£2bn fund for building low-cost homes, Theresa May declares

Prime minister to call on associations to help end social housing ‘stigma’ that sees tenants treated as ‘second class citizens’

Housing associations will be handed £2bn in new funding to help them build low-cost homes, under plans set to be announced by Theresa May tomorrow.

The prime minister will tell associations they will be allowed to apply for money for the next decade in a bid to give them greater financial security.

Ms May will also call on housing providers to help end the stigma around social housing that, she will say, sees many politicians “look down on” people who live in low-cost homes.

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She will tell a conference of the National Housing Federation, which represents housing associations, that “the most ambitious” providers will be able to bid for government money to last them until 2028-29.

The money will come from housing budgets in the next spending review period – the details of which are not expected until next year.

Ms May is expected to say: “You said that if you were going to take a serious role in not just managing but building the homes this country needs, you had to have the stability provided by long-term funding deals. Well, eight housing associations have already been given such deals, worth almost £600m and paving the way for almost 15,000 new affordable homes.

“And today, I can announce that new longer-term partnerships will be opened up to the most ambitious housing associations through a ground-breaking £2bn initiative. Under the scheme, associations will be able to apply for funding stretching as far ahead as 2028-29 – the first time any government has offered housing associations such long-term certainty.

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“Doing so will give you the stability you need to get tens of thousands of affordable and social homes built where they are needed most, and make it easier for you to leverage the private finance you need to build many more.”

Ms May will demand associations “achieve things neither private developers nor local authorities are capable of doing” and call on them “to take the lead in transforming the very way in which we think about and deliver housing in this country” by “taking on and leading major developments themselves”, rather than simply buying properties built by developers.

She will also ask associations to help end the “stigma” around social housing, admitting that too many people, including politicians, “look down on” people who live in low-cost homes.

“For many people, a certain stigma still clings to social housing. Some residents feel marginalised and overlooked, and are ashamed to share the fact that their home belongs to a housing association or local authority”, she will say.

“And on the outside, many people in society – including too many politicians – continue to look down on social housing and, by extension, the people who call it their home.”

She will add: “We should never see social housing as something that need simply be “good enough”, nor think that the people who live in it should be grateful for their safety net and expect no better.

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“Whether it is owned and managed by local authorities, [tenant management organisations] or housing associations, I want to see social housing that is so good people are proud to call it their home… Our friends and neighbours who live in social housing are not second-rate citizens.”

Ms May used her speech at last year’s Conservative Party conference to announce £2bn of new investment in low-cost housing – enough to build 5,000 new homes per year – although this was criticised as being significantly less than is needed.

No 10 said the new £2bn was in addition to the amount announced last year.

However, Labour said the latest cash injection would not be enough to reverse the impact of previous cuts to housing budgets.

John Healey, Labour’s shadow housing secretary, said: “Theresa May’s promises fall far short of what’s needed.

“Any pledge of new investment is welcome, but the reality is spending on new affordable homes has been slashed so the number of new social rented homes built last year fell to the lowest level since records began.

“If Conservative ministers are serious about fixing the housing crisis they should back Labour’s plans to build a million genuinely affordable homes, including the biggest council house building programme for over 30 years.”

Benjamin Kentish

Legislative reform and drive towards model mortgage

 

To mortgage sector stakeholders in Nigeria, the need for a functional mortgage system cannot be over-emphasised. This is why the drive towards a model mortgage is receiving all the attention that it requires.

At the fore-front of this drive is the Nigerian Mortgage Refinance Company (NMRC) which is riding on the relative successes it has achieved in the past couple of years of its establishment and pushing for the adoption of a model mortgage and foreclosure law by the states.

As part of efforts at growing a mortgage system that will drive affordability, the company is presently driving a legislative reform in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.

What the company is driving at, according to one its directors whose primary mortgage bank is a major shareholder in the company, is to get various states houses of assembly to pass foreclosure laws as a prelude to mortgage-backed affordable housing delivery.

This is good news for home seekers who may need mortgage facility because foreclosure law, upon adoption, aims to fast tract the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.

According to the authorities of the mortgage refinancing company, the model mortgage and foreclosure law is in its final form for engagement with 21 pilot states committing to the implementation of an enabling environment for the development of the mortgage market.

