It’s Official: We are recruiting, NNPC confirms

The Nigerian National Petroleum Corporation ( NNPC) says it has opened its portal for recruitment of fresh graduates and experienced professionals into the system.

Mr Ndu Ughamadu, its Group General Manager, (Public Affairs Division), confirmed this to the News Agency of Nigeria (NAN) in Abuja on Wednesday.

He said that the portal for the recruitment was opened on Wednesday.

The recruitment portal address is https:/careers.nnpcgroup.com

“The portal was opened today and I have received hundreds of inquiries weather it is correct or not.

” We are going to recruit people from different engineering fields , especially fresh graduates and equally in the administrative areas,” he said

Ughamadu said that recruitment would be in three categories of fresh graduates, senior officers/ supervisory cadre and managerial cadre.

Abuja Land Scandal: Buhari’s Minister Awards Choice Plots Of Land To Saraki, Abba Kyari, Amaechi, APC Leaders And Cabinet Members

Mohammed Musa Bello, Minister of the Federal Capital Territory (FCT), has signed off choice land plots in massive scale for himself and leaders of the ruling All Progressive Congress (APC) in a manner that underscores a worsening pang of corruption in public space.

The beneficiaries of this massive round of land allocations include APC National Leader, Bola Tinubu, and his wife, Senator Remi Tinubu, both of whom used proxy names.

The land largesse has carefully been carved up among the proverbial fat cats of the presidential seat of power in Abuja.

The Chief of Staff to the President, Abba Kyari; former Secretary to the Government of the Federation (SGF), Babachir Lawal, who currently faces trial for sundry corrupt enrichment; current SGF, Boss Mustapha; former Director-General of the Department of State Services (DSS), Lawan Daura; Minister of Transportation, Rotimi Amaechi; Minister of Aviation, Hadi Sirika are among prominent names whose allocations’ right of occupancy (R of O) have been delivered.

The Minister personally took care of himself, members of the federal cabinet, principal officers of the two chambers of the legislature and many of President Muhammadu Buhari’s aides with two choice allocations of 6,000 square metres each.

Separate choice plots in Maitama and Guzape districts were received by each beneficiary. Other beneficiaries of the land allocation largesse with only a plot each are non-principal officers of the National Assembly and fringe aides within the Presidency.

Several of the beneficiaries in this land bazaar orchestrated by the Minister have previously benefited from government allocations in the FCT under different official positions.

For instance, as Tinubu, Saraki and Amaechi were recipients of choice land allocations in Abuja whilst seating as governors and chairmen of the Governors Forum respectively.

Following his appointment as FCT Minister, Bello had promised to address all land racketeering in Abuja. He proceeded to inaugurate two committees to address the public petitions.

The committees pored through case files, invited individuals involved and finally made recommendations. However, as it shows, Bello’s interests had switched to more pecuniary matters. Not a single recommendation of the committees has attracted his attention.

Contrary to what is on ground, the Minister recently claimed that his administration had resolved 500 lingering land racketeering cases. Our sources assert that he has not attended to any.

Furthermore, none of the requests by organised official groups from Ministries, Departments and Agencies (MDAs) for allocation of land for low and medium-income estates to address peculiar housing challenges has received his attention.

For staffers of the FCT, Bello has been a particularly indolent Minister with established cases of sitting on budgetary appropriations for utilities in the FCT wand continued instances of elapsed budgetary provisions repeatedly returned to the treasury.

Source: Sahara Reporters

What Buhari has to do to take Nigeria’s economy to the next level

One of the main reasons newly-elected Nigerian president Muhammadu Buhari had been widely expected to lose his bid for a second term was the poor state of the country’s economy. Under his presidency, Nigeria’s unemployment rate more than doubled, from 10.4% in January 2016 to 23.1% in July 2018.
In his first four years, Buhari also failed to address poverty. Under his watch, Nigeria overtook India as the country with the largest number of people living in extreme poverty. About 87 million Nigerians, or half the population, live on less than US$1.90 per day.

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And economic growth has been lacklustre since his election in 2015. The country went into recession in 2016, with a negative 1.6% growth rate. There was a rebound in economic growth of about 2% in 2018. Nevertheless the IMF forecasts that growth will remain anaemic at an annual average of about 1.9% from 2019 – 2023.

