Stakeholders in the real estate sector are looking up to the Bola Tinubu-led government to review the Land Use Act and address the funding gap that has stunted the sector’s growth, JOSEPHINE OGUNDEJI writes
The over 28 million Nigerians living without decent and affordable houses reflect the dire state of the country’s real estate sector.
A recent report from the Central Bank of Nigeria states that Nigeria’s housing deficit which stood at 7 million units in 1991 has worsened to 28 million units as of March this year.
Poor funding, regulations and rising inflation have been largely blamed for the country’s huge housing gap. The CBN projected N21tn was needed to finance this deficit.
As the President-elect takes over the leadership of the country, real estate stakeholders are full of expectation that he would pay special attention to the sector and tackle the challenges that stifled its growth.
Partnership with private sector
The outgoing Minister of Works and Housing, Babatunde Fashola, recently said the government only cannot meet the housing needs of Nigerians. He stressed the need to create an enabling environment for private sector involvement in housing provision.
He stated that despite the numerous housing programmes initiated by the current administration for affordable housing, the private sector still dominated the real estate sector.
According to him, the private sector remains the real driver of housing solutions, adding that the right framework would unleash the power of private capital in the sector.
He added, “There is nothing the government does in the housing sector that exceeds and provides more than what the private sector can do. Whether it is a state government building or the Federal Government, the real drivers at the end of the day are the capacity of private capital for providing more houses.
“When you look at the scope of land holding, apart from the state government that owns the bulk of the land, the Federal Government does not have as much land as the collective land holding in the hands of the private sector.”
In the same vein, the Co-founder of Dukiya Investments, Lukman Shobowale, said the incoming government must prioritise the housing sector.
He said, “In addition to the emphasis on mortgage and optimising the Land Use Act, a Tinubu presidency must boost private sector participation through incentives such as tax concessions, and provide the infrastructure that can support investment in the sector.”
Reviewing Land Use Act
The Treasurer of the Nigerian Institute of Building, Philips Ayotunde, said the new administrator as a matter of urgency should either review or repeal the Land Use Act.
He added, “It is obvious the government needs the private sector to invest in the real estate sector and one way to get the private sector to do this is by winning its trust. Let investors know that their investments are secured and that they will get maximum returns on their investments without fear and uncertainties.
“It takes a lot of courage to do this because the state governments have been using the Act to enrich themselves, and it will be difficult for them to just let go like that.”
Implementing town planning guidelines
A former President of the Association of Town Planning Consultants of Nigeria, Moses Ogunleye, said the government should re-introduce the sites and services scheme in states of the federation.
He said, “This was done during the Shagari era. By this, the Federal Government will secure or acquire land from the state government, get sites properly laid out or planned, and provide the infrastructures like roads, power and water supply, and sewage/wastewater facilities, among others.
“In addition, plots will be offered for sale to individuals who will build houses as they can afford but within town planning guidelines. Let the Federal Government continue to provide technical support for the preparation of master plans or physical development plans for cities and towns, and the plans already prepared by the Federal Government through the Federal Ministry of Works and Housing, should be effectively funded.”
Also, the President of the Nigerian Institute of Town Planners, Nathaniel Atebije, said no state in the country had implemented a good town planning mechanism.
He said, “If a state was not well planned from the beginning, the government can take remedial measures to ensure that they are able to address the challenges of the moment. There are some other states just moving in circles because no serious effort is actually being made.
“Planning is a legal issue. As of today, it is only Lagos State that has effectively domesticated the Nigerian Urban and Regional Planning Law. Other states have done nothing about it. Their best effort is to make a whitewash law that is of no effect.”
Single-digit mortgage system
The Kaduna State Governor, Nasir el-Rufai, recently said for Nigeria to solve its housing deficit, it requires a favourable mortgage policy.
He disclosed that the mortgage system would enable buyers to spread payment over a 25-year period, stressing that the incoming administration under President-elect Bola Tinubu would ensure single-digit interest.
He said, “The steps taken by Gombe are the right steps, which is partnering with the private sector and other investors to build houses. But the problem of the housing deficit will never be addressed until we have a national mortgage system. People cannot buy houses by paying N10m-N50m at a go. No one does that at a go. We need to design a system that enables people to buy houses and pay in 25 years at low-interest rates. That means we need a national mortgage system.
