NHF Bill: Experts differ on implications for the economy

Among the 17 sustainable development goals (SDGs) adopted by the United Nations (UN) and its Member States, “housing for all” forms one of the specific targets to be achieved by 2030.

But 2030 is almost here, even as the issue of housing deficit continues to become worse; despite claims by successive governments to have tackled the perennial problem in their bits.

Recently, there have been debates coming from different quarters in Nigeria regarding the proposed National Housing Fund (NHF) bill, which is currently awaiting Presidential assent.

Several top financial and tax analysts have rightly argued different sides to the NHF bill and its possible impacts on Nigeria. And while some are calling for the bill to be scrapped, others are throwing their weights behind it.

How housing development impacts the economy

In economic terms, the development of the housing sector forms an integral part of any country’s economic progress. Whether it is construction, rental or sale, each layer contributes spiral effects on the economy.

Basically, the influences of the housing sector on national economies can be summarised. Firstly, while housing fulfills a basic human need for shelter, it also provides the base from which households participate in the economy.

Secondly, housing is the largest single asset most households will accumulate during their lifetime. Therefore, housing constitutes an important part of most countries’ stock of wealth.

An overview of Nigeria’s acute housing deficit

Despite having an estimated population of over 190 million population, Nigeria’s housing sector has been characterized by a housing deficit estimated at 18 million units.

Earlier reports from the World Bank (as cited by Global Property Guide) shows that Nigeria needs about 700,000 additional units each year for the next 20 years.

However, recent Reports have shown that for the nation to upturn the high deficit figure, an additional 2 million housing unit per annum will be required for the next 10 years.

Like Nigeria, other nations equally affected

The UN-Habitat report for 2016 shows that globally, one in eight people live in slums. In total, around 1 billion people live in slum conditions today. According to the UN, the numbers are continuously increasing.

The majority of the slum dwellers are in developing economies. In spite of great progress in improving slums and preventing the formation of slums, 30 percent of the urban population living in slums in developing countries.

It was further reported that 35% of the world population lives in unimaginable housing situations, representing over 2 billion today.

Recent declines

It has been revealed that the Nigerian housing sector has recently been declining, especially so during the better part of the last 5 years. Moreover, when compared to the housing sectors of some of the most advanced countries in the world, the Nigerian housing sector still has a long way to go. For instance, the Housing sector in countries like the US and Australia boasted largest in terms of the sector’s contributions to GDP and the highest employer of the labour force.

More investments needed to close housing deficits

Recent online statistics have revealed that the Nigerian housing sector would need about $400 billion investment over the next 25-30 years to reconcile this deficit.

Also, reports have shown that the World Bank stated N59.5 trillion would be needed to adequately meet the housing needs of Nigerians.

To corroborate this, the Special Adviser to the Nigerian President on Economic Matters, Mr. Adeyemi Dipeolu, during the second Nigeria Housing Finance Conference in Abuja in 2018, stated the following:


Analysts at loggerheads on the impact of proposed NHF law

Recall, that the revised National Housing Fund Law was recently passed by the National Assembly and submitted to the President. Nairametrics also joined in the debate, highlighting the possible elevated costs it could entail for several businesses in the country.

Global tax and consulting conglomerate, Price Waterhouse Coopers (PWC) has also opined that the “proposed law is a bad idea”.

The Head of Tax and Regulatory Services at PwC Nigeria and Tax
Leader for PwC West Africa, Mr. Taiwo Oyedele, called for the total withdrawal of the bill. The tax guru stated:


He further stated the following:


On the contrary, some people are of the opinion that the NHF law is a good thing for the Nigerian economy. The Founder and Publisher of Nairametrics, Mr. Ugohukwu Obi Chukwu, threw his weight behind the proposed NHF bill thus:



The financial expert further stated:



Similarly, a housing industry expert, Mr. John T. Ikyaave, described the recent passage of the revised NHF bill as a positive development. According to him:


Meanwhile, the CEO of AfriSwiss Capital Management Limited, Mr. Kalu Aja, faulted the NHF proposed law;



He stated further,


Source: NairaMetrics

MTR Gardens: New urban community where OPIC offers affordable luxury

When the moving construction machines of the Ogun State Property Investment Corporation (OPIC) arrived Isheri area of the state in August 2015, many did not believe in their ability to deliver what stand today as luxury homes, and also an urban community offering  strong value propositions.

This was because, Isheri,  a sleepy rural community, had huge environment challenges that devastated property values. The part of the community where MTR Gardens is sitting today was  a waterlogged waste land that posed a security risk being a hideout for miscreants.

The terrain was difficult to access, leading to a tough and  difficult  development process that involved different stages of reclamation, flood channelization and raft foundation  to ensure structural stability of the coming buildings.

Today, the Isheri story has changed and, according to Jide Odusolu, the OPIC managing director and special adviser to the Ogun State governor on property and investment, “what we are doing here, apart from creating homes, is also a form of economic expansion in which we are creating economic urban communities and resolving environment challenges”.

OPIC has been in existence for over 30 years, but in the last eight years, has been a veritable tool in the state government’s infrastructure development, economic expansion and internal revenue generation.

“Before this administration came on board, OPIC in over 30 years delivered a maximum of 200 housing units, all of them in Agbara. They also built about three kilometers of roads; but in the last eight years, OPIC   has delivered about 2000 housing units and also done over 40 kilometres network of  roads in our various estates”, Odusolu disclosed to journalists on tour of the facilities recently.

MTR Gardens, located on KM6 along Lagos-Ibadan Expressway Way, is the corporation’s latest housing development. It is a 180-unit premium apartment-styled community comprising 150 units of 3-bedroom apartments and 30 units of 2-bedroom apartments in 25 and 3 blocks respectively.

The estate which targets upper middle class buyers boasts dedicated power supply, paved roads/walkways, portable water, packaged sewage plant, and sit-out areas. The rooms are very specious for both the 3-bedroom and 2-bedroom, each with ensuite maid-room and three parking spaces for each apartment. Recreational facilities include multi-purpose gym, swimming pool, basketball court and a neighbourhood mall to answer to the domestic needs of residents.

