Obih and the art of closing deals

Ruth Obih is the Chief Executive Officer of 3invest, a real estate company with syndicated radio shows on Classic and Beat Fm. In this interview with Rita Ohai, she addresses land tax and mortgage financing drive recently adopted by the State and Federal Government respectively.

Ruth is a tenacious businesswoman.

In addition to merging a large dose of bravado and courage in closing the right deals, her sharp eye for detail helps her win the confidence of clients. As a result, when she speaks on matters concerning the property market, she does it with a measure of authority.

Having worked as a lawyer at  Ajumogobia and Okeke’s legal firm, she developed a growing passion for real estate. It was during her time at the firm she got the chance to take part in an internship programme in the UK.

While there, she noted many discrepancies with how home-financing schemes were carried out abroad and in her home country.

Top on that list is what she tags “the length of time it takes for the conveyance property perfection scheme between the UK and Nigeria.”

From the tone of her voice, one can tell that she thinks it’s an absolute bother.

In places like England, an online process grants an interested party a certificate of ownership for a house in a few weeks but in-country it takes a longer process and there are an abundance of procedures attached to it.

Even though western nations appear to have well structured mortgage systems, which interested investors take advantage of, the bug has not quite caught on locally. And this is something she finds unsettling.

“In this part of the world,” Ruth says, “we are not long term investors but they (UK) are more investment-minded because their stream if income is usually predictable. However because most Nigerians still find it tough to set up fixed deposits in the banks, they might not consider the mortgage system.

Listing a few of the factors hindering the adoption of advance house financing schemes, she continued, “When we look at the legal system in the country, there are laws such as the ‘foreclosure law’ that does not allow the mortgage system work properly. This law is not flexible so it is a situation whereby you can lend to someone but you cannot take it back. I think the mortgage system will work better when the legal laws that affect the property market are reformed.

“The land use act was created in 1978. This is 36 years later in 2015 and we are still living by those rules. We ought to have refined them and completely changed the ones that are not working and keep the ones that apply in present times,” she said.

Giving an example of a law that needs urgent reworking, the lawyer turned realtor says, “The foreclosure law is faulty. It does not allow people take back properties that they have lent or mortgaged due to the long procedures in place.

“So if you buy a property, it takes you a prolong period to actually own the property and then the bank that lent you the money finds it difficult to foreclose on your. But in a better economy where foreclosure takes place immediately, people will not default easily.”

The Nigerian Mortgage Re-financing Company (NMRC) recently put up 10,000 units for acquisition and according to NMRC, the scheme was over-subscribed by 50,000 units. 

While stakeholders say that although it was a pilot scheme, the size was rather small in light of the 17 million housing deficit on ground, Ruth expresses, “ I believe the NMRC is a good start because, first of all, they must liquidate the mortgage industry so that they can lend more funds and reduce high interest rates which are what is killing the mortgage system because people are made to pay double or triple on houses they bought and it doesn’t really make sense.

“In the UK you can get a mortgage between 6 to 8 percent but here it is between 20 to 25 percent , it won’t work and it doesn’t make sense. The NMRC is saying that they want to reduce it to either a single digit or the nearest double-digit interest rate. It’s a good start.” With Lagos State slashing land tax rates from 10 to 3 percent, many forecast an improvement in the ease with which land and housing acquisition activities are carried out within the sector.

Nevertheless, some investors have contrary opinions. Apprehension for those who purchased their properties when the tax rates were still 10 percent runs high most landlord believe they run the risk of property devaluation when they intend to sell these building.

As land is expected to cost marginally less in the short term, over-valued units may transition from safe investments to negative equity.

In her opinion, while others are concerned about receiving lower prices for their properties, the cut will be helpful for the larger public and may be precursor for a robust year in the Nigerian real estate sector.

With the oil prices plummeting, many stakeholders are gearing up for the shortfall in revenues expected to stifle activities of diverse sectors of the economy.

Although some are of the opinion that ripples of its impact will be felt in the property market, Obih has a different take on the matter as she says, “One thing players in this sector do not want is to suffer what they went through in 2008. They are now more cautious, they will not want to be hit twice. We are really prepared for it.”

Rita Ohai