States’ economies sees improvement as Fund’s intervention targets 500,000 home and 1.5m jobs

The intervention by the Family Home Fund (FHF) in the Nigerian housing sector to deliver affordable housing to low-income earners in the country will significantly improve the GDP and economy of the states where the intervention is already yielding fruits, people familiar with the Fund have said.

EchoStone is a property development firm that deploys an innovative technology which allows rapid and scalable construction of houses. It is currently building 2,000 housing units beginning with 250 units of two-bedroom detached bungalows in Idale Badagry, Lagos. FHF is to build 20,000 housing units in Lagos.

So far, about six state governments including the FCT have donated land for the development of various numbers of housing units, including Ebonyi State which has donated land for developing 1,200 homes.

Kaduna State has also donated land for its millennium city which promises about 650 homes; the ancient city of Kano has 757 homes; Asaba, Delta State, about 620 homes; Ogun State, about 1, 074 homes; FCT, about 580 homes, while Akwa Ibom has donated land and signed MoU with the fund for the construction of 5,000 low-income houses.

There is an expectation that through a combination of these housing development activities, 1.5 million jobs will be created for both skilled and unskilled labour that will be working at the construction sites.

Analysts say the creation of 1.5 million jobs will have significant impact on the economies of the states, more so with the multiplier effect of job creation.

“When you give job to one person, you shall have impacted the lives of about four or five more persons,” noted Johnson Chukwuma, a civil engineer.

He explained that, one way or another, part of the income earned by these workers goes to the state government by way of paying taxes or other levies, stressing that a state with healthy citizens is, by implication, a wealthy state.

FHF, which is arguably the largest affordable housing-focused fund in sub-Saharan Africa, was in Lagos recently and, according to Femi Adewole, its managing director, its mission to Lagos was to explore a potential partnership for a large-scale affordable housing scheme with a specific focus on Lagosians on low income.

“Alongside good quality homes, the programme will be looking to create jobs for Lagosians. Other aspects of the scheme include a commitment that we are not just to build housing units; we also need to look into the environment and climate change issues which now stare us in the face,” Adewole said.

He assured of the fund’s commitment to the provision of affordable housing, disclosing that they had invested over N20 billion in housing projects to support Nigerians who are earning below N100,000.

“We are also providing financing for developers who will build homes ranging between N2.5 million to N5 million,” he said.

Besides providing funding for the product suppliers, the Fund also aids the demand side by assisting house buyers, giving them a deferred loan for up to 40 percent cost of the houses.
The Fund supports local content in the house-building process and Adewole disclosed that their long-term objective was to ensure that up to 80 percent of manufactured inputs were locally produced.

 

Source: Chuka Uroko

saxonby-affordable-logo

7 Key Features that Impact Affordable Housing in Africa

Africa’s housing sector has witnessed remarkable and significant developments over the past few years. Thanks to the multiple reforms brought about by stakeholders of the sector. However, there is still a vast scope of possibilities to bridge the gap between the affordable housing demand and supply through multiple approaches, which when brought together will lead to a future where everyone has a place to call home.

We have encompassed some of the influencing factors that would allow more collaboration and thus pose African affordable housing as a lucrative sector to invest in a meaningful future.

1. Investment & Financing 

The key to a good return is based on a bankable investment structure, optimal project management, and predictable returns. Multiple channels of securing & boosting returns and alternate

financing options help re-instill the investor/financier faith in affordable housing projects.

2. Public-Private Partnerships:
PPP models are now taking the center stage as governments turn to PPPs for long-term commitments; risk-sharing and large scale investments. This model is not only cost-efficient but also time-efficient and objective. Yet, multiple concerns arise with the model with respect to the accountability, control, and rigidity of contracts.

3. Design & Construction efficiency:

A whopping 70% or more of the entire cost is directed towards construction. This is one of the major challenges that affect affordability. Innovative construction methods such as the use of reclaimed material, new planning and cost management systems, design innovations, account for construction efficiency of homes.

4.  Legal & policy framework:

While these exist to protect the interests of the end users, there is no denying that, many a times legal structures & policies could be an impediment for investors to venture into projects as a result of implications which could impact the entire value chain of the sector. The issue is how to address priorities and various conflicts of interests in order to ease financing and supply of affordable houses.

