Rent Control or Regulation of Property Values in Nigeria : Gain or Pain

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Since the supposed regulation of property values in Nigeria via the Rent Control and Recovery of Residential Premises (RCRRP) Edict in 1997, have Nigerians being the better for it or are they worse hit by it. Has the law really being effective or is it moribund? This article analyses the effect of rent control or regulation of property values in Nigeria on her citizenry.

Demand in commercial and residential properties will always be on the rise as long as the population continues to increase with reckless abandon. It’s now the affordability of such properties that could pose a problem. Having said that, real estate business is an evergreen enterprise that can be money spinning if square pegs are not placed in round holes.

Increasing demand for commercial and residential properties has caused increase in rental values while the Government was seen to have intervened through the enactment of the Rent Control and Recovery of Residential Premises (RCRRP) Edict (1997).

That notwithstanding, rent control is a residual matter under the 1999 constitution. As a result, most of the states in Nigeria have their individual rent control laws, spearheaded by Lagos State.

Rent control laws may exist but is the law really effective? Are tenants not still at the mercy of their business-mined landlords? How many tenants go to court to seek redress? How many Nigerians have really being vindicated by the supposed laws, even the Lagos tenancy law of 2011 seems not to have done much to address the plight of helpless tenants.

What really is the effect of the law on residential rental values in Nigeria, especially in a city such as Lagos where the population is alarming, as compared to the available land.

Come to think of it, won’t it be better for Government to provide an enabling environment for investors to provide low cost housing units that would in the long run reduce rental values, rather than pretending to regulate the real estate market?

Rental housing accounts for more than a third of most tenants’ income and rent controls are a very sensitive issue for the renting public. Rent control is the standard ceiling placed on the rate that a landlord can charge while allowing a landlord to set the rent freely when letting to a new tenant but subject to the tenant’s right not to accept and preventing the landlord from raising the rent or ejecting the tenant (Basu and Emerson, 2003).

Compared with other government-mandated price controls, it is the law placing maximum price on what landlords may charge tenants and usually set below that which would have otherwise prevailed (Block and Edgar Olsen, 1981); while it sometimes functions as price ceiling and a collection of laws regulating how much a landlord can raise or must reduce the rent, and limiting the reasons for eviction, working together with eviction protections so that the landlord does not get around a rent limit by evicting the tenant (Carlson, 2006).

Rent control or regulation of property values in Nigeria is usually an intervention through measures put in place by government on the pretext of protecting the urban dwellers from being pushed off the open market in the course of securing accommodations by putting a ceiling on the maximum rent payable on all classes of residential properties.

Such measures include legislation on rent control to check incessant and arbitrary increases brought about through the interplay of demand and supply of residential accommodation. Such demand often rises at geometric rate while supply rises at arithmetic rate thereby causing galloping increase in rent from year to year.

Prior to the advent of rent control in Lagos State, the Lagos urban poor and low income earners were at the mercy of shylock landlords who often resorted to taking court order through the back door without serving the tenants proper notices,  called jankara judgment (in Lagos parlance), to force them out without due process of law.

Many of the property owners increased rent on an annual basis and at high rates, demanding advance rent of up to two years, not minding the unsanitary conditions of such accommodation units.

Consequently, in 1997 the then military administrator of Lagos State signed into law an edict, which is cited as the Rent Control and Recovery of Residential Premises Edict No. 6 of 1997 (also called Rent Edict) with effect from the 21st day of March 1997.

The most striking provision of the edict was the involvement of Estate Surveyors and Valuers in determining the standard rent payable on residential accommodation in each of the zones into which Lagos State has been delineated and stipulated in relations to size of room, number of rooms, facilities provided, and locations.

In determining the effects of government intervention in property market through the imposition of property tax on sustainable housing delivery, scholar and researchers found that government intervention through the imposition of statutory formula for determining the amount payable by property owners as land use charge was inappropriate and that high tax and penalties would discourage investment in new housing and maintenance of existing stock.

Other arguments against rent control posited that the policy which was meant to assist poorer residents, harms far more citizens than it helps and limits the freedom of all citizens. It was argued further, that very few moderately priced rental units are actually available in rent-controlled cities with most advertised units priced well above the actual median rent, whereas in cities without controls, moderately priced units are available.