Apartments in this Garden which offers both investment and residential opportunities attract competitive market prices. Buyers and investors have the option of buying fully completed apartments or shells in which case they have to do the finishing by themselves. But there is price differential.

Whereas a completed 3-bedroom apartment sells for N32 million, the shell variant goes for N24 million. As for 2-bedroom, a completed apartment sells for N18.5 million while the shell goes for N14 million.

Buyers also have the option of paying outright or going through mortgage facilities provided by Gateway Mortgage Bank, Homebase Mortgage Bank and Trustbond Mortgage Bank Plc at 18 percent interest rate repayable in 15 years .

The managing director informed that  MTR Gardens, which is designed to have  the same scale of what  obtains in 1004  Estate in Lagos without the stress and pressure there, is the first of a three-phased development, disclosing that the second phase promises 600 apartments.

“The third phase of this project is going to be a commercial city with office building and shopping mall; the concept of what we are doing is to recreate this area in such a way that it is not just enough to live in Ogun, but to also work and thrive in the state. We want to make people start seeing this place as home where they can live, work and play”, he said.

Odusolu, whose eight-year stint in OPIC shall be elapsing in May this year, says it is gratifying for him to have been a part of the journey that made the transformation that Ogun has seen within this period.

Source: Chuka Uroko

Millions Fear Losing Their Homes Across Africa – Survey

Cape Town — Tens of millions of urban dwellers in Sub-Saharan Africa live in fear of losing their homes against their will, a new study says.

The study, which its authors describe as “ground-breaking”, shows that in 18 countries surveyed, nearly 32 million adults in urban areas are “insecure in their rights to their home and land.”

Projected across all of Sub-Saharan Africa, “that means there could be more than 60 million adults living in urban areas… who are tenure insecure,” the study adds, and if the trend continues, the insecurity could afflict more than 210 million by 2050.

Measuring security of tenure is one of the indicators used to assess progress in attaining the first of the Sustainable Development Goals, which is the eradication of poverty.

The study was carried out by Prindex, an initiative launched by two think tanks – the Global Land Alliance and the London-based Overseas Development Institute (ODI) – with support from the Omidyar Network. It also covered countries in South-East Asia, Latin America, North Africa and the Middle East and, in Europe, the United Kingdom.

Surveyed on their expectations for the next five years, one in four adults across 33 countries said they were likely or very likely to lose their homes.

Anna Locke of the ODI said the survey showed for the first time “that every morning, hundreds of millions of people around the world wake up fearing they might lose their home. This should make us reconsider how we think about development.”

The findings were “alarming”, added Malcolm Childress of the Global Land Alliance: “People who are insecure in their homes often struggle to plan for their future, invest money or get an education.”

Locke said a finding that women felt less secure than men in event of divorce or death of their partner was “particularly striking – it shows there is a long way to go in meeting the aspiration of equal economic rights for women worldwide.”

The survey showed that although in general Sub-Saharan Africans perceive they have less security of tenure than do people living in other parts of the world, there was one particularly surprising exception. Of the 33 nations surveyed, Rwanda did best, with only eight percent of urban dwellers feeling their tenure threatened – fewer than in the United Kingdom.

Burkina Faso and Liberia did worst, with 44 percent and 43 percent of adults respectively fearing losing their homes. In Burkina Faso, respondents cited their biggest fears as being government seizures of their property, family disputes, company seizures and problems with local and customary authorities. Family disputes ranked high among the worries of Liberians as well.also.

The percentage of people feeling at risk in their homes in other countries surveyed, ranging from those feeling most insecure to least insecure:

  • Benin 34 percent, Nambia 32 percent, Cameroon 31 percent;
  • Côte d’Ivoire, Kenya and Niger 28 percent, Zambia 27 percent, Ghana and Uganda 26 percent;
  • Madagascar 25 percent, Mozambique 24 percent, Nigeria 22 percent, Malawi, Senegal and Tanzania 21 percent.

Other reasons for tenure insecurity cited: government seizures in Malawi, Rwanda and Senegal; family disputes in Ghana; concern at owners or renters asking people to leave in Madagascar and Rwanda; and death of a household member in Nigeria, Ghana and Niger.

Source: Prindex

How residents grapple with challenges of communal living in serviced estates

Apart from income, people also put into consideration the availability and functional infrastructure such as good roads and drainage, waste management, security, serenity and attractiveness of environment as well as adequate supply of power and water when deciding where to live.

Gated estates are generally upscale residential communities designed for affluent individuals. They provide a lot of benefits to the residents that live within them, but services are not free lunch.

Every gated estate has a central management authority, an outsourced facilities managing firm or Home Owners Association that maintains the facilities and ensures residents enjoy them to the fullest.

Olumide Akinyemi, project manager at Global Limited, posited that why high profile individuals reside in gated communities goes beyond comfortable access to facilities and amenities, but issues of security, privacy, and exclusivity of the amenities are of concern to them.

A report by AfrAsia Bank, an institution authorized and regulated by Bank of Mauritius, titled ‘2018 Wealth Report’  affirms  that an increasing number of High Net Worth Individuals (HNWI) prefer to live in gated communities and estates.

The institute cites security, facility, quality  and design of houses, views, scenery  and wildlife as well as price growth potentials as factors influencing the decisions of HNWIs to inhabit gated communities.

But these upscale communities, as attractive as they seem, are not without challenges of varying degrees for residents, landlords, estate developers and facilities managers who provide and manage facilities and services used by the residents.

Most of these estates are serviced, meaning that services are provided and paid for by the residents either collectively or individually. The payments are made in form of service charge which has become a major feature of most estates and a source of contention. In most cases they pose challenges.

“The private estates or residential housing requires the services of facilities managers because a lot of the people who live there are middle income professionals who live there hoping to leverage economy of scale to get the kind of services they need”, explained chief executive of a frontline facilities management and services firm, who pleaded to be anonymous.