5. Technological advancements:

The rapidly evolving landscape of technology offers numerous ways to not only expedite the initiation and delivery of houses but also streamlines, the whole process, increases transparency and thus reassure that the residential units are fast, affordable and reach the rightful buyer.

6. Infrastructure and community facilities: 

Homes that are well within the proximity of workplaces, educational institutions, and other recreational areas are always a win with the community. This not only attracts more investment but also the buyers, providing them with low-cost homes and facilities that are basic to present-day living.

 

7. Sustainable Homes are the Future

Last but certainly not the least, is the concept of Green Homes, where people and the planet can thrive. Green building practices and sustainable designs contribute to efficient utilization of resources while creating healthier and more productive environments for people and communities.

The Affordable Housing Investment Summit attempts to open avenues to have honest and fruitful dialogues, on the 26th & 27th of June 2019 in Nairobi-Kenya, along the factors above and more, among the key stakeholders including the government representatives, financiers and project developers who delve into the ideas that can convert challenges into opportunities to make affordable homes a reality for all.

family

Seven ways to get your child a first home

It has never been harder to get a foot on the housing ladder. House prices are now nearly eight times the average wage, and they have been rising faster than most can save.

Almost one in four first-time buyers are now turning to the ‘Bank of Mum and Dad’, figures from insurer Aldermore Bank show.

And 30-year-olds whose parents have no property wealth are 60 percent less likely to be homeowners, according to the Resolution Foundation.

But if you can’t hand over a hefty deposit to your loved ones, you could still lend a hand.

Last week we explained how you can aid them in preparing their finances to get mortgage-fit in two years. Here, we explore other ways to help them get the keys to their first home…

GIVE IT ALL AWAY

Family or friends can give all — or a chunk — of a deposit to the buyer as a simple, tax-free, non-returnable gift.

Simply handing over a deposit is the most common way parents help their children onto the ladder, and this is where the term ‘Bank of Mum and Dad’ originates.

Legal & General figures show the Bank of Mum and Dad gave close to £5.7 billion in 2018.

Alongside savings accounts for first-time buyers such as Help to Buy and Lifetime Isas, a gifted deposit can top up any shortfall.

But this may be an option only for wealthy parents who have money they won’t need in retirement if they intend to give all their loved ones an equal deposit.

Vicky Bradley, a product manager at Skipton Building Society, had saved £9,000 for a deposit when she fell in love with a £125,000 two-bed terraced house in Keighley, West Yorkshire.

Her parents, Bob and Linda Bradley, offered to help cover the 10 percent deposit and fees.

‘They agreed to an informal loan of £3,000, but then told me it was really a gift,’ says Vicky. ‘It was such a lovely surprise and allowed me to arrange a mortgage straight away.’

Gifted money could be subject to inheritance tax. For gifts above your annual allowance of £3,000, you must live longer than seven years from the date you gave the money away to avoid the risk of an inheritance tax liability on your donation.

A gifted deposit can also prompt questions over who gets the money back if a couple of splits and their house is sold.

A solicitor can draw up a legal document such as a Declaration of Trust to note which buyer the gift was given , and the share of the property to which they are entitled.

…OR GET IT BACK

If you cannot afford to give a deposit away, then you can lend it — on your own terms.

A loan lets you keep some control by specifying when you need the cash back. It may be exempt from inheritance tax but the rules are complex, so check with a tax expert first.

A solicitor is needed to draw up the terms and, just like with a mortgage, the parents would register a charge on the property deeds to ensure the loan is paid back.

The charge on the deeds would specify that on the sale of the property, or when it is remortgaged, the money lent is repaid.

A drawback for the parents, however, is that they are also required to stick to the terms and cannot readily access their cash.

Only a handful of lenders accept a parental loan as a deposit, and those that do take monthly repayments into account — which could restrict the amount your child can borrow.

LOAN YOUR NAME 

First-time buyers can now add their parents to the mortgage application while keeping Mum and Dad’s names off the deeds.

A ‘joint borrower, sole proprietor’ deal allows the buyer to apply for a home loan using their parents’ income. Adding family members to the mortgage, but not the property, has grown in popularity.

Lenders prefer this over a traditional guarantor deal, where parents are vetted separately to make sure they can make payments in case the children default on the loan.