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The company hinted that it would be focusing on building capacity and completing outstanding operational activities. “We will be embarking on an aggressive drive towards the procurement of an ICT infrastructure for the mortgage industry, the completion of our second tranche equity capital raise, and most importantly the completion of our first round of mortgage refinancing; we will work hard to meet our mandate to revolutionize the Nigerian mortgage landscape”, an official of the company hinted.

The company has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage banks. Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage’s managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria. He assured that his bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.

NMRC seems to be conscious of the demands and obligations inherent in the Nigerian business environment as it assures that it will continue to anchor all its services on global best practices, good corporate governance and strict risk management practices.

By now, the company might have got from its shareholders the approval to, among other things, increase their capital base for three main reasons including capital adequacy, mortgage refinancing and procurement of necessary infrastructure.

As at the time when this request was made, the shareholders who saw the need for capital adequacy for the company, especially for its mortgage refinancing function, could not, however, come to terms with the management‘s explanation on the issue of infrastructure and, therefore, insisted that the capital raise be put on hold until the management was able to spell out those items of infrastructure that made the capital raise necessary.

NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.

“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, the official said, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.

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Right now, the company is working under market conditions hoping that, over time, as the market deepens and grows, the issue of single digit interest rate will be expected. Whatever the rate is today, the desire is to drive it down to single digit.

Chuka Uroko

Obaseki’s affordable housing: Emotan Gardens’ first phase of 86-units ready by year end – EDPA boss

 

In what has been described as a revolution in Edo State’s housing sector, the first set of homeowners in Governor Godwin Obaseki’s affordable housing project, Emotan Gardens, will move into their property at the end of the year.

Emotan Gardens Executive Chairman, Edo Development and Property Agency (EDPA), Isoken Omo, disclosed this in a chat with journalists and assured prospective buyers that 86 units of the houses, which constitute the first phase of the project, will be delivered before the end of 2018.

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She said, “Emotan Gardens is a 1, 800-unit gated housing estate which will be done in phases and clusters. The first phase is actually a show phase with about 86 units in it. When it is finished, people can live there. While they are living there, the other phases will be built. In the end, everything will be joined together to become a full estate.”

She explained that the construction of the 86 units is ongoing and assured that it will be ready at the end of the year, noting, “By then people will live there. There will be infrastructure and not just the houses will be ready. We will have roads, lawns, water and electricity there.” According to her, “The sales for the properties opened at the Edo National Association Worldwide (ENAW) convention, in Toronto, Canada. All the slots are available. Because it is being delivered in phases, it will work in two ways so that we will deliver on our promise. For example, if you don’t have all the money, and then deposit some amount and tell us when you want it ready, it gives us enough time to build up capital.”

On the first phase, Isoken explained, “We have different types. We have four 2-bedroom in a row; 3-bedroom row of houses, 2 and 3-bedroom semi-detached; 3-bedroom semi-detached; blocks of flats; 4-bedroom stand-alone bungalows, terrace houses, 3-bedroom with a maid quarters.

“We have commercial plots and residential plots. Within the commercial plot, we have shopping malls. Within the estate, we have made provision for school, hospital, police station and all those things you need in a community.”

Explaining that there is provision for those who want to build for themselves to buy plots of land, she said, “You can buy a plot of 450 sqm land or 900 sqm land. There is a design guide but it is not rigid. The guide is to ensure homogeneity.”

On the prices for the houses, Isoken said, “The house starts from N5.7 million for the cluster of 2-bedrooms and it goes up to N7m, N8m, N9m and so, according to the housing type. But N5.7m is the entry price. We expect 25 per cent down payment at expression of interest, and then you complete the necessary forms, including the Know Your Customer (KYC) form.

She explained that the KYC form is to “ensure the money is not laundered, and that it came from a clean channel. The onus is on us to check that to ensure we don’t fall foul of the laws. After this, we process the form, then you pay the deposit and we send you your Letter of Offer with terms of payment.

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“There are different payment options. We have outright purchase; 18-month payment plan for payment in tranches, and mortgage arrangement. We are looking at different mortgage options that people can tap into which will be affordable.”

Isoken assured prospective buyers that the model house and other houses on that row are nearly completed, while painting work is ongoing, adding, “The inside of the model house is ready. We are painting others on that row. Some are at the roofing stage, others are at the block stage. By December when we are ready to deliver, all of them will be ready. At the same time work is ongoing on the greenery.”