The economic downturn in the country is, however, making it difficult for some of these residents to meet their obligations in terms of rents and service charge payments, leading to serious frictions between residents and landlords or residents and service providers as the case may be.

“Many of  these mid-come professionals who worked in oil and gas companies or banks have lost their jobs, the income of some of them has reduced and they are therefore struggling to pay their service charge. Even many of them are defaulting in paying their rents”, the chief executive revealed.

In some cases, however, frictions arise not from loss of job or income, but from rising costs which has in turn jerked up service charge in many estates.  “Rising cost of maintenance has increased   sharply  to between 30 percent and 40 percent”, according to Mojisola Akingbade, an estate manager, who expressed fear that sooner than later, cost of maintaining a building might outstrip the rents.

Our  findings  on four key facilities including  power, water, sewage disposal and security in three gated estates in Lagos namely Osborne Foreshore Estate, Ikoyi; Cable Point Estate in Lekki Phase I and 1004 Estate in Victoria Island reveal near-common experiences by residents.

Though residents have their comfort and enjoy serenity, attractive landscape, tight security, and clean environment with slight variations in terms of power and water, service charge payments remain a major issue the service providers have to contend with.

In terms of security, a visit to these estates shows that they are well secured for habitation. A domestic staff who has been working in 1004 Estate for six years, told us that tight security in the estate was a major selling point.

The staff, who did not want to be named, explained that a significant number of occupants of the estate are foreigners (particularly Chinese and Indians) and a major reason for this, according to him, is because the environment is safe.

“About 90 percent of the residents are Chinese and Indians. The estate appeals to them because they are confident that their lives and valuables are secured; you cannot enter here anyhow; there are protocols. You cannot find these foreigners in non-gated areas where there are often cases of armed robbery. Things like that scare them,” he said

Talking about the service charge for security, he said residents are billed and payments are remitted to the Home Owners and Residents Association (HORA) office.  Efforts to get the amount paid by residents were fruitless as the HORA office was reluctant to provide such information.

A visit to Cable Point Estate, Lekki Phase I gave a similar picture of 1004 estate as regards security. One of the estate residents, who introduced himself simply as Biodun, told us that the estate management office does not joke with security.

“This is how we operate here. It is mandatory for everyone to sign-in before they get access into the estate. You cannot find people wandering aimlessly here”, Biodun said.

At Osborne Foreshore Estate, Ikoyi, it is the same trend. Fortune Olakunle, who works in one of the hotels within the estate, told us that visitors were scrutinized before gaining access. “There are guards stationed at the gate, both armed and unarmed. A car search is conducted before motorists are allowed in.

“Non-residents are required to call their hosts before being allowed into the estate. This is why there are no known recorded cases of armed robbery or violent crimes within the estate”, Olakunle said.

Power is supplied to the sampled estates by Eko Distribution Company, but reliance on public power supply varies among the estates. At 1004, it was gathered that the estate has a central generating plant beside Civic Centre that supplies power to the estate.

“Before, the estate relied on public electricity, but not anymore. If public electricity goes off, within the next 20 seconds, the power plant picks up”, a resident in the estate disclosed.
Asked about the service charge for power, the resident who pleaded anonymity explained that apartments were metered to individual residents and payment is commensurate with consumption.

The same thing applies to Cable Point estate. The resident explained that although the estate gets power from public sources, it is not dependent on them because of frequent outages associated with public power.  “You know the country we live in. Power is epileptic. The estate has its own plant that serves residents. The plant runs 24 hours in the absence of public power supply”, he said.

Checks at other areas around Cable Point estate revealed that residents were not impressed with the power situation. Emmanuel Nweke, a resident at Lai Yusuf Crescent adjacent Cable Point, said “sometimes we live two days without power. They also give us three straight days without interruption, but this is rare. We are not happy.”

Unlike 1004 and Cable Point, it was gathered that Osborne has no central generating plant that serves residents in case of power interruption. “Majority of residents complement public power with generators and inverters”, a resident confirmed.


“There is nothing like crazy bills. All buildings have prepaid meteres. For instance, in my office, we pay huge sums to get certain units of light that can sustain us a month. You know that prepaid meter is a not a friend of heavy gadgets”, the resident added.

Water is another critical facility in these estates.  It was gathered at 1004 estate that there is a central water plant that serves residents. John explained that the tanks are cleaned twice in a month. “External tankers are called to supply the estate whenever the tanks are cleaned. Each cluster has its reservoir to serve residents during this period”, he added.

This  also applies for Cable Point Estate. The resident revealed that water in Lekki is  generally bad, but the estate has its own treatment plant that serves residents with potable water supply. According to him, the plant is routinely purified.

In Osborne foreshore, all houses in the estates have their own personal boreholes and water treatment plants. The water is safe for human consumption and residents enjoy  portable water.

In the three estates, the central management authority collectively handles Waste Management. It was gathered that the Lagos State Waste Management Authority (LAWMA) visits the estates to evacuate dirt at least once in a week.

Source: Israel Odubola

Mixta Africa plans ‘a haven’ in Lagos with Adiva Plainfields II

Another initiative aimed at increasing the housing stock in the country has begun in Lagos under a mixed-use development scheme. The project will yield 227 units of residential accommodation.

Mixta Africa is promoting the new venture, located within the rapidly developing Lagos New Town axis of Lagos State along the Lekki-Epe Expressway corridor. Construction work at the site began recently, and a vast majority of the project is currently being sold off-plan.

The project known, as Adiva Plainfields II is located within the Adiva Plainfields gated residential community. The development offers attractive homes and serviced plots to prospective buyers. It is developed in phases and on completion, the units will comprise four bedroom terraces and two bedroom apartments.

