Stoking legislative reform towards model mortgage

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The legislature in the 36 states of the federation are all settling down now with the new members learning the rope while the old and returning members are perfecting their arts for effective legislative duties.

Expectedly and as is characteristic of Nigeria, virtually all of these legislative houses had a number of bills pending which have been inherited by the new assembly. One of such bills which the sponsors wanted urgently was the adoption of a model mortgage and foreclosure law by the states.

The bill was packaged as part of efforts at growing a mortgage system that would drive affordability in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.

At the fore-front of the drive for this law is the Nigerian Mortgage Refinance Company (NMRC) which is riding on the relative success it has achieved in the last few years of its establishment and pushing for the adoption of the law by the states.

Given the importance of the law, mortgage sector stakeholders are urging the new states assembly to resume deliberations on it with a view to making their respective states adopt the law and pave the way for improved activities in the mortgage sector and, by extension, in the property market.

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

This idea, when it filtered out, was good news and remains so for home seekers who may need mortgage facility because foreclosure law, upon adoption, fast-tracks the process for creating legal … Read More...

Revisiting FMBN’s informal sector and co-operative housing scheme

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As access to mortgage continues to be an exclusive preserve of the privileged few in Nigeria, good initiatives that could ease access to the facility by low income earners and those in the informal sector of the economy should be encouraged by the government and its agencies.

This is why there is need for the Federal Mortgage Bank of Nigeria (FMBN) to go back to its very inspiring and commendable ‘Informal Sector Co-operative Housing Scheme’ which was launched in Lagos a few years ago with the primary aim of bringing more people into the mortgage net.

The scheme, also tagged ‘Affordable Home Ownership Through Co-operative Financing’, was launched as part of  the apex mortgage bank’s efforts at bridging the housing demand-supply gap  and giving the vast majority of  this economically-disadvantaged Nigerians, who constitute this sector, the opportunity to have decent and affordable housing.

The informal sector in Nigeria comprises low income earners struggling to earn their daily living such as artisans, the road-side mechanics, the market traders, farmers and so on. Basically, these are individuals who do not wear suits, ties or polished shoes to work in air-conditioned offices, yet they contribute immensely to the national economy.

 The National Housing Fund (NHF) scheme, whose operations are supervised by the FMBN, is accessible only to those in the formal sector, but by the launching of this new scheme, FMBN assured that Nigerians in the informal sector would be registered as bona fide contributors to NHF and become eligible for affordable loan to build, purchase or renovate residential accommodation.

The bank explained  that the loan facility under the scheme could be accessed in one of two ways, namely Cooperative Housing Development Loan (CHDL) and the Cooperative Housing Funds Loans (CNL).

The CHDL enables a cooperative society that has … Read More...

Possible growth initiatives for housing finance in Nigeria

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Unemployment and high level poverty are two major obstacles to getting housing finance in Nigeria. Poverty level in the country is high despite the country’s apparent wealth from petro-dollar. This is made worse by rising unemployment figures in excess of 20 million.

Africa is regarded as a poor continent and, despite its relative large population size, the continent is economically underweight with an estimated €113 billion gross asset value of real estate which represents 1 percent of the world’s total value.

A World Bank report once estimated that only 3 percent of the African population, about 15 percent of the world’s 7.3 billion population has income viable enough to qualify them for a mortgage. This explains the need for initiatives that can lead to viable income to qualify people for mortgage.

That estimate simply underscores the level of poverty in the black continent where some households live below poverty line. Home ownership in most parts of Africa remains a luxury because houses are literally unavailable and where they are, they are inaccessible and unaffordable.

In Nigeria, the continent’s most populous nation and one touted as its largest economy, it is estimated that 70 percent of country’s over 180 million people lives below poverty line, which is the reason for the low home ownership level in the country that is a little above 10 percent.

It is also estimated that about 90 percent of houses in Nigeria are self-built with less than 5 percent of them in possession of formal title registration. Because of this, mortgage loans and advances in the country stand at 0.5 percent to GDP in contrast to 30-40 percent in emerging economies and 60-80 percent in advanced economies.

Adigwe Arinze of Homebase Mortgage Bank attributes this to hostile business environment and lack … Read More...

Fresh challenges in housing market as landlords seek agreement, commission fees outside terms

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The lack of sufficient and pocket-friendly accommodation in most Nigerian cities has left many home-seekers at the mercy of some landlords who, according to BusinessDay checks, are taking undue advantage of the challenges in the country’s property market.

Some house owners in the busy mainland of Lagos and Port Harcourt are said to be enacting new terms of renting apartments to prospective tenants that are unfavourable to estate agents and their clients.

BusinessDay survey revealed that some landlords who have highly sought-after apartments with cheaper price ask potential tenants to pay legal (agreement) fees to them instead of a lawyer and the commission which is also supposed to be the agent’s fee for initiating the transaction is split to give a share to the house owner.

“What happened before now was that the lawyer from the landlord was entitled to the agreement fee while the agent was given the commission but now the landlords are taking half of the commission and sometimes more than half coupled with the agreement as they no longer use the services of lawyers and no written agreement is given other than a receipt,” Ade Usman, a real estate agent in Yaba, told BusinessDay.

According to the middle-aged man who gets most of his clients from an online platform, the landlords’ recent behaviour is as a result of the fact that “they feel if  one agent doesn’t collect the amount he is given, another agent will.”

He attributed this to the increase in the number of agents now scrambling for the same business. “These days, anyone can bring a tenant to a landlord and claim that he/she is an agent and is willing to take any amount, thereby stirring unhealthy competition in the market.”

Agency fees are not illegal as some …

Hope dims on housing roadmap as Buhari’s 1st tenure nears end 

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A very robust roadmap on housing was one of the early policies and programmes of the Muhammadu Buhari administration that Nigerians, especially those in the low-income class and still in the housing market, welcomed with high expectations. But as the clock ticks for the end of Buhari’s first tenure, these expectations are waning. The roadmap,…

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