In many cities, controls drive out residents and businesses; as controls hold down rents for some units, costs for all other rental housing skyrockets; tenants in rent-controlled units fear moving to more desirable neighborhoods since the only units available for rent are very high priced (Carter, 2001).

The high rates of homelessness are a manifestation of rent control and non-regulation of property values in Nigeria, with individuals having difficulty in finding new apartment in rent control cities; while crowding is a manifestation of rent control.

Rent control is a disease of the mind that soon becomes a disease of the market and those cities that resist infection by having a healthy tolerance for the rights of others are rewarded with a normal competitive housing market in which housing is available at every price level.

Those cities that succumb to the disease of rent control are doomed to never ending, house-to-house warfare over an ever diminishing supply of unaffordable housing. It is more likely to harm the market and lead to lack of investment in new rental housing and dis-investment in the existing stock. This causes deterioration of building and leaves tenants worse off over the long run.

The nature of the controls in place seem to do little harm to housing markets modest benefits to tenants, without solving the problems of the poor in urban housing markets and provision of affordable housing for the poor must be accomplished by other means (Keating, Teitz and Skaburskis, 1998; Carter, 2001).

Rent control or not, the landlords find other means to exploit their tenants.

With this at the background, a number of questions arise: What is the effect of property market regulation on value of residential properties in Lagos State Nigeria?

Is there really any significant difference between a statutory rent and open market rental values in Nigeria?

This is a subject for intense debate

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How Flooding Can Affect Real Estate Value

Flooding can affect real estate value

The issue of climate change and its consequences is all over the media and has moved up the political agenda. Occurrence and severity of natural disasters increases daily. Flooding is one of the most common natural disasters in the world. 

The risk of flooding has always been present for buildings close to rivers or coasts but it has been growing in recent years. Major flood disasters in the world over the past decade have shown that flooding is a significant environmental hazard.

Flood poses a risk to infrastructure, local economy, housing, living conditions and not to forget human lives. The substantial cost of damaging natural and built environment, of cleaning up and the following renovations run into billions.

Global warming will very likely increase frequency and intensity of natural disasters such as flood, storm and heat waves. Storminess and rainfall in combination with expansion of human settlement in floodplains lead to a higher number of homes located at flood prone areas.

According to reasonable judgment flood risk seriously affects the value and amenity of your home or business property. Consideration should be given on a discount on the regular market value or other adjusting parameters within valuation.

As already mentioned climate change and as a direct consequence global warming will increase frequency and severity of floods. Rising global average air and ocean temperatures will support the rate of evaporation and the water holding capacity of the air, what results in an intensification of the water cycle.

There will be more energy to drive storms and hurricanes. There are a number of causes of flooding. Most commonly surface water flooding in times of heavy rain, river and coastal flooding will result in flooded property.

In addition, due to increase of global temperatures average sea level will rise. That will especially endanger regions situated just some centimeters above sea level.

Areas with large coastal settlements, might experience deadly disaster and consequently substantial loses. The location of real estate in a floodplain result in lower real estate values. Typically, flooding has only a temporary impact on property values and after three years prices should ordinarily return to their normal market level, if the problem doesn’t persist.

Regardless, flooding itself, location of a property in a floodplain area or the risk of recurrent flood events can affect the value of real estate substantially.

The impact of flooding on the market value of real estate or the event of a flood can cause extreme devastation to real estate. The reduction in the real estate value might range from negligible to severe.

In general the common conditions on the property market should not be influenced by a local and time limited flood event.

However, before talking about the negative effects that have to be considered in the valuation process the positive effect of water front location must be looked at closely.

On the flip side, the value of a property with a direct access to a lake or a river should be high. Positive and negative effects of water front location do overlap. In-depth analysis very often fails due to the small number of purchases, especially in exclusive residential areas where transfer of ownership is rare.

Sea level rise, increase of storm and heavy rain that result in flooding and a general higher flood risk, this are the consequences of climate change we have to expect in the future. Even it’s influence on the price of real estate can not be immediately ascertained, most of the findings of investigations see a negative influence on the market value of real estate by flooding.

The impact of flooding should therefore be considered in the real estate valuation process. No one knows when and in what extent the next flood event will occur or if precautions will be sufficient, however climate change means that natural disasters will be more common in the future and financial losses will increase.

Hence, valuation of endangered real estate has to consider the aspects of flooding and flood risk.