FMBN, NHIS, PenCom AND PENSIONERS

The Federal Mortgage Bank of Nigeria (FMBN), the National Health Insurance Scheme (NHIS) and the National Pension Commission (PenCom) are three major institutions that have profound influence in the way the welfare of Nigerian workers, retirees and pensioners is shaped.

The three institutions share certain features in common: one of the features is that Federal Government employees are automatically enrolled as contributors to the pool of money meant to make it easier for them to meet their need for housing and basic health care while still in service, and periodic pension payments on retirement, respectively.

The amount of money deducted from the salary of each worker as contribution to each of the trio is decided without any consultation with the worker. This feature, which negates the principle of participation, is also common to the three organisations.

The decision on how and when any worker can benefit from his own money deducted and lodged with them ostensibly to further the welfare of the worker is left to the three powerful institutions to choose. This is another shared feature.

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To illustrate, the Federal Mortgage Bank of Nigeria may only advance loans to a worker to build or renovate or purchase a house when its management deems fit to do so, not necessarily based on the urgency of the need of the worker to have accommodation. Likewise, the NHIS, in addition to severely limiting the type of health care accessible by workers, it totally denies retired contributors access to its services regardless of the extent of their need for such services.

They are denied, even at the point of death. On its part, the National Pension Commission is supposedly constrained by the Act establishing it to pay Federal retirees a single kobo out of their Retirement Savings Accounts, even in the face of starvation, except after the Benefit Redemption Fund is activated in favour of the retirees. Some people perceive this arrangement as absurd.

The way and manner the three institutions operate need to be tampered with a human face; with empathy and in the context of the spirit of the humane intention that justified the establishment of each of the three institutions.

While the PenCom was busy earlier this week talking to Directors of Pension Operations, frustrated retirees under the Contributory Pension Scheme, which the Commission oversees, were crying out loudly for attention and payments of their pensions in several states of the country. So unsettling.

In the case of the Federal Mortgage Bank of Nigeria, its Managing Director told State House Correspondents after his meeting with the Vice President of Nigeria that a fresh approach toward facilitating house ownership has taken off, thus raising hope on future housing projects for thousands of beneficiaries with zero equity subscription. This is a good initiative, but the reported case of 2017 and 2018 retirees who are still patiently waiting for the refund of their contributions to the National Housing Fund (NHF) by the FMBN should be treated with the urgency it deserves. September is especially significant as school children resume, and the refunded money can be handy for many in paying school fees.

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The sum total of this article is that the Acts establishing the three institutions, which came into being to preserve and advance the welfare of their contributors, should be usefully flexible: in the case of the FMBN the zero equity approach is good, the rent-to-own concept is wonderful with lower interest charges; the NHIS establishment Act deserves amendment to extend access to basic health care to pensioners who were contributors. The PRA 2014 should be revisited to make it possible for retirees to access part of their savings while remittance to their RSAs from the Benefit Redemption Fund is processed.

The three institutions should be the drivers of the process of making their operations flexible in the interest of their clients.

Salisu Na’inna Dambatta

 

Barclays and UK government plan £1bn housing fund

Bank chairman John McFarlane says fund will address ‘vital need’ for new homes

Barclays and the UK government have revealed plans for a £1bn fund to help property developers meet what the bank’s chairman calls a “vital need” for new homes, including social housing and retirement homes.

The UK bank will commit £875m to a new Housing Delivery Fund, alongside £125m from Homes England, the government’s national housing agency. Small and medium-sized house builders and developers will be able to take loans of between £5m and £100m to fund their projects, with a loan-to-value ratio of up to 70%.

The goal is to diversify the housing market, Barclays said in its statement on the fund, adding that almost two-thirds of homes are currently built by just 10 companies. The fund will be open to existing Barclays clients as well as new customers and will prioritise builders of social housing, retirement homes and homes for private rental.

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The interest rate of the loans was not disclosed, but Barclays said they would be “competitively priced”.

Barclays chairman John McFarlane said: “There is a vital need to build more good quality homes across the country. This £1bn fund is about helping to do exactly that by showing firms in the business of house building that the right finance is available for projects that help meet this urgent need.”

James Brokenshire, the housing secretary, said: “This is a fantastic opportunity to not only get more homes built but also promote new and innovative approaches to construction and design that exist across the housing market.”

Then-housing secretary Sajid Javid launched Homes England in January as the successor to the Homes and Communities Agency.

The government has set a target of delivering an average of 300,000 a year by the mid-2020s. Its housing white paper, published in February 2017, described the UK’s housing market as “broken”.