By reelecting Buhari despite his unimpressive economic performance, Nigerians are giving him a second chance. One of Buhari’s campaign catchphrases was “Next Level,” signalling his determination to build on programmes initiated in the first term. These include conditional cash transfers to vulnerable citizens, school feeding programmes, giving young people critical skills, and implementing a microcredit scheme for small traders and artisans.

But these initiatives, however noble, are not widespread and substantive enough to touch a majority of the Nigerian population. Buhari should be planning a massive stimulus package to jump start the economy. This is particularly important given the fact that economic growth is going to be so lacklustre.

High unemployment

Nigeria’s high unemployment rate has created a bloated and unproductive informal sector, replete with millions of underemployed youths.

Buhari’s response in the first term was to create jobs by providing credit to micro and small enterprises, especially in the agro-processing sector. But job creation by small enterprises usually takes time. And the number of jobs is never on the scale of large enterprises. The end result has been that most Nigerians feel economically marginalised in spite of Buhari’s best efforts.

The Buhari administration is well aware of the bleak economic conditions. In February 2017 it launched the ambitious economic and growth plan. Its overarching objective was to restore growth and build a competitive economy through investment in infrastructure and creation of an enabling business environment.

Laudable as the plan might have been, there’s a cynicism about whether Buhari will get any of it implemented given that he only has another four years in office.

I believe that he needs to be a great deal more bold, and to come up with a new set of interventions that truly take Nigeria to the “next level”.

The next level

Nigeria urgently needs a massive economic stimulus programme. If he can summon the energy, Buhari should significantly increase spending in sectors, projects and programmes that boost the economy, generate employment and promote inclusive growth. He should prioritise infrastructure, labour-intensive manufacturing such as textiles and footwear, agro-processing, youth entrepreneurship projects, health and education.

Nigeria has a very large stock of human and natural resources that aren’t being used optimally. Meanwhile, there is a huge infrastructural deficit. These range from dilapidated roads, epileptic electricity supply, acute water shortages, crumbling public buildings, grossly underfunded public tertiary institutions and so on. The gap can be closed through public works projects executed with direct labour.

The benefits of this are clear. These projects would provide temporary employment for unskilled workers in government-funded projects, which would enable these workers to gain experience needed for permanent jobs. In addition, the targeted stimulus spending on productive and value-creating projects would spur growth, while also addressing inclusivity. The beneficiaries of economic growth in Nigeria have typically been politicians, workers in the oil and gas sector, high-level public officials, and executives of financial institutions. A vast majority of Nigerians are usually left out.

Some may wonder how the Buhari administration could possibly finance a massive stimulus spending, given dwindling oil revenues and a volatile global oil market.

There’s an answer to this conundrum: Nigeria could follow the example of Asian countries that financed their stimulus programmes through domestic borrowing mainly by issuing government bonds. Borrowing money domestically in a local currency isn’t nearly as problematic as external borrowing.

Of course, financing stimulus spending via domestic borrowing comes at a price: it may crowd-out domestic private investment by raising interest rates. But this would be a temporary hiccup, as the increase in aggregate demand generated by stimulus spending would subsequently crowd-in investment in the production of goods and services. This ultimately will generate employment opportunities.

One of the usual concerns about stimulus spending is the risk of inflation. But unemployment, economic disempowerment and youth restiveness are bigger threats to the stability of the Nigerian economy in the short to medium term.

A big chunk of Buhari’s stimulus spending should be directed toward manufacturing and agro-processing. The manufacturing sector accounts for only 12% of employment in the country, down from a high of over 30% in the 1980s. During its heydays in the 1970s-1980s, the Nigerian textile industry alone employed almost 1 million workers. Today it employs about 30,000 workers.

According to the Manufacturers Association of Nigeria, the contribution of manufacturing to the country’s GDP has been flat at 4%. This is well below the 12% targeted by the government.

Taking charge

In this first term, Buhari ceded too much economic policymaking responsibility to Vice President Yemi Osinbajo. Though a brilliant lawyer and professor, Osinbajo has no experience in economic management.

To move the economy to the next level, and thus regain the trust of Nigerians who have given him a second chance, the president must surround himself with a more talented team of economists.

