real estate scam

It is unwise to think you can’t be fooled in a real estate transaction while some sellers and buyers are quite honest, there can be some dishonest sellers, agents or buyers. The reality is that the trait of dishonesty is not written on anybody’s forehead instead many of this scammers are criminally minded folks who are taking advantage of the system. Scams in the real estate industry in Nigeria are real but real estate scams are not just a problem peculiar to Nigeria. It is a global issue and there are ways you can protect yourself from being a victim.

So the real question is: how do you know if you’re about to be scammed in a real estate transaction? The truth is you can’t know if you are about to be scammed but there are warning signs and tips you can take to protect yourself against the activities of scammers. Even if you are working with honest people, these are safe ways to approach buying, renting or selling any home.

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Don’t rush the buying/renting process
It is quite possible to find a great deal and you most probably want to act quickly so you don’t lose the offer to someone else but the problem with rushing the buying or renting process is that you have little time to question the real estate transaction.

Step on the brakes of excitement and objectively analyse the deal if it seems to good to be true then it is advisable to step back from such transactions. It is better to be safe than sorry.

Verify the person you’re working with in the real estate transaction

Do not take whoever you are working with at face value ensure you do your research about that person. This is the digital age, check the person online, ask for referrals from other people and review their past works.

If your gut feeling tells you something is wrong with the person involved in the real estate transaction, then you need to step back do more research about that person. Don’t work with any person you have no confidence in.

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Ask questions

Ensure to ask a lot of questions especially about any unclear issue about the real estate question. Ask the agent the reason for the sale? When there is not a reason for the sale, that can be a red flag. Questions are important because they help reveal inconsistencies in the real estate transactions.

If you spot any inconsistencies that cannot be reconciled then you need to rethink your involvement in the real estate transaction.

Avoid paying cash

If the homeowner or agent is asking you to pay in cash then you should tread carefully of that real estate transaction. The problem with paying in cash is that the money is not traceable unlike paying in a bank instead you insist on writing checks or paying at the bank as this means of payment does not leave you hanging dry if the transaction goes wrong.

You want to be able to hold someone liable when all is not what they seem; so be careful and avoid payments you can’t trace. If the agent or house owner is unyielding about paying in cash, then you need to step back immediately from that transaction.

Email scams

Internet originating scams are not uncommon these days. All the advantages of the digital era have made our life a lot easier, however, they don’t come without harm. When you receive an email that seems suspicious, double check with your agent before taking any actions requested electronically.

Use a reliable source in your search for properties
Online property listing sources is a reputable platform to use in finding properties in Nigeria. It is advisable to make use of well know property agency so as not to be duped of one’s hard earned money.

Never skip inspection

A major red flag for any real estate transaction is when the homeowner or agent is trying to discourage you from inspecting the house. If there is nothing suspicious to hide then inspection is not negotiable. Insist on inspection and if not granted by the homeowner or agent then it is advisable to terminate the real estate transaction immediately.

Damilola Dimeji-Ajayi

7 Things You Need to Know Before Investing in Real Estate

I often hear people say they want to invest in real estate, but many do not know what to do or how exactly to go about the processes. It takes more than having interest, or a wild dream to own a property. Being informed plays a vital role in ensuring one makes the best business decision.

Although there are different categories of properties (flat buildings, duplex, land etc), having a basic knowledge of what real estate investment entails can help one navigate through the processes.

1. Learn how to spot a great location
For a smart choice of location, one must be able to tell areas with the high potential of developing over the next few years. It is important to do your homework, this will not only help you in making informed decisions but the yield – financial and social – will also be invaluable. Is the town becoming dense and overpriced? Then it is time to pay attention to the outskirts. Over the last few years, parts of Ogun state close to Lagos have recorded a high level of immigration, an increase in infrastructures, and more construction of residential buildings and companies.

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This post on how to spot an up and coming areas will help you gain insight on how to make good judgement concerning real estate. You don’t want to be left out. Likewise, in learning about the future of a location and its prospects, it is also important to consider the history of the house, land or area. Is it usually flooded during the raining season? Is the area prone to social, political or religious riots? Do your research.

