As Nigeria’s housing demand-supply gap continues to widen as a result of delivery problems investors have to contend with, experts have canvassed the use of the UK model to fix the problems.
In Nigeria, housing delivery is largely private-sector driven unlike the UK where, the experts say, the government plays a major role, creating policy and regulatory environment for the delivery of affordable housing through the Ministry of Housing and a dedicated agency known as Homes England.
“The government planning department is required by law to ensure that adequate land is available and dedicated for affordable housing based on data on housing need,” Kemi Olomola-Sijuwade, a UK-based realtor, explained.
While many developers in Nigeria get involved in the development of many house types, including residential, industrial and commercial, Kemi Olomola-Sijuwade said that, in the UK, developers focus on the delivery of housing specialising in specific market segments.
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On the financing side, mortgage providers focus on ensuring the availability of mortgages, limiting the exit risk of developers.
Besides this, all stakeholders need to collaborate, working together as a team and building support for one another in order to find a solution. There are issues of poor infrastructure, currency risk, security issues, economic contraction and devaluation of the naira.
Other challenges facing the sector, according to Gbenga Olaniyan, CEO, Estate Links, are limited sources of funding for real estate development and investment, changing consumer patterns that are bringing forth heavy rental vacancies, and hike in cost of construction.
Olaniyan along with Olomola-Sijuwade spoke at the just concluded Abuja International Housing Conference. He noted that these challenges have been worsened by the impact of the Covid-19 pandemic on the economy, leading to a significant drop in housing supply across the board.
“It is extremely unlikely that we can make much progress without significant improvement in the collaboration between the public and private sector players,” Olomola-Sijuwade said, stressing that the public sector must embrace the responsibility to create enabling environment including land, statutory approvals, financing, developer incentives, standards and customer protection.
On its part, she said, the private sector must bring discipline and innovation to the design and construction of homes.
Nigeria’s housing problem as reflected in its 20 million units’ deficit and about 100,000 annual output which basically resides in affordable housing for low-income earners. Though some analysts say affordable housing is not social housing, others describe it as that house-type that does not take more than 30 percent of household income to buy.
To bridge its housing gap, Nigeria needs to deliver about 200,000 annually for the next 10-20 years. To realize this goal, it has been suggested that the government should establish special financing and impact investing schemes such as Real Estate Investment Funds (REITs).
Stakeholders should also establish a Working Group of Stakeholders (WGS) who are committed to supporting the affordable housing agenda. The group must also engage in joint planning towards the creation of affordable housing at different levels of society.
“This joint planning must be intentionally geared towards establishing a framework for inclusive development that can be cascaded to the lowest strata of the society in terms of achieving the affordable housing agenda,” Ugochukwu Chime, former chairman of Real Estate Developers Association of Nigeria (REDAN), explained.
Setting up State Affordable Housing Commissions as a public-private partnership between state governments and organized private sector developers, academics, main landowners, building material suppliers etc is another good route to solving the housing problem.
This commission, according to him, should be jointly managed by the private and public sector to be led by a representative board including all stakeholders with leadership by rotation.
“The commission is to be funded by modest subscription by stakeholders, grants, government subvention or private sector contribution. One tool that can be used to achieve the required funding challenge is to set up a Housing Trust Fund with the specific purpose of creating and preserving housing for low- and moderate-income individuals within the state,” he said.