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Recession: Real estate stakeholders want sector reenergized

Recession: Real estate stakeholders want sector reenergized

Federal government  released the Economic Recovery and Growth Plan (ERGP) which unveils a road map for the country’s economic recovery growth and sustainable development, real estate experts have called on the government to look in the direction of the real estate sector to further improve the economy.

The government said the core vision of the ERGP is one of sustained inclusive growth, with focuses on improving both public and private sector efficiency.

Real estate is considered a vibrant sector that provides jobs for many people such as  consultants, contractors, suppliers of  building materials, vendors, labourers and artisans.

Speaking on the huge economic potential in the property sector, President of  the Nigerian Institution of Estate Surveyors and Valuers, Dr. Bolarinde Patunola-Ajayi,   said the sector if fully  tapped by government at all levels could  get the economy out of recession.

He said: “Real estate business is about management of all land resources, which gives support for all activities of man. Every business is done on land. Human life and basic needs are dependent on land, hence Nigeria must pay attention to real estate, except we are not prepared to come out of our economic woes.

“Real estate investment is the pedestal for economic development and growth, and many developing nations such as Singapore and the United Arab Emirates that understand this have seen the positive impact on their economies. There is effective demand in the real estate sector; developers only need to seek the consultancy services of estate surveyors and valuers to know which type of real estate should be developed in a particular place.”

Patunola-Ajayi stated also that it was erroneous for the government to think that the economy could only be diversified through agriculture and the film and fashion industry, rather than the real estate sector.

According to him, surveying every parcel of land will ensure that every owner, including farmers, has registered title to their land and that would make it possible and easier for the public to have access to loan facilities for all types of developments such as residential, agricultural, commercial or industrial.

“This is with a resultant effect that houses are available for living and offices are available for business, including transportation to move goods and services from one place to another.

Speaking in similar vein, the National Coordinator, Women in Surveying, a subset of the Nigerian Institution of Surveyors, Mrs. Funke Adekunle, called on government at all levels to embark on construction as many people  would be engaged  and  help the nation to come out of the present economic recession.

Adekunle stated that establishing industries in large numbers would provide job opportunities for the youth, adding that it would stimulate the economy to some extent.

She spoke on Friday at the 13th annual regional conference of the Women in Surveying.

She also encouraged individuals to establish industries in order to encourage local production of  building materials currently being imported from other countries.

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Workers decry proposed sale of Kaduna government houses

Workers decry proposed sale  of Kaduna government houses

Kaduna State workers have rejected move by the government to sell ‘non-essential’ residential quarters to public servants and the general public, saying the decision was without recourse to all relevant stakeholders in the state particularly, workers, who they say are creators of wealth and legal occupants of the properties.

The state government had advertised an invitation to bid and approved guidelines for the public auction of state government residential quarters to public servants and the general public. The move to sell off 1,990 government houses according to reports was to cut the cost of maintaining the quarters as endorsed by the State Executive Council.

Speaking on behalf of the workers, the Chairmen of Kaduna State chapter of Nigeria Labour Congress (NLC) and Trade Union Congress (TUC); Comrade Adamu Ango and Comrade Shehu Mohammed respectively said that the proposed sale of residential quarters is meant to favour political office holders  .

“It is unfortunate that the civil servants working for the state and who are currently occupying these quarters were never given option of first refusal before the extension of offer to the general public.

“Another area of concern is the public servants who receive peanut as salaries and wages when compared with those of the political office holders of the state. Also, payment of 25 percent of purchase price including 10 percent non-refundable deposit must be made to the state government within 90 days of being declared winner and balance of 75 percent be paid by all purchasers within an additional 90 days. From the above condition, which civil servant of the state can afford this payment,” they queried.

They also noted that the condition is contrary to the provision of the Federal Government Mortgage Bank arrangement of issuing loans to civil servants from all over the federation.

Meanwhile, the state government stated that government residential houses exempted from the sale include Governor’s guest houses at Alimi and Race Course roads; Deputy Governor’s houses at Tafawa Balewa way and Lamido road; Chief Judge’s guest house at Yakubu Avenue; Speaker’s guest house at Shehu Crescent and institutional quarters of all hospitals, schools and other related facilities in the state. Under the bidding process as advertised, all houses occupied by public servants will be sold in an open auction whereby all residents of the state shall be given equal opportunity.