 

BY: STEPHEN ONYEIWU

PenCom directs PFAs to invest 60% of infrastructure fund locally

The National Pension Commission has directed Pension Fund Administrators (PFAs) to invest a minimum of 60 per cent of the infrastructure fund in projects within Nigeria.

The revised regulation on investment of pension fund assets issued to PFAs by PenCom recently also set the minimum value of the projects to be considered for investments with pension funds as N5 billion.

There have been calls by Nigerians that the country’s growing pension funds should be invested in infrastructure projects that would benefit people at the bottom of the pyramid.

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An amendment to the Pension Reform Act (PRA), 2004 in 2014 provided a legal backing for PFAs to now invest pension funds in infrastructure unlike before the amendment.

The PRA 2014 provided in Section 86 that pension funds could be invested in real estate development, a provision which will enable Nigerians to have access to housing and close the gap in housing development in Nigeria.

With the new development, infrastructure investments through pension funds skyrocketed by over 600 per cent, from N2.23 billion in January, 2017, to N16.07 billion as at August 31, 2018.

However, this translates to less than 3 per cent of Nigeria’s N8.63 trillion pension assets as at December, 2018.

The revised regulation seen by Daily Trust indicated that pension fund assets can be invested in infrastructure projects through eligible bonds and Sukuk, as long as they are for core infrastructure projects, whose business plans and financial projections indicate that they are viable as well as economically and financially rewarding for investment by pension funds.

The bond or sukuk issued to finance the infrastructure project shall have credit enhancements, being guarantees by the Federal Government of Nigeria or eligible MDFOs and any agency backed by a Sovereign or Development Finance Institution; have a maturity date that precedes the expiration of the concession where applicable; and have a feasible and enforceable redemption procedure in the event of an adverse event such as project suspension and cancellation.

Where infrastructure projects are financed through Infrastructure Funds, the infrastructure fund shall have well defined and publicised investment objectives and strategy as well as disclosures of pricing of underlying assets, including any other necessary information.

In an interview with Daily Trust, the Acting Director General of PenCom, Aisha Umar-Dahir, said the commission introduced infrastructure as an approved asset class in 2010 but the move did not immediately translate into investments in infrastructure by PFAs due to limited availability of investible infrastructure products that meet the minimum criteria for pension fund investment.

“The commission sought to address this by actively engaging stakeholders in the capital market to facilitate the development of these investible instruments and other necessary conditions to encourage pension fund investments in infrastructure, that is credit enhancement mechanisms,” the PenCom boss said.

She said the commission supported the establishment of Infrastructure Credit Guarantee Company Limited (InfraCredit) which provides local currency guarantees to enhance the credit quality of debt instruments issued to finance infrastructure assets in Nigeria. “The company had provided credit guarantee for an infrastructure bond issued by Viathan Funding Plc. in December, 2017, with pension funds subscribing for over 70 per cent of the issuance. These efforts are gradually bearing fruits as infrastructure investments by pension funds have grown,” she said.

However, the revised regulation has shown that PenCom is concerned with the safety of pension funds even as more PFAs invest in infrastructure.

The regulation is also concerned with who manages the infrastructure fund, mandating that PFAs must ensure that the key Principals, namely the Chief Executive Officer and Chief Investment Officer of the Fund Manager shall each have at least 10 years relevant and continuous experience in infrastructure financing or investment management and shall not exit the Fund without prior notice to the PFAs, which shall not be less than 90 days from the exit date.

The regulation mandated that the ‘exit clause’ shall be expressly stated as a condition in the investment agreement/covenant between the PFA and the Fund Manager.

Source: Daily Trust

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.

Real estate investing: How much do you need to get started?

Real estate investing interests large numbers of people, especially when home prices are rising. And that’s been the case in recent years. According to the latest figures from the Federal Reserve, “The median net worth of homeowners increased 15 percent between 2013 and 2016, whereas that of renters or other non-homeowners fell 5 percent.”

Logically, if homeowners are doing so well, then doesn’t it make sense to own more than one house? If you want to be an investor, you’ll need real cash. But how much do you need? In some cases, as we shall see, the answer is very little.