After Virgin Money withdrew its guarantor mortgage last year due to a lack of demand, only a handful of lenders, including Hinckley & Rugby, Cambridge and Market Harborough building societies, will still consider this type of deal.

Instead, around 20 lenders offer the new joint borrower arrangement — double that available ten years ago.

High Street banks such as Barclays, Metro, and Clydesdale offer a mortgage on these terms, along with building societies such as Newcastle, Hinckley & Rugby and Buckinghamshire. Interest rates are typically the same as with a regular mortgage.

The cheapest five-year fix available is 2.34 percent with Barclays for borrowers with a 10 percent deposit. On a mortgage of £150,000, the monthly repayments would be £661. Over five years, the total cost of the mortgage, including a £999 fee, would be £40,659.

The length of the mortgage offered will depend on the age of the oldest borrower.

Mark Harris, chief executive of mortgage broker SPF Private Clients, says: ‘This type of deal helps with the affordability of the mortgage but not the deposit.

It also ensures the child qualifies for first-time buyer stamp duty exemptions, while the parents sidestep the additional 3 percent stamp duty surcharge for purchasing a second home.’

And by not owning a share of the first-time buyer’s home, parents can also avoid paying capital gains tax on any increase in the value of the house when it is sold.

But Mr Harris warns: ‘Anyone named on the mortgage is jointly responsible for making payments. It could also damage their credit rating if repayments are not maintained, and affect the parents’ ability to take out further debt in the future.’

 

SAVINGS SWAP

Among specialist offers aimed at families is a 100 percent mortgage tied to a savings account.

This allows first-time buyers to buy a house without a deposit on the condition that a family member deposits money in attached savings account for a fixed period.

The Barclays Family Springboard and Lloyds Lend A Hand mortgages require 10 percent of the value of the house to be locked away in a fixed-interest savings account for three years.

Although your money is tucked away and you cannot access it in an emergency, you will get it back, along with interest, when the term ends.

Lloyds pays 2.5 percent on savings, and Barclays currently pays 2.25 percent — its rate is set 1.5 percent above the Bank of England base rate.

David Hollingworth, of mortgage broker L&C, says: ‘This could help parents or grandparents who are not in a position to give money away, or have a large family and need to share their wealth around.’

But for the first-time buyer, it may mean they have to stay in the property until its value increases enough to give them a substantial deposit in order to take the next step on the housing ladder.

If the house price falls, they could find themselves in negative equity. If mortgage payments are missed, banks may hold on to the money for longer until they are cleared or, depending on the lender, use some of the money to clear any debts.

Former garage owner Carl Bojen, 65, used the Family Springboard mortgage to help his granddaughter Toni Thornton, 28, buy her first home nearby in Grimsby, Lincolnshire, with partner Kane Ramsey and their son Ronny, three.

‘I want to help all my grandchildren buy their own homes, but it would break me to give all six of them a deposit,’ Carl says.

Carl and his wife Linda, 65, put £13,200 of their savings — 10 percent of the £132,000 purchase price — into a Barclays savings account attached to the mortgage. After three years Carl and Linda will get their money back with interest, ready to help their next grandchild.

Without help, Toni, who works in telephone sales, and electrician Kane would have had to save for another three years.

HOME BETTING

Another option for families is, instead of offering cash as a deposit, parents can allow the bank to put a charge — like a mortgage — on their home for the equivalent amount.

The value of that charge could be, for example, 20 to 25 percent of the value of the first-time buyer’s house. It remains on the property for around 10 years.

It can be reviewed before then, and if there is enough equity built up in the home, it can be removed early.

Aldermore Bank and Family Building Society are two lenders that offer these types of mortgages. Family BS requires the first-time buyer to contribute 5 percent of the deposit.

It could suit parents who have lots of property wealth and do not plan to move house.

If parents want to move, particularly in the short term, there must be enough equity in their new home to still provide the same guarantee.

There is also the risk that they could lose their home if their child or grandchild’s house is repossessed and there is not enough money to repay the loan.

SLASH INTEREST

Families can also use a savings account to slash the interest a first-time buyer pays on their mortgage.

A family offset mortgage is similar to the savings and mortgage account option, but instead of getting interested on the money in the account, it is used to reduce the mortgage cost.