The highest bid price will then be offered to the public servant in occupation to exercise the right of first refusal by effecting payment of 10% non-refundable deposit within 14 days but if the public servants fails to exercise the right of first refusal, the preferred bidder will be allowed to complete the transaction.

Under the auction process, no housing unit will be sold below the reserved price; being in the open market value of the property. The preferred bidder will be determined by a simple evaluation of the highest bid submitted and the bid bond will immediately become a 10 percent non-refundable deposit towards purchase of the property. Payment of 25 percent of purchasing price including 10 percent non-refundable deposit must be made to the state government within 90 days of being declared winner while balance of 75 percent must be paid by all purchasers within an additional 90 days.

Governor Nasir El-Rufai also said the sale is about raising money to develop infrastructure as well as build other houses for all residents of Kaduna State. He said the government has about 36,000 civil servants and only about 2000 are currently accommodated in government houses.

“These 2000 houses cannot satisfy 36,000. Secondly, there is nowhere in the world where this system of giving civil servants houses operate. We have moved away from that. What you should have in place is a mortgage system where anyone with an income will be able to buy a house and pay over 20 years,” he said.

But the workers while decrying the proposed sale of the buildings, asked the state government to borrow a leaf from the federal government’s monetization programme which gave workers who are legal occupants of government houses an unconditional right of first refusal.

When interviewed, the managing consultant of Babs Abdulraheem and Co., Estate Surveyor & Valuer, he suggested that since government has concluded plans to sell the properties, it should give the sale a human face by considering the plight of the civil servants whom he said might have contributed their services to the state’s  development.

He argued that with the meager salary they earn, it would be difficult for them to afford the properties on open market value. He further advised government to work out mechanism that would enable the civil servants buy the houses at a reduced or subsidized rate and if possible provide soft loan to civil servants to enable them buy the property with ease.

“For those who are about to retire, the money can be taken from their pension and gratuity. Allowing the civil servants to lose out on the purchase of the properties may lead to social problems in the sense that they will become homeless and this is capable of reducing their commitment to work,” he said.

On the value of the properties, he said that property values are determined by factors including economic factor, location, size and the physical property per se.

Source: Daily trust

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Real Estate Developers to sue surveyors over hike in fees

ccording to Daily Post, the Real Estate Developers Association of Nigeria, REDAN, has threatened to take Surveyors to court if the proposed increment in the cost of preparing survey plans for lands across the country is implemented.

According to Daily Post, the Real Estate Developers Association of Nigeria, REDAN, has threatened to take surveyors to court if the proposed increment in the cost of preparing survey plans for lands across the country is implemented.

This was disclosed in a letter to Surveyors by Counsel to REDAN, Ebun-Olu Adegboruwa.

Adegboruwa warned that such plan if implemented will result to increase in cost of lands, therefore, making land owners and investors pay as much as One Million Naira for a single plot of land, even in rural areas of Lagos State as from April 1, 2017.

REDAN added that increment in survey plans will hinder efforts of present administration towards achieving affordable housing for Nigerians.

He urged surveyors to summon a meeting with stakeholders or be challenged to court by REDAN, should surveyors insist on implementing the policy as stated.

The letter reads: “Our clients consider it improper to increase the cost of survey plans at this time of economic recession, especially considering the ripple effect that such a step may have on other stakeholders within the built industry, such as architects, engineers and lawyers, etc, who are also members of their association.

“The planned increment will also impact negatively on the policy of affordable housing being promoted by the present administration at all levels.

“Our clients have also consulted the various statutes regulating this matter and they are yet to be convinced of the legal basis of this increment at this time.

“Consequently, we have our clients’ instructions to request you to kindly prevail on your organisation and its members to suspend the implementation of this policy and to allow for further interactions, dialogue and discussions, between all the relevant stakeholders in the real estate business.

“ In compliance with statutory requirement to explore alternative dispute resolution mechanism, kindly indicate to us in writing within five clear days of your receipt of this letter, of your kind disposition towards the meeting suggested herein, failing which we have our clients’ further instructions to take out a writ of summons in court to determine the legality of such increment, to take out an order of injunction to restrain the implementation thereof and to determine other ancillary legal issues.”

Source: Daily Post

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New land survey fees begin in Lagos, threaten homeownership

New land survey fees begin in Lagos, threaten homeownership

Hopes of cheaper construction cost and land ownership for prospective property developers may still be a pipe dream going by fresh increase in land survey fees in Lagos area by the Nigerian Institution of Surveyors (NIS).”- Guardian reports.