The company currently has developments in Lagos, Edo and Rivers states with an eye for expansion in the nearest future. In Lagos State, the developments are along the Lekki-Epe expressway within the rapidly developing Lagos New Town.Mixta Africa’s short and long-term objective is to provide affordable housing, which addresses the current housing deficit. To this end, the firm launched the Emotan Gardens Estate in Benin City with homes as low as N6million. There are also plans to develop affordable housingSpecifically, the Adiva Plainfields II has its own infrastructural facilities including roads, power and water supply systems as well as a quality drainage. It is designed as a community where families and live and play.

According to the Head, Marketing and Sales, Mr. Korede Lawrence, “The lake, public parks and gardens set the tone for this tranquil community. Adiva Plainfields is a housing development of the future. With its unique design, first class amenities and peaceful surroundings, it is a secure investment for now and the future.”

He said: “The types of properties offered in this new phase are specifically targeted to provide an ideal environment for families. The designs are modern and functional while still offering top-notch infrastructure.

“It is a quality development, which has its own infrastructural amenities including roads, power and water supply systems and a quality drainage system, which has proven capable of handling torrential rains.

“In addition to the breathtaking scenery and accessible services, residents will have access to Adiva Gardens, a beautiful garden right in the heart of the estate and a children’s play area making their living experience even more comfortable.”

On the current situation of property business, Lawrence said: “The market is constantly growing even with the increasing number of developers and marketers. It is also becoming clearer that implementing systems that support flexible payment plans is a game changer for the industry.”

Source: Chinedum Uwaegbulam

Land documentation process in Nigeria: A mixed bag of experiences

For Nigerians with enough money to throw around or those who have connection with persons in high offices, getting a title for their landed property can almost happen in a blink of an eye, while for others it can take almost forever.

Checks  revealed that Nigerian property owners, estate developers, legal practitioners and other stakeholders in Lagos state have had different experiences, at one time or another, in getting their land documents in a country where 90 percent of houses are built with own savings.

Issues around the rigorous processes,long duration and the high cost of obtaining land documentations are among key setbacks identified and highlighted by industry stakeholders.
Jide Ogunleye, CEO of Denaro Properties Limited, a business and investment strategies firm with emphasis on real estate, said bureaucracy combined with corruption in the titling process will not allow things to get done.

“Whatever has been done has still not solved the problem of titling, forget the e-certificate. The people that will provide the e-certificate can be bottlenecks in the process,” he said.
He explained that this is because “people won’t move your file, except they are paid or something, and as such it is likely that in some cases you can be on your land title for a very long period of time.”

Omobola Ayoola, business development manager at Joe Etoniru & Associates, a real estate company, affirms, saying that the process of getting land title “is not cut-and-dried; it is not like you submit the form and immediately your form goes through some people and you get your certificate, no.”

She notes that the cost of getting the document can be as high as N1 million to N2 million, adding that it has always been expensive.

But, according to the Lagos State Business Made Easy (BME) document driven by the Presidential Enabling Business Environment Council (PEBEC), there has been a reform in the method of operations by the Lagos State Land Bureau as it has introduced the use of technology in its day-to-day transactions.

The BME document, however, explains that prior to the implementation of the reforms, “applicants seeking to register property in Lagos were required to pay fees at different stages and carry out visits to the land registry before registration could be completed.”

It notes that “the reform initiatives put in place have simplified this process by making payments possible online, automating procedures and reducing charges.” As a result, the time required to register property has reduced from 105 days to 75 days, and also the number of procedures required to register property has reduced from 12 to 8.

Adeniyi Akinlusi, president of Mortgage Bankers Association of Nigeria (MBAN) and CEO, Trustbond Mortgage points out, however, that the cost of land titling has reduced compared to what it used to be before Bababunde Fashola’s administration.

“So in terms of cost, it has come down. They have also tried to reduce the administrative bottleneck but there is room for improvement. However, I am aware that the new law being reviewed by Lagos state is going to streamline titling in terms of the processing,” Akinlusi said.
Meanwhile, possession of land title documents is one of the most important ways of laying claim to ownership of a property.

Ayo Ibaru, COO/Director,  Real Estate Advisory at Northcourt Real Estate, explained that the process of land documentation in Lagos state has attained an almost legendary status in property development lore.

“There has been many a complaint about unnecessary hassles on the path to title perfection. The process takes too long. The requirements border on the onerous and the officials in charge could be more helpful,” Ibaru noted.

But he added that there have been some improvements, saying that transaction speed has gotten better as the government has made concerted efforts to introduce technology to the process, including the commissioning of an online system to facilitate the processing of land documentation.

Narrating his frustration with the process of getting land title for his clients, a legal adviser who asked not be quoted for the fear of losing his job said in his last  eight years of working on the field, nothing has changed about getting a land document.

“The time it takes to get the document has not improved; it only just depends on how fast you want to get it done. It is for the highest bidder, sometimes if you have someone at the top, it can be faster but with serious follow up which would have involved you paying heavily to the officers you will be able to get it faster than others”.

Over the past three years, Nigeria has implemented more than 140 reforms, increased its Distance-to-Frontier (DTF) score by over 11 basis points, and moved up 24 places in the World Bank Doing Business Index (DBI) rankings, as revealed by PEBEC Reforms Reference Handbook.

Some of the highlights of reforms by successive administrations in lands bureau to date, as compiled from the website of the Lagos State Government Land Bureau include  the 30-Day Governor’s Consent and Reduction of payments on Consent fees, Capital Gains Tax, Stamp Duty and Registration fees.

Ibaru applauded these efforts qand the resultant improvements, but pointed out however that, in all, it still leaves much to be desired for a state that prides itself as ‘Centre of Excellence’.
“The governor’s consent, by many accounts, can be obtained within 3 – 6 months of completing the application. The cost, however, could be improved as officials still charge approved and not-so-clear fees at different stages of the process,” he explained.

The administration of the land use act means that everything must be issued by the governor, which according some real estate experts takes a lot of time.  This means that when a mortgage is to be registered it must be with the consent of the governor, and this is cost-inclusive.