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In her foreword to that paper, Prime Minister Theresa May wrote that the government’s goal is to “fix this broken market so that housing is more affordable and people have the security they need to plan for the future”.

May went on: “The starting point is to build more homes. This will slow the rise in housing costs so that more ordinary working families can afford to buy a home and it will also bring the cost of renting down.”

She added that diversifying the housebuilding market would involve “opening it up to smaller builders and those who embrace innovative and efficient methods”.

Tim Burke 

3 reasons to worry about the housing market

Home prices in the United States have never been higher. In January, housing values eclipsed their 2006 pre-crisis peak and since then have only pushed higher, according to the Case-Shiller home price index.

The culprits are a crazy tight job market, rising wages and the fact that the homeownership rate is rising again after bottoming in 2016.

But storm clouds are gathering as the Federal Reserve pushes interest rates higher, part of its ongoing fight to keep a lid on inflation. Higher rates weigh on home affordability — and thus depress demand. Here are three growing headwinds the housing market faces:

Affordability
Thanks to the resolve of Federal Reserve chairman Jerome Powell, who is resisting President Trump’s calls for a slowdown of the rate hike pace, monetary policy continues to tighten. That’s pushing up long-term interest rates, with the 30-year Treasury yield pushing back over the 3 percent threshold recently, up from less than 2.7 percent in December and a low of 2.1 percent in the summer of 2016.

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Looking at the 30-year fixed mortgage rate, rates are at 4.5 percent right now, up from 3.8 percent last September and lows around 3.3 percent in 2012 and 2013.

As a result of rising mortgage rates and higher home prices, Gluskin Sheff economists estimate that housing affordability has crashed to lows not seen since 2008, well off the highs seen in 2011 and 2012 when a combination of lower prices and lower rates helped put an end to the housing collapse.
Sales activity

A slowdown in new home construction during the housing crisis resulted in a backlog of demand for brand-new homes. Builders have responded to consumer appetite for newly constructed homes, which has helped pushed up the average price of a new home from a low of $250,000 in late 2011 to a high of $402,900 in December, before cooling slightly.

But now sales activity is rolling over, threatening to break the recent trend of rising activity. Sales of existing homes has flatlined over the past year.

 

Demographics

Millennial homeownership rates are still poor, mired as they are with student loan debt and tepid wages.

According to the Urban Institute, the homeownership rate of millennials between the ages of 25 and 34 is about 8 percent below Gen X and baby boomers at the same age. If millennial homeownership matched previous generations, there would be 3.4 million more homeowners today, they estimate.

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The risk is that the longer this generation delays homeownership, the more baby boomers looking to downsize will be pressured into lowering their home prices when they enter retirement.

Indeed, a study by Fannie Mae’s Economic and Strategic Research group warns of a “mass exodus” on the horizon as the “homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners.”

Anthony Mirhaydari

Nigeria not yet mature for Rent-to-Own home model – Previs

The Nigerian real estate market is not yet mature and ready for the burgeoning rent-to-own homeownership model, Previs Development, a special purpose vehicle in the James Cubitt Group, has said.

The company, whose vision is to make property ownership possible, enjoyable and meaningful for everyone, notes that despite the seeming simplicity of this model, careful study of the offers in the market now shows that the absence of mortgage financing has significantly limited the number of homes that can be delivered using that model.

As a homeownership model, rent-to-own, also called rental-purchase, is a type of legally documented transaction under which tangible property, such as land or a house is leased in exchange for a monthly, quarterly or annual payment, with the option to purchase at some point during the agreement.

The model is gaining popularity among developers and is being championed by the Lagos State government as a viable option for providing ‘cheap’ housing accommodation for its civil servants.

But Previs says that with some of its building developments sold out using the rent-to-own scheme, it has observed that the Nigerian real estate market is not yet ready for a rent-to-own model for houses.

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“We want to cater to Nigeria’s underserved middle market. This is why we have created a product called Rent-to-Own-Land (RTOL). The logic is simple: without access to bulk funds, aspiring property owners must approach their home ownership in milestones – land first. Getting land is where the journey starts for most homeowners,” explained Peter Coker, Previs’ managing director, in a statement.

“Our planned estates are strategically located. Subscribers under our RTOL scheme enjoy up to 200 percent capital appreciation because the estates are in developing areas which are receiving focused attention from the government, ” Posi Lawore, the Project Lead for Previs, disclosed.