Cash needs for real estate investing

The cash needed to purchase investment property will vary according to many factors. The three big items to watch are the cash needed for a down payment, the cash needed to close, and the cash immediately required for moving and repairs. Additionally, buyers should always have reserves in case something unexpected takes place.

Owner-occupants typically finance a home with one of four options: FHA mortgages, VA financing, conforming loans that can be bought by Fannie Mae and Freddie Mac, and USDA mortgages.

For investors, most of those programs are off-limits. Neither FHA nor VA programs allow pure investor mortgages. The property must be owner-occupied to be eligible. On the other hand, with just 3.5 percent down (FHA) or even zero down (VA), you can finance a property with as many as four units if you live in one unit as your prime residence.

Fannie Mae and Freddie Mac do allow investor loans, but buyers must be highly-qualified and bring a larger down payment.

There are situations where real estate investing can be done with less cash. Some options to consider include:

Seller contributions

Many loan programs allow owners to provide a seller contribution, from 2 to 6 percent of the sale price. Typically, such contributions can be used to offset closing costs and mortgage borrowing. However, there is a minimum down payment that must come from the buyer.

Gifts

While seller contributions typically cannot be used to pay some or all of the down payment, that is generally not the case with gifts. Gifts – especially from friends and family – can offset down payment requirements.

To make sure a gift is really a gift and not a disguised loan, lenders require a “gift letter” from the donor stating that the money is a gift and that no repayment or interest is required. They also often want bank statements from the gift-giver to prove that he or she has the money to give you, and a paper trail showing that the money exited the giver’s account and entered yours.

Co-buyers and co-borrowers

If cash is a problem, perhaps the answer is to find a financially-strong co-buyer. With an equity-sharing agreement, you have an occupant-owner and a non-resident investor owner.

Both partners pay their share of mortgage costs, taxes, repairs, etc. However, the owner-occupant pays rent. For tax purposes, the rent is income to both parties, and the mortgage interest, property taxes, depreciation and other costs count as deductions from that income.

The property may generate positive cash flow to both parties, create paper losses to be deducted from other income — or even both.

When the property is sold, the owners divide the profit or loss. A written equity sharing agreement is a must – speak with a real estate attorney for details.

Private Lenders

Those with an interest in flipping often need to act quickly, or they’ll lose a property. Private lenders, historically known as hard money lenders, can often fund transactions in 10 days or so but such loans require a lot of cash. According to the Housing News Report, “Private lenders often have terms which include 70 percent loan-to-value (LTV) ratios, 3 to 4 points, interest from 8 to 13 percent, and a length of one to two years.”

Financing from private lenders tends to be short-term because the assumption is that flippers will quickly re-sell properties. However, stalled repairs, surprise problems, unexpected costs, and changes in market demand can delay sales and make flipping very risky. An alternative funding approach is to team with other investors, pool money, and buy property for cash.

Assume financing

Today’s FHA and VA home loan programs allow qualified borrowers to assume existing mortgages for investment property purchases. For VA home loans, you don’t need to be eligible for VA financing yourself. you don’t have to be in the military or a veteran.

The upside is that you can save money on mortgage origination costs, and may get a better interest rate than is currently available. (This depends on when the existing mortgage was taken, and how much the home seller is paying.)

However, you’re likely to need a sizable down payment. The reason is that the loan balance has been paid down by the current owner, while the home value is likely to have increased.

If your seller has a 3.75 percent interest rate, that’s much better than you can get right now. That rate was available in 2016. So let’s assume that the current seller paid $200,000 for a home put 5 percent down. Three years later, the loan balance would be about $188,000. meanwhile, if the property value increased at 5 percent per year, it’s worth $231,525. You’d need $43,525 to make up the difference.

Secondary financing

Rather than one loan, why not purchase with two? This is not only a way to reduce cash needed, but it can also eliminate mortgage insurance costs.

For example, you want to buy a $300,000 property. You could buy with $60,000 down (20 percent) and a $240,000 mortgage (80 percent). Alternatively, you could buy with a $240,000 mortgage and a second loan for $45,000. Now you have $285,000 in financing and need just 5 percent down in cash – a total of $15,000 plus closing costs.

Source: Themortgagereports

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

Dangote Re-affirms Commitment to Nigeria’s Economic Potential

Alhaji Aliko Dangote, President, Dangote Industries, says his continuous efforts to innovate, create value and invest in Nigeria’s economy is borne out of his firm belief in its vast economic potential.