The transaction cost of title perfection sometimes gets between 7 to 8 percent of a mortgage loan amount. A loan applicant  sees a situation whereby he wants to borrow N10 million and he needs another N1 million or N700,000 as perfection cost, explained Abiodun Akanbi, head of strategy at Infinity Trust Mortgage Bank

Mary Ikechukwu disclosed that she had been processing her land title for over 2 years and still no sign of going through with it anytime soon. “At the first sight of presenting my file to the officers, they spotted some errors in the documents. Meanwhile, this is not my first time of registering, and so I had to start with the processing all over again,”  she lamented.


Continuing, she said,  “even with the amount I have paid, the process is still slow and I do not even know the exact issue” adding, “there is need for an efficient online system that will help remove all the human interface in the processing.”

Meanwhile, Nigeria with the highest population in Africa has one of the world’s lowest mortgages to Gross Domestic Product (GDP) rate at less than 1 percent, which obviously lags Ghana’s 2 percent, South Africa’s 30 percent, the U.S rate at 60 percent and that of the UK at 70 percent

According to Akinlusi, all hands are on deck, as the mortgage association was engaging with the government. “If the foreclosure law which is being reviewed now is enacted, like it has been passed by Kaduna state, it will help to streamline titling of property and documentation and when it becomes faster to get title, the cost of development will cost less and then you can start talking about property approval and, if they have building, then mortgage can come in,” Akinlusi assured.

Source: Endurance Okafor

Why PMBs can’t create mortgages or give housing loans

After the consolidation and recapitalisation of the primary mortgage institutions (PMIs), leading to their name change, reduction in their number from 83 to 40 at the time, and increase in capital base, expectation was that their impact would be felt considerably in the housing sector.

 But, even though the capital base of the PMIs which became primary mortgage banks (PMBs) was moved from the statutory N100 million to N2.5 billion for those licenced to operate at regional level and N5billion for those with national operating licence, Nigeria’s housing problem still persists.

 When the Nigerian Mortgage Refinance Company (NMRC) was set up by the federal government, part of its mandate was to increase liquidity in the mortgage market as a critical step towards increasing housing affordability.

 Twice, the company has raised funds from the capital market, totalling N18 billion as at December 2018, to refinance mortgages originated by the PMBs. But only a few of them had mortgages for refinancing.

 From the consolidation and recapitalisation time to this moment, many of the PMBs have been struggling, unable to originate mortgages or give housing loans. Not even the revised operational guidelines by the Central Bank of Nigeria (CBN) which stripped the PMBs of other business concerns and compelled them to focus on their core business of providing mortgages and housing finance for home ownership and other forms of property acquisition, has helped matters.

  “The problems of mortgage banks revolve around their small capital base and so there isn’t much they can do. For all the money I have, unless I raise additional capital, I don’t think I can do 1,000 mortgages,” Ayodele Olowookere, the CEO, Omoluabi Mortgage Bank, explained to us in an interview.

  “I think mortgage banks need to do self-enlightenment and education to grow the industry,” he added. He explained that over time there has been a wrong perception of the mortgage industry which, according to him, was understandable because a lot of mortgage banks had also done what was not right like collecting money from people and not giving back.

 A lot of people say they will never go near mortgage banks because of some unethical conducts like this. Though Rose Okwechime, CEO, Abbey Mortgage Bank Plc, attributes some people’s apathy to mortgage banks to the “newness” of the mortgage system, Olowookere insisted that it was as a result of lack of self-education by the operators.

 Besides these reasons, analysts observe that some of these PMBs are not doing well because the Nigerian business environment is both hostile and risky. So, if these banks are not originating mortgages or giving housing loans, it could be for either of two factors or both.

 One is that a lot of people who would have taken mortgages or subscribed to mortgage products are unemployed. Many of those who are employed are either not mortgageable or suffering from job insecurity. The second point is that the money that many of these PMBs have is short-term deposits and, therefore, cannot be given out to long-term borrowers.

 Paul Onwuanibe, CEO, Landmark Group, adds what he calls “the big issue,” which is the fact that there is a clear absence of mortgage-viable properties out there in the market on which mortgage could be created.

 “The basic principle of a mortgage is that you must have steady income and be in gainful employment. You must be able to provide income in multiples for the property that will be built for your use. If your income is N4 million per annum, for instance, and the cost of the property is N30 million, unless you want to steal, you cannot afford that property and there is no mortgage for you at that rate given your income,” he explained to us.

 In other economies, the mortgage sector is a huge contributor to economic growth, but in Nigeria, the sector’s contribution to GDP is less than one percent, which is why the industry operators are canvassing government’s intervention as has been done in the agric sector.


 According to them, government must understand that if the mortgage industry is well-run and there is a good policy thrust to support its operations, it will diversify the economy with job creation. “The focus on other non-oil sectors, especially agriculture, is good because Nigerians need to feed themselves, but everybody also needs shelter and this can only be possible if the mortgage sector is made functional,” Olowookere said.

 Onwuanibe affirmed, adding that “the mortgage industry has to improve, and developers have to be encouraged to build mortgage-viable and ready properties; mortgage interest rates have to be reduced to single digit and made available; the whole process of securing mortgage has to be made clearer and more transparent, and the mortgage has to be available on the ‘retail high street’ such that every time you go out looking for it, you see it.”

Source: Chuka Uroko

Revised NHF: Fresh hope on more home affordability for workers

For Nigerian workers, thepassage of the revised National Housing Fund (NHF) bill by the National Assembly is not only a piece of good news, but also one that raises fresh hope for enhanced access to mortgage and more home affordability.

Liquidity issue in the mortgage system is expected to be a thing of the past. Nigeria workers, especially those in the public sector, are the least advantaged in terms of home ownership in Nigeria, considering that their take home pay at N18,000 per month can hardly give them three good meals a day and pay other bills including house rents and school fees, not to think of buying or building houses.

They need some support in the form of mortgage to enable them buy or build their own houses. It was in the realization of this need that the Federal Government, 27 years ago, came up with the National Housing Act 1992 that gave birth to the NHF.