“These estates are properly planned. Subscribers know that their neighbour will not turn their residences to office spaces years down the line,” Lawore assured.

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The number of residential accommodation being transformed to offices spaces continues to increase daily. This invariably changes the dynamics to the living conditions and may affect property usage and pricing.

Tolulope Olorundero, Marketing and Communications Lead, disclosed that the Phase 1 of their property in Lekki Scheme 2 was sold out, while Phase 2 was also fast selling out because their subscribers enjoyed monthly or annual payment plans of up to 5 years.

“The estate is designed to deliver social amenities such as schools, recreation spots, and communal spaces,” she said

“Artisans can now have pride in their skills”– Bldr. Opaluwah

The Vice Chairman, Council of Registered Builders of Nigeria (CORBON), Bldr. Samson Ameh Opaluwah has said that with the collaboration of N-Power, C-STEmp, CORBON and the Federal Government, artisans are now going to enjoy their pride of place in the society with the upcoming Construction Artisans Award.

Bldr Samson Opaluwah made this statement during a chat with HousingNews Correspondent earlier today.

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“from now henceforth skills of artisans will be rewarded and their importance in running the engine of the Nigerian economy will be identified.” He said.

The Construction Artisans Awards which is slated for the first quarter of 2019, he said, is platform aimed at showcasing and rewarding excellence and competence of artisans all across the federation.

“It is not a competition; however we want to see who is competent and who is skilled in a particular area and begin to reward them.” He said.

He added that the Construction Artisans Award was birthed due to the little importance given to technical education, in the area of acquisition of adequate requisite skills of artisans in the construction sector and the need to ginger youths to know that competence has value and acquiring skills is rewarded in the society.

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“No matter how educated, knowledgeable or proficient the engineer, architect, quantity surveyor and builders are, the person who translates the idea into reality is the artisan and if the artisan is not properly trained in his skill it becomes a major challenge because all the intellectual inputs cannot actually benefit the eventual development that is intended.

Bldr. Samson charged all artisans to raise their tools and utilize them maximally as the upcoming Construction Artisans Awards is aimed at showcasing their worth to the society and rewarding them for their enormous efforts in the physical actualization of ideas of professionals in the construction sector.

 

Wilson Ifeoma Nonye – HousingNews, Abuja

POSSIBLE SOLUTIONS TO UTILIZING CAPITAL MARKET DERIVATIVES IN HOUSING DELIVERY OF NIGERIA EMERGING MARKET

 

It is no doubt that capital market and it derivatives in housing delivery is still at its early stage of development in Nigeria and the current situation of the market is not encouraging to make it a favorable finance source for housing development at a scale and affordable rate.

It won’t be farfetched to note that so many challenges are hindering capital market derivatives from been used for housing finance and delivery in Nigeria ranging from policies to others factors and that awareness of the imperativeness and benefits of financing through the capital market is lacking even as this seem to be one of the major way to liberate people from their shackle of financial difficulty for real estate development, a synergetic effort between the market and developers is missing.

Housing supply in response to its demand remains a daunting challenge in Nigeria especially and finance has long been identified as one of the major issue hindering stocks delivery. Effective sources of housing finance are the only way to walk out of the cogwheel of this problem which the capital market seem to be a way out.

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WHAT IS THE WAY OUT?

(i) The capital market option should be considered by developers and investors in the housing market and be adequately explored since this can contribute over fifty percent of the required funds needed for housing delivery in any economy.

(ii) The capital market operators should channel funds into real estate development and investment to aid housing delivery in Nigeria.

(iii) A synergetic effort should be created between the capital market and real estate developers this will enhance effective housing delivery in Nigeria.

(iv) The policies of government on investment of capital market products and the condition required for borrowing should be made flexible and a bit liberal for real estate firms.

(v) An enabling environment also needs to be created for both the operators in the capitals market and the real estate developers to ensure optimum service delivery.

(vi) The real estate developers firms should also see it as a matter of importance to create or form alliance for them to be effective in their operation and to gain more recognition and trust as well as access to the capital market funds instead of the present finance sources.

(vii) An enlightenment programme is also required from the government and the capital market regulators on the available products/derivatives for housing finance in the market.