“The administration of Bola Tinubu has already promised that they will come up with a national mortgage system with single digit interest, 15 to 20 years repayment and we are looking forward to it. It is not impossible to do. I did it in the Federal Capital Territory when we sold 32,000 Federal Government houses but it only worked in the FCT. It was not scaled up nationally.”
Speaking on the issue, a mortgage banker, Bukola Jegede, faulted the country’s mortgage system, describing it as nonexistent.
“The interest rate on any mortgage is double-digit and it is around 28–30 per cent. It is only a ritualist or a fraudster that can take a mortgage with that kind of high interest. The institution here is not like we have abroad, where they get a single-digit interest rate.
“It is true that the Federal Government-owned mortgage institutions charge six per cent interest. For other mortgages, you cannot get anything less than 18 per cent, which does not allow the mortgage system to thrive. Also, most mortgage institutions do not do long-term lending. They only do five years maximum because they want their money back as fast as possible because the longer loans are with Nigerians, the more difficult it would be to get them back.”
On the way forward, she said the interest rate should be reduced drastically and mortgages should be linked to salary accounts.
Building material research laboratories in states
The Managing Partner of Archiscapes Atelier Ltd, Sogo Oyesode, said the establishment of build material research laboratories in states was crucial to encouraging mass production of local building materials while improving them for more durability and efficiency, thereby preventing building collapse.
He said, “The incoming administration should take advantage of technology for mass production and usage of locally sourced building materials. This is the only true and easiest way to achieve true low-cost housing for the masses. Most of the so-called low-cost buildings everywhere now are not truly low-cost. When you compare it to the income level of those it is meant for, they are not low-cost. They are still expensive.
“Taking advantage of technology will require financial investment in setting up something like a material production centre and machines in numbers will be procured for the mass production of building materials such as compressed earth bricks, hollow clay pots, timber logs, bamboo, among others. Also, there should also be building material research labs where continuous research will be carried out towards improving the durability and efficiency of these materials.”
According to him, the costs of building materials may continue to be on the rise if concerted efforts are not made by the government and the stakeholders in the building industry.
Oyesode said, “Most of the reliable materials are imported into the country. There is a need to improve our local content and bring in new technology. The irony of the situation is that there are lots of local materials that can be used to improve the quality of buildings in Nigeria.”
Implement multi-storey buildings initiative
The Treasurer of the Nigerian Institute of Building, Philips Ayotunde, urged the government to build multiple-storey buildings, which save costs and bridge the affordability gap in the long run.
He said, “The new government must ensure that quality and safety is maintained, the engagement of relevant and skilled professionals is essential, because of the complexity of multiple storey structures, there’s still a high level of supervision and monitoring by the relevant agencies and the activities of quacks is still not as much as compared to lower buildings.”
In the same vein, the Chief Executive Officer of Riel Homes, Dr Kolade Adepoju, said the Shanghai Tower of China is a 632m high, 128-storey skyscraper, housing over 16,000 people in the country, and could also be implemented in Nigeria.
He added, “The higher the building can go, the more land space we can maximise in the country, hence making shelter for all become a reality. Though it is capital intensive, it will help in bridging the deficit gap.”
One-stop shop for housing
The National President of the Nigerian Institute of Building, Professor Yohana Izam, said there was a need for a radical restructuring of the housing sector, adding that the establishment of housing corporations would aid the proper utilisation of fair reviews and effective delivery of housing.
He said, “A one-stop-shop would provide solutions to all challenges facing the industry. Currently, we do not know who is doing what. We have several housing bodies that are numerous and out of unison. We should go back to the days of housing corporations as a one-stop-shop. Under this corporation, there would be departments for all kinds of housing issues including housing finance issues so that the bilateral leakages can robustly be interrogated.”
In the same vein, the Executive Secretary of the Association Housing Corporation of Nigeria, Toye Eniola, said a housing corporation was the way forward for the building sector.
He said, “In a housing corporation, you have complete professionals adequately monitored for the roles they take up in building construction without interchanging roles like in the situation of a bricklayer taking the position of an engineer. Most houses built by housing corporations rarely collapse.”