The increase by Lagos chapter of the institution, which may act as a test bed for professional scale of fees in the built environment sector has ruffled feathers in the housing industry. Other professional bodies are watching how events will unfold, while experts and private developers foresee increase in lands and housing cost.

The chapter had raised the land survey plan fees by over 300 per cent, starting from April 1. The fees cut across different zones of the state. For instance, Ikorodu, Epe, Badagry Ojo and Ajeromi Ifelodun local government that is currently N120, 000 it has been increased to N350, 000.

While Lagos Island, Eti- Osa, Ikeja and Papa, which is presently N300, 000 now is going for N1million. Somolu, Alimoso, Mushin, Agege, Ibeju Lekki, Kosofe, Lagos Mainland, Amuwo Odofin Local Government, formerly pegged at N180, 000 has been hiked to N650, 000.

Some housing professionals that spoke to The Guardian criticised the move, saying it would also make prospective homeowners to cut corners and increase the cost of procurement of land documents.

President, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Dr. Bolarinde Patunola-Ajayi said that the development will make few people to invest in property as the new rate is higher than the cost of buying land in some locations.NIESV president, who dismissed call for the institution to increase its scale of fees, noted that such development would have dire consequence for the housing industry.

For the Second vice president, Nigerian Institute of Building, Mr. Kunle Awobodu, said that the institution is justified in increasing its fees as inflation has affected members of the built environment professionals. He disclosed that such fees will be pass on to the would-be subscribers of houses or landed property.

But, property developers under the aegis of Real Estate Developers Association of Nigeria (REDAN) are not allowing the matter to lie low. REDAN has engaged the services of a law firm and threatened to go court.

In a letter to the surveyors, counsel to REDAN, Ebun-Olu Adegboruwa, asked the surveyors to suspend the implementation of the proposed increment, in order to give room for further interaction and dialogue, with all stakeholders in the building industry.

REDAN also made a case that the increment will have a ripple effect on the cost of land as other professionals involved in the real estate business such as lawyers, architects, engineers, and town planners will also increase the cost of their own services, which will all be borne by the end users. “It will also rubbish the efforts of government towards achieving affordable housing.”

REDAN therefore appealed to the surveyors to convey a meeting of all stakeholders in order to discuss and agree on the best modality for any review of professional fees in land related matters.

Adegboruwa however warned that REDAN will challenge the proposed increment in court, should the surveyors insist on implementing the policy as stated.The letter read:  “Our clients consider it improper to increase the cost of survey plans at this time of economic recession, especially considering the ripple effect that such a step may have on other stakeholders within the built industry, such as architects, engineers and lawyers, etc, who are also members of their association.

“The planned increment will also impact negatively on the policy of affordable housing being promoted by the present administration at all levels. Our clients have also consulted the various statutes regulating this matter and they are yet to be convinced of the legal basis of this increment at this time.

Consequently, we have our clients’ instructions to request you to kindly prevail on your organisation and its members to suspend the implementation of this policy and to allow for further interactions, dialogue and discussions, between all the relevant stakeholders in the real estate business.

“ In compliance with statutory requirement to explore alternative dispute resolution mechanism, kindly indicate to us in writing within five clear days of your receipt of this letter, of your kind disposition towards the meeting suggested herein, failing which we have our clients’ further instructions to take out a writ of summons in court to determine the legality of such increment, to take out an order of injunction to restrain the implementation thereof and to determine other ancillary legal issues,” they added.

The Guardian learnt that the new increase is supposed to be approved by the Surveyors Council of Nigeria (SURCON), but the NIS and SURCON have been in a showdown over allegation and counter allegation bothering on induction of new members.Recently, the Surveyor General of the Federation, Prof Peter Nwilo accused the NIS President of trying to create a serious division in the profession of surveying.

Nwilo referred to the Laws of the Federation of Nigeria, CAP 425 adding that according to the law, even the minister can give instructions of general nature. The profession of Surveying is regulated by the Surveyors Council of Nigeria (SURCON), set up and empowered by CAP 425, Laws of the Federation of Nigeria.

Efforts to get the NIS Lagos chairman, Mr. Alara Olugbenga comment proved abortive. The Executive Secretary of the national body, could not respond to several calls and emails on issues raised on the matter.