NHF was aimed to mobilise funds for the provision of affordable housing for Nigerians. The outlined sources of funds for the fund included contributions by Nigerians in both the public and private sectors; investment in the fund by commercial and merchant banks; investment in the fund by insurance companies and financial contributions by the Federal Government.

But, over the 27 years of its existence, contributions from Nigerian workers have been the mainstay of the fund. Lack of compliance to the provisions of the Act by commercial and merchant banks and insurance companies has affected its liquidity and capacity to create the required impact.

Indeed, mortgage experts argue that the slow growth and minimal impact of the fund over the years are attributable to the failure of both the banks, insurance companies and other stakeholders to live up to expectations. This was the situation that gave rise to the review and passage of the new NHF bill by the National Assembly.

Some of the notable provisions in the new bill are the 2.5 percent contribution of monthly income to the fund by Nigerians in the public and private sector.

This comes with benefits and is refundable on retirement. As a contributor to the fund, a worker can apply for a housing loan of up to 15 million after only six months of continuous contribution. The loans attract low-interest rates of 9 percent per annum and are payable over 35 years.

Secondly, commercial banks or merchant banks and insurance companies are now required to invest 10 percent of their profit before tax into the fund.

In the existing law, commercial and merchant banks were required to invest a whopping 10 percent of loans and advances to the fund while insurance companies are required to invest a minimum of 20 percent of non-life funds and 40 per cent of it life funds in real estate.

The bill also stipulates fines to be applied to commercial and merchant banks as well as insurance companies to ensure compliance amongst others.

Though these provisions are still contentious as analysts say that asking every commercial or merchant bank, insurance company to invest 10 percent of its profit before tax (PBT) into the fund at an interest rate of 1percent above the interest rate payable on current accounts of banks could hurt them, close watchers of the mortgage and housing market in Nigeria commend the unfolding development.

These market watchers insist  that it is a positive development in the quest to tackle the perennial problem of sustainable housing finance that is required to develop  the country’s housing sector.

“The provisions of the new housing bill are relevant and will enhance the potential of the NHF scheme to increase access to decent, quality, affordable housing for Nigerian workers, especially those within the low- and medium-income brackets”, said John Ikyaave, a housing industry expert, in Abuja.

The fear of the analysts is that when such a financial strain is put on private companies, they will be forced to cut costs by sacking staff and freezing new investments, just as the new bill will probably see some of the companies pass on the cost to consumers, thereby triggering a surge in inflation.

But Ikyaave reasons that the new NHF bill, which is now awaiting the assent of President Muhammadu Buhari, will support the provision of housing loans at best and lowest market interest rates of between 6 and 9 percent that can be paid for periods of up to 35 years.

“Currently, if you go to commercial or mortgage banks for a housing loan, the interest rates you will be charged usually range from 19 to 25 percent. Now, how many Nigerian workers can afford that?

The  NHF is the only scheme that gives housing loans at single digits and for longer-terms of 35-years. A stronger NHF with  robust financial inflows will have the capacity to extend its range of affordable housing solutions to more Nigerian workers and create wider impact”, he posited.

Ikyaave commended all housing industry stakeholders who contributed to the passage of the bill and encouraged President Buhari to see its merit and sign it into law to kick-start a new phase in the provision of social housing in the country.

Source: Chuka Uroko

Is UK property still a good investment?

For those considering whether now is the moment to buy, these are disorienting times. When Kate Faulkner recently looked for a home in the city of Peterborough — a growing location for London commuters — she found comparable properties within one square mile whose prices were going up, down or were completely flat.

“There are as many different markets in one city as there are across the country,” said the founder of Property Checklists, a website and advice provider.

With price growth slowing in former hotspots, transaction levels stuttering and an uncertain period for Britain’s economy in prospect, the housing market has been drawing in its horns. Buy-to-let investors are hemmed in by new taxes and regulations, while owner-occupiers are reconsidering high-risk property moves as interest rates start to rise and mortgage affordability rules remain tight.


This week, Bank of England governor Mark Carney delivered a stunning warning that house prices could be 35 per cent lower than would otherwise be the case three years after a disruptive “no-deal Brexit”.

Some, however, believe today’s uncertain market offers precisely the conditions in which canny purchasers can find opportunities to strike a property bargain. After experts tackled the issues on stage at the FT Weekend Festival last weekend, FT Money assesses the outlook for anyone thinking of pushing the boat out on a home purchase. Is property still a good investment?

A journey of price discovery

A housing cycle is under way across the UK, said Richard Donnell, director of housing market analyst Hometrack, told a packed marquee of FT Money readers at the festival. But depending on where you are in the UK, it could either be coming to an end or it is just getting going. While growth is powering ahead in cities such as Manchester and Liverpool, it is flagging or going into reverse in places like Aberdeen and parts of London, according to Hometrack’s latest prognostications.


There are other parts of the UK that are still to see the ripple effects of formerly stratospheric growth in London and the Southeast — a trend that stalled roughly three years ago. “Five cities are 50 per cent higher [in price terms] than they were 10 years ago,” said Mr Donnell, with Oxford, Cambridge and Bristol among them. “But there are four cities such as Glasgow and Newcastle that are still at 2008 levels or even lower.”

The decidedly mixed picture he set out is reflected by lacklustre levels of activity in the housing market. The number of housing transactions has been stuck at the same level for four years — around 1.2m per year — but in London, where the market slowdown has been particularly marked in central or “prime” areas, turnover is down by 20 per cent over four years. Sellers are coming to terms with the fact that there are fewer buyers on the ground, and today’s house hunters are making higher demands of vendors.

But some of those sellers are not yet willing to acknowledge that a material change in sentiment has taken place. One indicator of this is the gap between asking and selling prices, which stands at 10 per cent in central London, said Mr Donnell. In Manchester and Birmingham it has narrowed to about 2.5 per cent.