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CONCLUSION

The housing industry and the capital market should accept the reality that there exists symbiotic relationship between available finance for housing and housing stocks. Events over the years have shown significant positive relationship between capital market derivatives and housing delivery in Nigeria. It has also been a recognized fact that developers of real estate are not adequately exploring the capital market using their derivatives for effective, adequate and affordable housing delivery and it has been perceived that the Nigerian capital market seems to be losing out since the capital that is supposed to be invested in this laudable venture (real estate) is been tied down and used for other ventures that are not as profitable and secure as the housing project.

However, if the above suggestions are been headed to and proper ways of actualization are carefully mapped out, capital market derivatives will be an effective tool in housing delivery of Nigeria’s emerging market

Easy Ways to Spot a Rental Scam

If you have never fallen for a rental scam, then consider yourself lucky because they are still very popular in Nigeria and many unsuspecting people still fall for. As you must have guessed, victims of rental scam suffer financially and psychologically because apart of the clog it throws in a victim’s financial plans, it’s largely humiliating to lose money this way. Sadly, for most victims, this means they have to start planning all over again.

You don’t have to go through the horrid experience of falling for a rental scam before you understand how they work and how to avoid getting scammed when hunting for an apartment/property. Below are some tips from seasoned professionals on ways to spot a scam before it happens.

Apartment/Property Unavailable for Inspection

You should never forget the fact that shady agents and fake real estate practitioners are very intelligent and have successfully scammed several people like you. In other words, they are very convincing when dealing with potential tenants. One of the glaring signs to look out for is that before a rental scam, they make it difficult and literally impossible for you to inspect the property. Of course, they will come up with several excuses but the end goal is the same – They don’t want you to inspect the apartment/property.

The really smart ones will go as far as telling you that they are out of town, which means they are not physically available to arrange an inspection of the property for you. In most cases, he/she (scam agent) will ask you to hold on till he/she gets back. This is just a tactic they use to buy time.

Anyone who keeps you away from an apartment/property you intend to rent has rental scam written all over his/her intention. Don’t fall for this trick regardless of the excuse they come up with.

Urgency of Transaction

Be wary of any situation or scenario where you are put under pressure to make a financial commitment way too early. It is a red flag that gives a rental scam away. Professional agents know that they need to give you time to make a realistic decision on whether you want the property or not. Scam agents; also known as 419 agents in Nigeria are known to stage the rental process in such a way that it puts a lot of urgency on the financial transaction involved.

The biggest hook they throw at unsuspecting victims is that they have received lots of applications and offers from other potential tenants. The goal here is to lure you into making that financial commitment. Once that is done, you are hooked and what follows is merely a familiar plot to serve as the nail the coffin of deception that you have unknowingly walked into. Don’t fall for the line of showing your commitment by paying a deposit.

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Disrupting the Flow of Renting an Apartment

Money should never exchange hands at the beginning of your quest to rent an apartment/property. Instead, this should always happen towards the end.

Under normal circumstances, you should meet the agent, homeowner or verified representative in person. You also need to carry out a thorough inspection of the property before you make payment. Any excuse that places payment above other crucial stages of the property renting process should send your alarm bells off.

No property agent with good intentions asks for payment upfront regardless of how professional they might have come across before pulling that move. Do you know how to find a house to rent in Nigeria? It’s not difficult and you should never be afraid to ask questions.

The Rent is Too Good to be True

If what you are being asked to pay as rent is way cheaper than the value of what you should have been asked to pay, then seek the guidance of a real estate expert to know what the idea rent should be. If the figure still falls below what you should be paying for the apartment, then it is most likely a trap set to lure you in.

For instance, if a typical 2-bedroom apartment in Lekki costs a minimum of N1 million to rent yet an agent tells you he has one for N400,000, you should start asking questions.

Uncompleted Buildings

If you are ever shown an uncompleted building by an agent or developer who gives you reasons why you need to pay quickly to secure the apartment, this is a major red flag. Many unsuspecting individuals have lost their money to this scam and to make matters worse, they never got their money back.

In many cases, scam agents and developers are not afraid of getting arrested especially those who have a strong hold on the corrupt side of the Nigerian police. These agents go as far as allowing you to inspect the property/apartment even while construction is ongoing. The trick here is to show the same apartment to as many as 10 to 40 unsuspecting victims who pay for the same apartment without ever clashing because the rogue agent schedules their inspection for different days.

One way to avoid this is to work with a property lawyer or a real estate expert; whose years of experience can be relied on to avoid falling into such traps.