Source: Guardian

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Okorocha donates land for NIESV office complexes

Okorocha donates land for NIESV office complexes

Governor Rochas Okorocha has donated land to the Nigerian Institution of Estate Surveyors and Valuers (NIESV) for the construction of its branch and zonal offices in Imo State.

Represented by the Secretary to the State Government (SSG), George Eche, the governor made the announce at the opening ceremony of the association’s two-day 47th annual national conference tagged Imo 2017 in Owerri.

Okorocha noted that the gesture was informed by his high regard for the body.He charged the surveyors to be proactive in their quest to transform the real estate sector of the economy.

The governor told the Dr. Bolarinde Patunola-Ajayi-led executive that the state government was working with the institution to make the sector vibrant.He maintained that as a body with ‘’credibility, reputation, standard professional conduct and practice in landed profession, it should eliminate all forms of quacks and uphold the guiding principles of international best practice.”

The governor submitted that a ‘’nation’s wealth and greatness could not be assessed by infrastructural development alone without value of its land.’’He added that his administration had executed projects to impact positively on the environment and landed property.

Okorocha charged the surveyors to come up with workable recommendations that could move the sector forward.Patunola-Ajayi had during a courtesy call on the governor sought support for the association so that the practitioners can effectively play their roles in revamping the national economy. The team also visited Eze Samuel Ohiri where they struck cooperation on how traditional institutions could partner with the sector for its overall development.

Admitting that the state government has been friendly to the association, Patunola-Ajayi pledged that the surveyors were committed to building reliable infrastructural projects in the state and the federation at large.

He said the choice of Owerri was due to its peaceful and secure disposition, adding that the state government has been hospitable.Patunola-Ajayi, said the conference would deliberate on various areas that would proffer solutions to the revenue generation challenge of government at the three tiers and transition from a mono economy largely dependent on oil to landed property area.In boosting revenue generation, he noted that existing laws on the landed property and real estate among others would be looked into at the event.”

Source: The Guardian

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Nigerian mortgage lenders strain as loans sour on job losses

Nigerian Mortgage Lenders Strain as Loans Sour on Job Losses

Bloomberg reports that Nigeria’s mortgage lenders are buckling under the weight of unpaid loans as job losses and inflation near a record high hinder the ability of customers to pay off their debts.

“They are just struggling to survive,” Adeniyi Akinlusi, president of the Mortgage Banking Association of Nigeria, said in an interview in Lagos, the commercial capital. “A lot of them aren’t making money.”

While the association said it isn’t aware of any mortgage lenders on the verge of collapsing, increased pressure on the nation’s 36 home-loan providers presents another challenge to President Muhammadu Buhari, whose administration is grappling with how to reverse the first contraction in gross domestic product in 25 years. Rising costs for everything from building materials to school fees has meant the industry has been stagnant since June, Akinlusi said.

At least 55 percent of the mortgage industry’s 94 billion naira ($300 million) of loans are classified as non-performing, Nigeria Deposit Insurance Corp., an Abuja-based regulator, said last month. That compares with a ratio of 10 percent for the 18.5 trillion naira of loans granted by the country’s banks and 45 percent for micro-lenders, which have 195 billion naira of outstanding loans.

“The real-estate market mirrors the larger economy,” said Udo Okonjo, chief executive officer of Lagos-based real estate broker Fine & Country West Africa. “Over the last year-and-a-half, the recession affected key sectors such as oil and gas, financial and manufacturing. There were a lot of layoffs.”

Assets Soar

Nigeria’s official unemployment rate jumped to the highest level in at least seven years in the third quarter of last year. While inflation in February slowed from a record a month earlier, at 17.8 percent, it is still almost double the central bank’s target. Total assets in the mortgage industry surged to more than 386 billion naira at the end of June, compared with 102 billion naira a year earlier. Nigerian regulators require mortgage lenders to have at least half their total assets in home loans.

In South Africa, the continent’s most industrialized economy, mortgages account for about 60 percent of total assets in the banking industry, which had total loans of 3.7 trillion rand ($284 billion) at the end of August, according to central bank data.

Nigeria’s biggest mortgage lenders include Union Homes Savings & Loans Plc, FBN Mortgages Ltd., and Abbey Mortgage Bank Plc, which in October reported that net income in the third quarter plunged 37 percent as non-performing loans jumped.