“In London we’re on a journey of price discovery. [Buying a home] is about finding the people who are serious about selling, who are happy to take that haircut on price to get on with their life. It takes a couple of years for sellers to take that on.”


The human factor

Among asset classes, housing often carries a strong emotional connection for its owner-occupiers — a connection that few would ascribe to the equity funds sitting in their Isa. Ed Mead, founder of property services company Viewber, expounded on the limitations of statistics in informing a decision about how to put a roof over one’s head — something that is essentially “a human endeavour”.

To ask the question whether property remains a good investment may have been uncontroversial in the FT Money tent, but Mr Mead, an industry veteran, said it marked a long-term and lamentable shift in public attitudes over the function of housing and the development of a national obsession with house prices.

“In my lifetime, it’s gone from being a home to being an investment,” he said. “The Brits have a macho problem with property prices. I do wish people would stop worrying about their inherent value being associated with their house.”

He was bullish, nonetheless, on the logic of pressing ahead with a purchase today. Pricing may be hard to pinpoint in a sluggish market with low turnover, he said, but the fact that everyone in an area was in the same position meant losses on one side of a transaction can easily become gains on the other.

“I think it’s the best time there’s ever been to buy in London,” he said. “Most people sell because they want to buy something bigger. Say you’ve got a £1m house that’s now worth £850,000. You’re trying to buy your dream house, which might have cost you £3m three years ago, and you can probably buy it now for £2.25m. Who’s winning there?”

His qualified optimism about the capital’s property market — in spite of falling prices in many boroughs — was shared by Henry Pryor, an independent buying agent speaking a stone’s throw away on the festival’s House & Home stage.

“Uncertainty is bringing with it opportunity because people don’t know how their sale is going to go, or how far their budget will stretch,” said Mr Pryor. “As a result, people are jumping the wrong way. Sometimes people are selling for less than they might have been able to get and in other cases other people are sitting tight.”

The difficulty of finding the right price in this climate of uncertainty, however, has brought interesting developments in the way people are marketing their homes. Terrified of putting their house on the market at the wrong level and either sparking no interest or leaving money on the table with a price pitched too low, vendors are increasingly turning to “ off-market sales”.

These allow them to put the word out among selected potential buyers, without publicly advertising the sale. Mr Mead said there had been “real growth” in the number of off-market websites such as Invisible Homes in Fulham — an area where sellers have had to accept lower prices than expected in the past two years. “They’re designed to try and show whether you’ve made a balls-up on the price before you take it to the market. They’ve become very popular,” he said.


Buy-to-let pressures

For owner-occupiers, investing in property can mean stretching oneself on a mortgage in the belief that a house is undervalued, or will rise in value following a revamp. But market purists might consider mainstream “property investment” to refer to the buy-to-let sector.

There, the experts agreed, the outlook is not rosy. Landlord investors have been in high dudgeon after a series of tax and regulatory changes that have hit profits and raised the costs of investment. Extra stamp duty in the form of a three percentage point surcharge on buy-to-let purchases introduced two years ago is one drag on the sector. Arguably, the more damaging move for highly leveraged landlords is the loss of higher rate tax relief on their mortgage interest, which is being eradicated in stages, disappearing for good in 2020. Mortgage affordability has also been curtailed by stringent “stress tests” demanded by regulators.

“All the benefits to owning a buy-to-let property are being taken away,” said Mr Mead.

The hit to higher-rate taxpayers has come together with the prospect of higher interest rates on buy-to-let mortgages after base rate rises, causing landlord owners to question their underlying rationale for investment and squeezing out those who pin their hopes on a short-term return via capital growth.

Mr Donnell offered a glimmer of hope in urging a different mindset on landlord investors. What buy-to-let still offers is a pension-style income stream that delivers a monthly cash flow from a property, he said. This can allow investors who are no longer working to benefit from earnings growth in the form of higher rents.

“Yields are low, but if you invest in the right markets this long-term link between rental and earnings growth is to me the underlying attraction of investing,” he said. “Learning to love the cash flow and taking what the housing market gives you on house price inflation is the way to approach investment.”

As London’s rental yields have paled against those achievable in the expanding cities of the north, investors based in the south are fishing further from their home territories in search of better returns. But the arms-length nature of such deals brought sharp warnings from Ms Faulkner about the need for fine-grained research into proposed areas for investment, with good and bad deals aplenty even on the same street.

“Your best friend if you’re investing outside an area you know is sold property price data. This is what you should focus on. You must find a good surveyor and agent and be very wary about property sourcing companies,” she said.

Does the loss of easy returns from price growth mean we will see a return of the classic “doer-upper” investor? Mr Pryor said the option of improving the value of a home through refurbishment or development had not gone away. “You can make money with property by re-purposing something that isn’t attractive today, turning it through 90 degrees, and adding a second bedroom or a mansard.”

In the FT Money tent, though, Ms Faulkner was skeptical, arguing that the “Sarah Beeny” effect, named after the TV presenter who sparked a surge in DIY property development, was fully played out in a crowded market, replete with people inclined to “go bonkers” over a derelict property.

“Far more people want to renovate properties than properties are available,” she said. “Some want to buy just to have the experience. The only way you can do it is to buy with cash, and buy something nobody would touch with a barge pole.”

The Brexit discount

One of the thorniest questions for those mulling a purchase or sale in the next few months is the extent to which the as yet unknown mechanics of Britain’s departure from the EU will affect any move they make in the market. Will a good Brexit deal cause prices to surge, or will they plummet should Britain crash out without agreements in place?

The “wait and see” approach already adopted by those not facing a forced sale or purchase will be followed more widely towards the end of this year, said Mr Pryor, as the political situation comes to a head before March 2019. In his view, this creeping reticence will tell on prices, leading to a drop of roughly 5 per cent in the second quarter of 2019.

“If you’re going out to buy what for most people will be their most expensive single asset, how brave have you got to be to commit to that purchase rather than do what I think most people will do and say — let’s just wait until June?”