Dangote said this during Dangote Cement Distributor’s Award Night on Monday in Lagos.

He said his target was to ensure that Nigeria becomes self-sufficient in all the sectors where Dangote Industries have its footprint — cement, agriculture, mining and petroleum.

The industrialist noted that the company was at the forefront in exploring opportunities targeted at the diversification of the economy and had continued to roll out massive agricultural projects across the country.

“We have started in rice, while plans are underway for dairy farming. Our push for backward integration in providing our own raw materials on a massive scale has led to the planned investment of 4.6 billion dollars over the next three years in sugar, rice and dairy production alone.

“That will eliminate the country’s reliance on imported food and the foreign exchange outflow that comes with it,” he said.

The industrialist noted that the award was to celebrate its valued customers and distributors for their unflinching partnership in ensuring that Dangote cement products remained the first choice for construction purposes across the country.

“You have made Dangote Cement become a household name and the product of choice among cement users in Nigeria.

“We are leaders in all the sectors where we play, and this demands continuous improvement and partnership with you, our customers.

“Our cement plant in Obajana, Kogi State, is already the biggest in Africa. We are building the fifth line, and hopefully it will come on stream early next year and will make its production 16.25 million tonnes.

“The cement plant and its sisters in Ibeshe, Ogun and Gboko, Benue have long been the bedrock of our leading role in the cement sector.

“Therefore, we are rewarding customers for growth. If they grow, we grow. We grow together,” he said.

Dangote pledged his commitment to the continued innovation toward creating more value for customers as well as stakeholders.

The overall National Best Growth customers rewarded were D.C. Okika Ltd, Lafenax Ltd., Gilbert Igweka Global Concept, Chinedu & Sons Ltd, and Kazab Heritage Ltd.

Also, some of the best Corporate Customers were CCECC Nig. Ltd, ITB Concrete, Julius Berger Nig. Ltd, Dantata & Sawoe Construction Company, EXTEX Group and Setraco Nigeria Ltd.

Dangote Cement posted a Profit After Tax (PAT) of N390.32 billion in its 2018 operations, as against N204.25 billion achieved in 2017.

Besides, the company has maintained its dominance of the Nigerian market, accounting for 65 per cent of the total volume sold in the domestic cement sector in 2018.

Cement revenue from its Nigerian operations increased by 11.9 per cent to N618.3 billion from N552.4 billion.

Source: Vanguard

Real Estate – Sector’s Growth Yet to Recover from Recession

A breakdown of the recently released GDP report by the National Bureau of Statistics showed a further contraction in the real estate sector. The sector’s real growth stood at -3.85% from -2.68% recorded in the preceding quarter.

The sector has now been in the negative territory for at least 12 consecutive quarters. However, the sector’s contribution increased from 6.5% in Q3’18 to 6.6% in Q4’18.

The global real estate agency, Knight Frank, recently released its ‘The London Report 2019’. In this report, the agency observed:

1. Commercial offices in central London attracted a total of £16.2 billion of global capital ahead of other cities like Paris, Manhattan and Hong Kong. China was the largest investor in the city.

2. London’s real estate market remains the most liquid and transparent in the global market. This will remain an attractive feature for global and domestic investors.

What does this mean for developing countries like Nigeria?

Renewed hope in London’s real estate market coupled with the negative growth recorded in Nigeria’s real estate market reduces the possibility of increased investment in the domestic real estate sector.

Performance of real estate companies in Nigeria

Currently, four companies – UPDC, UAC Property, Union Homes and Skye Shelter Fund – are listed on the Nigerian Stock Exchange.

In the period between December 31, 2018 and January 31, 2019 there was mixed movement in share prices across the board. UPDC and UAC shares declined by 9.9% and 9.95% respectively to N5.95 and N1.72. Union Homes and Skye Shelter Fund’s share prices remained flat at N45.20 and N95.00 respectively.

Proshare Nigeria Pvt. Ltd.

Outlook for real estate in February

Minimal activities are expected within the real estate sector in February. The election season will slow down activities across various sectors including real estate. However, we expect activities within the sector to improve by H2’19, driven by increased government spending.

Source: Proshareng

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