Recovery Signs

The association is also working with the Central Bank of Nigeria to develop rules for non-interest mortgage financing as it seeks to deepen penetration and boost participation by Muslims, who account for about half of Nigeria’s 180 million people, he said.

The regulator is expected to draft rules this year that will enable mortgage companies to provide loans to workers in the informal sector, including farmers, who don’t earn enough to make an initial down-payment for the debt, Akinlusi said.

The mortgage industry has taken steps to avoid further fallout from the economy’s woes by partnering with insurers to provide compulsory policies that protect home-loan providers, the association’s Akinlusi said. The policies pay the interest on mortgages for six months should a customer die or become disabled.

“We have begun to see very early signs of a cautious recovery,” said Fine & Country’s Okonjo. “Cautious because it has to be sustained to be referred to as recovery. If the inflation rate continues to drop, if the naira stabilizes, and the ambiguity and uncertainties are removed from the environment, once these factors are in place, then we are pretty confident that towards the third, fourth quarter of 2017, we should definitely begin to see actual recovery.”

Source: Bloomberg

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Fashola raises hope on housing scheme

Fashola raises hope on housing scheme

Nigerians’ hope of owning  homes is looking up. This is because houses built under the Federal Housing Scheme will be allocated to all Nigerians, irrespective of their states of origin.

The Minister of Power, Works and Housing, Babatunde Fashola, gave the assurance shortly after completing a tour of federal projects in Maiduguri, Borno State.

“I prefer to use the word residents to indicate people who live or work in the states where the houses are built, rather than those who are indigenous to the state,’’ Fashola said, adding that the ultimate beneficiaries of the houses will be residents of the states in which the houses are built.

He said the objective of the scheme is to deliver affordable houses to workers based on the National Housing Policy.

“There is a National Housing Policy in place aimed at providing affordable housing, but there has been no programme in place to deliver the houses. That is what this programme is all about,” he said.

The National Housing programme is built on a foundation that requires consulting stakeholders, by conducting, surveys so the stakeholders can take ownership of it. This, he explained, is why the ministry is consulting, in the hope that it will be able to carry along the stakeholders so that they can take ownership of the scheme.

He said it is after this stage that the ministry can talk about affordability, pointing out that the housing scheme was also part of government multi-facet approach to economic development.

“The programme is part of government efforts to create value chain economic activities, aimed at empowering Nigerians all over the country. Workers will be happy on site getting paid from contractors to take care of their families and patronising food and others,” he said.

The minister also said the ministry was training artisans such as carpenters and bricklayers, among others, to be relevant technically

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FMBN Spends N1.4bn In Niger

IMG_9126

    “The Federal Mortgage Bank of Nigeria (FMBN) says it has spent N1.4bn for the development of 379 housing units in Niger State, as part of effort to bridge the 17 million housing gap in the country.

Minister of State for Power, Works and Housing, Alhaji Mustapha Baba Shehuri who stated  this at the commissioning of the FMBN and Sea Mountain 133 Units Housing Estate in Minna Niger State, recently also said with the need for 720,000 units per annum, the annual aggregate production of 100,000 housing units is not likely to meet the housing gap of the nation.
Shehuri explained that the Federal government would not relent in its efforts to bridge the huge housing gap experienced in the nation.
According  to the Minister, “The Ministry of Power, Works and Housing will continue to strive to ensure that the challenges of housing deficit in Nigeria, which has been put at 16-17 million units is surmountable”.
He continued, “with a population of about 200 million that is growing at an average rate of three per cent, perannum coupled with an annual  rural-urban migration rate of over five per cent, Nigeria is said to be in need of about 720,000 housing units per annum. Currently the annual aggregate production is about 100,000 housing units, thereby leaving a huge gap.
While commending the FMBN for its efforts in rising up to the challenge of housing deficit, he disclosed that there are plans by the federal government to build  mass housing units in every state of the federation for workers over a  3 – year period and added already, National Housing Models have been designed and approved for each political zone.
In his speech, Managing  Director, FMBN, Mr Richard Esin, stated that the estate, which comprises 51 units of 3-bedroom bungalows, and 82 units of 2-bedroom bungalows, cost between N5 million and N7 million, adding that already FMBN, has spent N1.4billion for development of 399 housing units in the state.”

Source: the nation

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