Land Use Act, workable NMRC await housing minister

Whoever emerges the minister for Lands, Housing and Urban Development in the President Muhammadu Buhari administration will have to contend with providing solutions to the ever widening housing demand-supply gap in Nigeria which is estimated at 17 million units.

Of all the problems in the housing sector, land and housing finance stand out, and these have been identified as creations of the Land Use Act enacted in 1978 by the then military government of Olusegun Obasanjo and an undeveloped mortgage system in the country.

Housing industry experts say the first and most important assignment for the incoming housing minister is the review of this Act which rests ownership of land on state governments, making the state governors feudal lords who have the power to allocate and revoke land ownership at will.

“I think the new administration has brought an attitude of change. So, we expect things to move in the right direction”, says Edward Akinlade, Group Managing Director, Suru Group. Akinlade adds, “For us in the housing sector, we expect the government to address two basic things. One is the Land Use Act which we want the new government to look at and amend, and the other is interest rate on mortgage”.

Land is not only critical, but also an integral factor of production for the growth of the economy. It drives not just housing development, but also agriculture and industrialisation, hence its availability and unencumbered access should be a major pre-occupation of the new minister.

In doing this, experts advise that the new minister should first pursue a legislative agenda aimed at expunging the Land Use Act from the constitution, to pave way for its review which must emphasise the removal of the ‘provocative’ Governor’s Consent.

Akinlade noted however, that this may be difficult because no governor in Nigeria would willingly give up his power, explaining that some of these states, especially those where land commands high value, see land as an equivalence of oil wells.

“The new minister must make the Nigerian Mortgage Refinance Company (NMRC) work”, Ojame  Ogini, an estate manager/consultant, advises, stressing that  it is about the only hope for housing finance in the country at the moment.

“Unfortunately, I am one of those who were not optimistic on this company at the beginning; when you look at the NMRC, howmany Nigerians, based on their model, could be affected by its policies? They’ve been slow since the change of government; so my advice is that when the new minister comes in, he should make that company work”, he advised further.

A federal government initiative but private sector-led, NMRC is a secondary mortgage institution that  refinances mortgages originated by primary mortgage lenders (PMLs) and also a vehicle for affordable homeownership for Nigerians.

At its launch by the Federal Government in January 2013, the company raised much hope, as Nigerians were told that  NMRC was expected to pull down lending rates for housing, from the current spread of 20 to 23 percent to the low double digits or, at least, to a high single digit.

“This company is being set up to help lower the funding cost of mortgages and promote the affordability and availability of good housing to working Nigerians by providing mortgage lending banks, increased access to liquidity and longer term funds in the market”, Ngozi Okonjo-Iweala, the then minister of finance, assured.

The incoming minister may not achieve much in the housing sector if adequate attention is not given to mortgage and Obi Ejimofo , the managing director of Lamudi Nigeria, says the new government could as well subsidise mortgage as a way of bringing change in housing.

“To actually kick-start the core of the housing sector which is the mortgage market, government needs to do something.  I believe that if the government is able to afford subsidy for the price of petroleum products in the market, it can do so for the mortgage industry. So, if the subsidy is removed from the oil sector as it is being clamoured for, the next best place to apply it is the mortgage market”, he said, advising that this should be food for thought for the incoming minister.

CHUKA UROKO