2. Pricing
Study the prices of properties in the neighbourhood and their trends. You should also compare them with the price listings in other areas. This will give you an idea of what is mostly on demand, their price range and the monetary value you place on your property. Pricing demands that one does thorough research, this enables you to have a better understanding of the concepts of the business. You will get to know about the locations that best suit your needs.

3. Renovations are not directly proportional to monetary returns
Polishing up a building may not necessarily increase the value. The knowledge of this will save you from unnecessary heartache. In a bid to create good impressions and increase the chances of selling the property, some renovations may need to be made. However, buyers have different tastes and no amount of renovation will make a person buy what they really do not want. But it is necessary to make effort. Keep the property clean, get rid of odours etc. Yes, upgrading the building will make it more appealing to buyers, but it may add only a little or nothing to your wallet. You will not always get back every amount spent on renovations. It does not mean you will be at a loss either. The basic things are to maintain a balance between the two.

4. Negotiate
Ability to negotiate is one of the skills that differentiate successful business owners from mediocre. Yes, we know you have the money and can’t wait to become a land or house owner. But perhaps that property can be purchased at a lower rate? This also works the other way round. In selling, you should not be in haste to let go of a property. You may get better deals that it deserves. It’s also okay to listen to potential buyers, you may not always get to sell the property at the price you wish. And that’s okay.

5. Real Estate is real business

There is the temptation to be lax about property investment as it is not a ‘day job.’ But the level of commitment should be as much. Get information, be diligent in asking questions and finding answers. You’d be surprised at how much many people who want to invest in real estate don’t know, not even the basics! You really don’t want your money to go to waste. There are real estate terms you may also need to familiarise yourself with, this may help you in dealing with agents and buyers.

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6. Put your money where your mouth is
If you cannot confidently talk about a property you intend to sell to someone, something might be wrong. Integrity is essential in everything, real estate business included. If something is not right with the building or land, if you are going to have issues speaking about it when it’s time to sell, maybe you should not buy it in the first place. Real estate business thrives when there is good marketing, that is one of the concepts one must not take for granted.

7. Put it in writing, always

This is basic! Whatever you do, ensure you have documents as a proof. Real estate is a serious business. Although legitimate, many are in it to take advantage of unsuspecting persons. In choosing a real estate agent, there are companies that can assist you to do that. There should also be legal documents at every point to bind your agreements with other people.

Kemi Falodun

Nigeria: 17 Million Deficit – Adopt Ethiopia’s Mass Housing Model, Dangote Tells Govt

The chairman/chief executive officer of Dangote Group, Alhaji Aliko Dangote has called on federal government to adopt Ethiopia’s mass housing model in a bid to address the over 17 million housing deficit in the country.

Dangote also said he supported the proposed restructuring and N500bn recapitalisation of the Federal Mortgage Bank of Nigeria (FMBN) for effective service delivery. He stated this when he visited the bank’s headquarters in Abuja alongside the chairman/ chief executive officer of BUA Group, Alhaji Abdulsamad Isyaku Rabiu on ways to boost affordable social housing delivery for Nigerians.

The Africa’s richest man commended FMBN for the renewed aggressive drive to provide affordable housing for Nigerians. Dangote assured that his company is ready to collaborate with FMBN towards reducing the housing deficit by increasing the tempo and scale of social housing provision across the country.

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According to him, “Count me as a friend of FMBN because we are open to collaboration and willing to support the good works that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria”.

Also speaking, chairman, BUA Group of companies, Alhaji Abdul Samad Isyaku Rabiu stated that he is committed to a close partnership with FMBN.

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Responding, the FMBN board chairman, Dr. Adewale Adeeyo lauded the support and partnership of the companies towards the development of the sector.

Chika Okeke

Restructuring the housing sector

A new initiative by the Central Bank of Nigeria to strengthen mortgage financing in the country highlights the crisis in the country’s housing sector. Though short on details, the bank said it was collaborating with the Nigerian Mortgage Refinance Corporation specifically to address challenges in delivering affordable housing in the country. Bridging the huge housing deficit requires a new multi-faceted approach by the three tiers of government.