When the mortgage lender checks whether the first-time buyer can afford the mortgage, they will base the assessment on the lower monthly payments, after the parents’ savings have been taken into account.

For example, if a mortgage of £150,000 was taken out, and £50,000 savings were deposited in the account, the borrower would only pay interest on £100,000 of the mortgage.

Family Building Society and Yorkshire Building Society are among those which offer the deal.

Parents will get their money back after a fixed period. This is usually ten years, but it can be reviewed earlier — for example, when the borrower’s fixed rate comes to an end.

The drawback is that the money is locked away for a period and will not earn interest for the parents. It could also be eroded by inflation.

If the house is repossessed or sold for less than the loan amount due, savings in the offset account can also be used to foot the shortfall.

But in a low-interest rate environment, savers may prefer to forego earning a small amount of interest in favor of helping their children pay less towards their monthly mortgage payments.

Kim and Alison Wilkinson, both 60, from Surrey, used a Family Building Society offset mortgage to help their daughter Sarah, 26, buy a £260,000 three-bedroom terraced home in Portsmouth, Hampshire.

The couple had built up savings but did not need to use them in the short term. Earning next to no interest in a savings account, they decided to put the money to better use.

Secondary school teacher Sarah’s mortgage with Family BS was fixed for five years at 2.89 percent.

‘Mum and Dad wanted their money to work as hard as possible,’ says Sarah. ‘By putting it in the offset account, it effectively earned 2.89 percent.’

While she could afford the monthly repayments without her parents’ help, she says: ‘This reduced my mortgage payment from around £750 to £550, which gave me the more disposable income to furnish the house and enjoy treats such as holidays, which I may not have been able to do as a first-time buyer.’

CASH IN PROPERTY

Income-poor older homeowners with plenty of property wealth could unlock their home’s equity to help.

Equity release is available to borrowers aged 55 or over. It allows homeowners to gift their property wealth now, instead of waiting until they die and their house is sold.

In the first half of 2018, close to 20 percent of borrowers taking out equity release used the money to help the family, according to Canada Life.4

The only has to be repaid only when the homeowner dies or moves into long-term care. There are also options that allow borrowers to pay the monthly interest if they want to reduce the cost of the overall loan.

This can also reduce your inheritance tax liability, as the value of the equity release loan will be deducted from the overall estate when the inheritance tax bill is calculated.

Rates on equity release mortgages are higher than traditional mortgages. The average interest rate is 5.24 percent, compared to the average two-year fixed rate of 2.49 percent on a traditional mortgage.

Interest is also rolled up and added to the loan monthly, which can double the debt every 14 years.

Parents or grandparents should seek legal advice before entering into a family mortgage arrangement.

Source: DailyMail

Odu’a signs N3.5bn housing deal with UK-based firm

Odu’a Investment Company Limited says it has signed a Memorandum of Understanding with United Kingdom-based Iconic City Limited for the development of a 3.8-hectare land in Alakia, Ibadan, the Oyo State capital, into a residential housing estate.

Odu’a said the agreement was in pursuit of its growth strategy predicated on unlocking value from its huge asset base for sustainable development.

Odu’a Investment Company Limited says it has signed a Memorandum of Understanding with United Kingdom-based Iconic City Limited for the development of a 3.8-hectare land in Alakia, Ibadan, the Oyo State capital, into a residential housing estate.

Odu’a said the agreement was in pursuit of its growth strategy predicated on unlocking value from its huge asset base for sustainable development.

According to the firm, the proposed residential housing estate which has been code-named ‘Westlink Iconic Estate’ is a medium density luxury estate consisting 124 households and will cost about N3.5bn.

“It comprises various housing types to allow for different market segmentation subscribers. The housing products are 60 units of three-bedroom apartments, 42 units of four-bedroom terrace houses, 14 units of five-bedroom semi-detached duplexes, eight units of six-bedroom fully detached duplexes and 36 commercial and business units,” the firm said.

It said the initiative was hinged on the Federal Government’s Economic Recovery and Growth Plan which had human capital development as one of its cardinal objectives with housing provision as key factor in achieving that goal.

The statement read in part, “The housing deficit in the country is over 22 million if not more, and investment in housing remains a worthwhile and profitable venture, especially when affordability is considered.