In March 2018, a Lagos court jailed an estate agent (also a self-proclaimed site engineer), Babatunde Habeeb. He was sentenced to 1,230 years imprisonment for scamming unsuspecting victims of N28 million.

The Application Form

The application form also gives many shady agents and scammers away. A typical application form should be thorough and the homeowner should not put you under any under pressure to complete the form. Remember that this form is the landlord’s way of ascertaining that you are the kind of tenant he/she wants.

Don’t lose sight of the fact that when you are trying to rent an apartment, you are not the only one being careful. The homeowner knows it is important to check you out to affirm that you will not end up a bad tenant.

On the application form, the homeowner tries to establish the kind of person you are, why you are leaving your previous residence as well as whether you will be able to pay your rent subsequently. Therefore, the less concerned the homeowner is about this part of the rental process, the more he/she tilts toward giving himself/herself away as an agent of a rental scam.

If your potential landlord/landlady does not care about your employment history or a reference from your previous landlord, then he/she is probably just in a hurry to swindle you.

Don’t Be Fooled By Photos

No matter how captivating the pictures of an apartment shown to you by a real estate agent is, it cannot replace an actual inspection. There are millions of images online that a scammer can easily download and present to you.

It’s okay to have images shown to you but don’t be naive enough to believe that once these are shown to you, everything checks out as being legitimate. In a situation where these images are emailed to you, you can verify their authenticity by uploading them on Google search to see if they pop up in a totally different listing.

No Written Lease

An agent looking to scam you will either be deliberately clumsy with the written lease or will not make it available to you. When renting an apartment, the only form of agreement you should take seriously is a written one and the reason is simple. A written agreement can always be used as a reference in cases of disagreement and clearly spells out details of what the lease covers.

It is important that the lease identifies who the property owner is. Anyone claiming to represent the interest of the legitimate owner of the home must have a legal document to back this.

In a situation where the property has more than one owner, you should request for a written confirmation from the other party. What this does is to communicate his acknowledgement of the ongoing rental process. Without the other party’s approval, the entire thing might be a sham.

No Meeting With the Owner

No excuse is good enough to justify not being able to have a meeting with the owner of a property before you rent his/her apartment. This meeting legitimises the rental. If you are renting any house, insist on seeing the documents of the ownership.

A popular trick used by con artists is to tell you that the necessary documents will be sent to you. This is one trap you should never fall for because no legitimate homeowner would refuse to show you the documents you have requested to see.

In a situation where the document is eventually shared with you but the name on it does not match the name of the person who claims to be the landlord, this should mark the end of your conversation.

The Subleasing Trap

Subleasing remains one of the riskiest waters to navigate and this is because you put yourself into a situation where you would be paying for an apartment that does not have your name in the original lease agreement that was signed.

Verifying the claim that the lease agreement leaves room for subleasing is another headache entirely. You should be careful not to make any financial commitment to such an arrangement. One safe way to go about this is to get the original tenant to include your name in the original lease agreement that was signed with the landlord.

Please note that if the sublease is forbidden in the lease agreement and you pay for the apartment without knowing this, both you and the original tenant can be ejected by the landlord.

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No Research

In the course of hunting for an apartment, you will be told a lot of things especially if you carry out due diligence and ask a lot of necessary questions. However, regardless of what you are told, it is important that you carve out time to carry out proper research. Google should be your friend at this point. Check the name of the agent as well as the landlord you have been introduced to.

The internet always remembers names and incidents that they have been associated with. For instance, what would you do if you discovered that your supposed landlord was arrested and jailed 10 years ago for collecting rent from 15 different prospective tenants for the same apartment? Would you still go ahead to sign a rental agreement?

Final Thoughts on Rental Scam

Always trust your instinct. If that inner voice or your gut tells you that there is something off about the agent or the property that is being presented to you, you’ll most likely be safer going with that hunch.

Some other things you can look out for that will help you avoid a rental scam include:

  • Don’t be moved by the galaxy of reasons the person might give for not being able to help you view/inspect the property
  • Restrict your search for an apartment/property to trusted real estate websites like Private Property and others that come to you via referrals from your friends and family
  • If the property is excessively cheaper than similar apartments within the same neighbourhood, it’s a good time to ask questions
  • Any real estate agent who is constantly impatient with you should also raise a red flag; especially one who tries to goad you toward making payment
  • No form of money should be paid until you carry out a thorough inspection of the property and you are satisfied with it

Private Property

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