The Deputy Governor, Financial Systems Stability of CBN, Aisha Ahmad, says the collaboration with NMRC targets effective mobilisation of credit for housing. Efforts to remove the constraints in the provision of cheaper homes would also be crystalised alongside the expected passage into law of the Model Mortgage and Foreclosure Bill. This seeks, among others, the dismantling of some of the administrative and legal constraints in achieving the goal of housing for all Nigerians, a target set by the government four decades ago but missed. Instead, the gap has widened.

From only a few million units short in the 1970s, the World Bank puts the current deficit at 17 million housing units. In contrast, faced with similar housing shortage in the wake of rapid urbanisation, South Africa delivered over three million housing units between 1994 and 2017 to fill the gap, establishing itself as a country with one of the world’s most ambitious housing programmes. Egypt, Africa’s third largest economy after Nigeria and South Africa, identified a national emergency situation when, by 2011, it had a deficit of 1.5 million housing units!

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According to Ahmad, Nigeria currently has a stock of only 13 million housing units for a population variously put at between 180 million and 193 million, while eventual demand is estimated at between 38 million and 44 million units.

Housing is critical in every economy and usually assumes crisis dimension in emerging economies where rapid urbanisation often outstrips the capacity of cities to provide new housing, according to economists. Shelter is a basic necessity after food and clothing. A report in South Africa’s Mail & Guardian newspaper said inadequate housing posed both security and development threats to the society. The United Nations Development Programme says housing is central to human development and impacts on health and productivity. Provision of housing or lack of it has also been linked to poverty and is adopted by the United Nations as a poverty-reduction strategy.

With poverty rate variously put at over 61 per cent by the National Bureau of Statistics and 80 per cent by the African Development Bank, Nigeria’s housing deficit is not surprising. Think of Lagos, where 86 persons are said to relocate to every hour and swelling its 23 million-strong population. Other cities like Abuja, Onitsha, Port Harcourt and Kano are feeling the pressure for new housing. State provision of housing is patchy and lending rules are prohibitive.

Confronted with urbanisation, responsive governments adopt multi-pronged approach. In South Africa, all of the central, provincial and city governments are involved. Government’s assistance targets low-income earners. Durban, a major city in South Africa, provided 174,000 new units between 1996 and 2014.

The United Kingdom provides a template to be emulated. There, private investment provides housing, while local councils supply the bulk of low-income housing with the central government’s support. Housing associations are also formed as non-profit organisations to provide housing for low-income earners and the needy. Like the UK, India has also been promoting strong mortgage financing through reforms sector to house its 1.2 billion people.

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Apart from sheer incompetence, successive Nigerian governments miss their targets through wrong strategies and lack of the needed political will and strong regulation to see through good ones. A repeated blunder is the forlorn attempt by the Federal Government to build houses directly. Without unlimited funds and by the sheer magnitude of the logistics, this is ridiculous. A current plan to build 2,736 units across 33 states is typical: how can this redress the 17 million deficit? It is the states and the local governments that are better placed to do this. The United States city and county councils are constantly partnering private developers to provide affordable housing through regulations, policies and subsidies.

The Federal Government should strengthen its partnership with the states and LGs, who in turn should enter into corruption-free arrangements with the private sector and non-profits. Land acquisition and building approval processes should be streamlined and home ownership made easier for the low- and middle-income segments through less red tape, low licensing fees and low-interest credit. State governors should stop building houses for civil servants alone: they are elected to serve all, not a few.

The government should muster the political will to implement the National Housing Policy and make the National Housing Fund and NMRC effective. Non-enforcement crippled the mandatory subscription of 2.5 per cent of every worker’s pay to the NHF specified by law. The system has also been assailed by the prevalent culture of corruption and nepotism, translating to low repayment of the low-interest credit provided by the Fund through primary mortgage institutions. Solving the problem will require a thorough reform of the mortgage finance sector that currently contributes less than one per cent to Gross Domestic Product, unlike OECD countries where it averages over 50 per cent.

But the daunting task is how to tackle the macroeconomic environment side where interest rates to the productive sectors average 22-28 per cent and lending rates to the real estate sector range between 28 and 36 per cent. Statutory requirements that banks and insurance firms reserve a percentage of their credit and investment respectively for real estate are ignored.

Construction is a major job creator and housing provision alleviates poverty: with this in mind, the three tiers of government should rouse themselves today to reform the housing sector.

Punch Editorial

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