“Odu’a Investment Company Limited has identified partnership as a veritable strategy to add tremendous value to her existing property portfolio, earn remarkable return, strengthen her brand image and increase her socio-economic footprint for the benefit of its shareholders and stakeholders. The Estate which is scheduled for completion in 30 months will boast of state-of-the-art features.”

Raji was quoted to have said the N3.5bn joint venture investment with Iconic City was another landmark initiative to unlock value from the property portfolio of the Odu’a Group and bring on board a new dimension in structured and luxurious community living in Ibadan.

“This is in line with the vision of the board and management of the company to live the mandate of our shareholders to be the engine room of the economic development of the West,” he said.

Ogunmuyiwa was also quoted as saying the partnership would give his firm the opportunity to utilise its professional experience from training, working and living in the UK to build a world class mixed luxury residential estate in Ibadan.

“The designs and model types are exquisite and the finishing inviting and affordable,” he added.

Source: punchng

home

How to build a house cheaply

It’s possible to build a house cheaply as long as you aren’t placing a value on the time you spend doing it, because the key to building cheaply is doing most of the work yourself–which means spending at least 2 hours working per square foot. In addition to saving a lot of money, you’ll always have a wonderful feeling of self-accomplishment when you look at the house that you built with your own two hands. Read the steps below for some proven ways to reduce your building costs.

Step 1
Keep your house design simple. Design the house to use standard-sized building materials. A two-story house is cheaper to build than a one-story house that has the same living area.
Step 2
Choose inexpensive materials. Cover the roof with galvanized sheets. Use shelves instead of cabinets in the kitchen. Buy low-end windows and doors. Use pine or vinyl for the floors, rather than hardwood or carpet.

African cities become the new home to over 40,000 people every day, many of whom find themselves without a roof over their heads. With that in mind, IFC has committed to do more to develop the property sector, both to provide new and affordable housing and to encourage an industry that requires significant building materials and has the potential to be a major employer. In May, IFC and Chinese multinational construction and engineering company, CITIC Construction launched a $300 million investment platform, CITICC (Africa) Holding Limited, to develop affordable housing in multiple African countries. The platform will partner with local housing developers and provide long-term capital to develop 30,000 homes over next five years. IFC estimates that each housing unit will create five full-time jobs – resulting in nearly 150,000 new jobs on the continent. Kenya and Nigeria are high on the priority list for the new effort. Kenya’s housing shortage is estimated at 2 million units, while Nigeria is in want of 17 million units. The soaring demand is being met by scant new supply. Africa’s housing market has few local developers with the technical and financial strength to construct large-scale projects. The IFC-CITIC Construction platform will work with local housing companies to develop affordable housing projects across Sub-Saharan Africa, each ranging in size from 2,000 to 8,000 units. CITIC Construction has a proven track record in constructing and delivering large scale housing projects. The platform will start by developing homes in Kenya, Rwanda and Nigeria, expanding to other countries as operations ramp up. “In Angola, through planning, financing, construction and post-construction operation, CITIC Construction has successfully completed the 200,000 units housing program, new city of Kilamba Kiaxi, with relative infrastructure and utilities in four years. CITIC Construction has also founded the CITIC BN Vocational School in Angola which helps youth acquire the skills they need to become professionals”, said Hong Bo, Assistant President of CITIC Group and Chairwoman of CITIC Construction, “CITIC Construction will take advantage of our engineering experience and delivery capability to develop more affordable houses for Africa through the platform with IFC.” “As Sub-Saharan Africa become more urbanized, the private sector can help governments meet the critical need for housing”, said Oumar Seydi, IFC Director for Eastern and Southern Africa. “The platform will help transform Africa’s housing markets by providing high quality, affordable homes, creating jobs, and demonstrating the viability of the sector to local developers. IFC will work with financial institutions to support mortgages and housing finance that will allow people to purchase the units.” The new housing units will be constructed in accordance to IFC’s green building standards, delivering homes that are environmentally friendly and sustainable. The World Bank Group estimates that by 2030, three billion people, or 40 percent of the world’s population will need new housing units. To date, IFC has invested more than $3 billion in housing finance in over 46 countries world-wide. IFC focuses on regions where large portions of the population live in sub-standard housing and have limited access to credit to build, expand, or renovate their homes. Read more

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