Sharing the stage with Mr Pryor — as well as his view of the slowing effect of Brexit uncertainty — was Stephanie McMahon, head of research at estate agent Strutt & Parker. But asked when the clouds might lift in the capital, she predicted the beginnings of a recovery “towards the back end of next year”.

One effect that she pinpointed was a fall in the share of the capital’s homes being bought by overseas purchasers — a trend that is likely to accelerate until the uncertainty over Britain’s future status begins to dissipate.

“We’re seeing less activity from international buyers. UK domestic buyers are now 80 per cent of London transactions. If you’re staying in the UK you have to make decisions, you have to change home whether you’ve had children or changed jobs.”

Neal Hudson, director of market research company Residential Analysts and another speaker on the House & Home stage, said a hard Brexit was likely to result in further stagnation and, in terms of the likely price drop, “a lot more pain than 5 per cent”.

He also cast doubt on the idea that sharply falling prices in London would have a silver lining: that hard-pressed first-time buyers might thereby be brought within reach of a purchase.

“If we had something more severe — a hard Brexit — there would be rising mortgage interest rates and stressed affordability. Prices might come down more, but if you’re a first-time buyer trying to get into the market, the lenders are probably just going to shut up shop.”

Such sentiments were echoed in Mr Carney’s recent comments to ministers about a disorderly Brexit. A property price crash would be driven by rising unemployment, depressed economic growth, higher inflation and higher interest rates, the governor warned.

Mr Mead advised property buyers preparing to weather the turbulence associated with Brexit to take a long-term view.

“You can spend an awful lot of time getting very confused by this stuff. It doesn’t matter what you think is going to happen in the next year or so. People love Britain because it’s safe and economically stable. It’s not going to lose its lustre. So long as you take a long-term view, if you see something you like and it makes sense to you, buy it.”

Is it really harder to be a first-time buyer now?

Today’s conventional wisdom is that young buyers face unprecedented difficulties in getting a first home. For one audience member in the FT Money tent at last week’s FT Weekend Festival, it was an assumption worth questioning.

“I bought my first house in 1971 . . . I didn’t have a Bank of Mum and Dad. I lived with my mother-in-law for free for a few months. The interest rate was 7 per cent and in the 1990s I was paying double-digit interest. Is it genuinely more expensive to get on the property ladder now than it was 40 years ago?” he asked experts on a panel discussing property investment.

With 40 years in the industry, Ed Mead, founder of property services company Viewber, was sympathetic, pointing out that beyond London and the Southeast, nominal house prices had often remained unmoved over the decade. “If nominal house prices are looking the same as they were 10-12 years ago, that’s got to be cheap.”

But the panel agreed that the nature of the challenge facing first-time buyers had shifted over the decades from paying high interest on home loans to paying high deposits, and satisfying much more stringent mortgage requirements to qualify for the loan in the first place.

With current mortgage interest rates at about 2 per cent, it is cheaper for London renters to buy the property they live in than to rent it, said Richard Donnell, director of housing market analyst Hometrack.

But the problem lies in the affordability test required by lenders, for which borrowers must show they can afford much higher rates of interest.

You’ve got to prove to your bank that at a stress rate of 7 per cent you’ve got another £1,000 of disposable income to pay towards your mortgage so you can afford that property. That’s the real binding effect for first-time buyers particularly in London and it’s a huge affordability hurdle for people to get on the ladder.”

Source: Financial Tmes. James Pickford

10 things you need to know about the revised National Housing Fund that may reduce your salary by 2.5% monthly

The revised bill, National Housing Fund (Establishment) Act 2018, allows individuals earning from the minimum wage mark to contribute 2.5% of their monthly income while commercial or merchant banks contribute 10% annual profit before tax to a poll for affordable housing building.

The revised version also introduced a 2.5% tax on every bag of cement, meaning, you pay more to buy a bag of cement and contribute more – just because you want to build an affordable home.

Under the extant NHF law (NHF 1992), every Nigerian earning N3,000 or more per annum is required to contribute 2.5% of their monthly basic salary to the NHF. The funds mobilised will be made available to contributors at affordable interest rates to build homes.

Just like the pension and personal income tax contributions, the NHF is compulsory for a public worker, a private worker or self-employed individuals earning pay from the range of minimum wage and above.

What are the key highlights of the proposed fund?

  • Mandatory 2.5% contribution of monthly income by employees earning minimum wage and above in public and private sectors as well as self-employed individuals.
  • 2.5% on locally produced or imported cement.
  • Employers are to deduct and remit the contributions monthly
  • Penalty for non-compliance of up to N100 million for corporates and N10m for individuals while sanctions include cancellation of operating licence of banks, insurance companies and PFAs for violations.
  • Withdrawal by contributors who have attained the age of 60 years or 35 years of service to be an interest rate of 2% per annum. The Fund and any refund of contributions are exempted from payment of taxes.

Why are people making noise about it now?

  • Although the Fund is not new, many have faulted why the revised is coming without the input of various stakeholders. The NHF Act of 1992 failed before many organisation including government-owned failed to make a contribution to the poll.
  • There were also alleged poor record keeping by the Federal Mortgage Bank of Nigeria (FMBN), the authority charged for the sole responsibility and cumbersome bureaucratic bottlenecks of getting a loan from it.
  • Another shortcoming of the revised bill was its inadequacies to touch on the shortcomings of the 1992 Act on the issue of land ownership and titles as well as the current Land Use Act. The NHF loan is merely for the construction of the building without the acquisition of the landed properties.

What is the cost implication on earners?

  • The cost implication for income earners is that it will take 2.5% from your income every month which is the equivalent of 250% from the PAYE contribution.

Meaning: A N30,000 earner will pay 2.5% (N750) every month to a poll account on the provision of affordable housing for the population.

  • It will increase the price of cement as the revised bill introduced a 2.5% tax on a bag of cement.
  • It will also take 10% away from commercial or merchant bank profit before tax (PBT) in every accounting year.

Source: Aderemi Ojekunle

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