Though freely and commonly used on housing development and homeownership issues, mass housing and affordability are as uncommon as they are critical. Nigeria’s high housing deficit and low homeownership level find explanation in the near-absence of functional mass housing strategies and low capacity for affordability in the housing market.
Nigeria has a housing deficit conservatively put at 17 million units and it is estimated that 60-70 percent of this deficit resides in the low to middle income market which individual investors and developers avoid for reasons ranging from low profit margin to infrastructure and Land Use Act.
The country’s housing market is one in which prices are so high that annual rent for a three-bedroom apartment, for instance, is as high as USD200,000 which is enough to buy same size apartment in South Africa with a mortgage facility which interest rate is lower than Nigeria’s lowest at 6 percent (NHF rate).
“The major problem facing Nigeria is the housing deficit which is about 17 million units; it is a task too big for one developer, one mortgage bank or even two mortgage banks to undertake, hence the need for partnerships”, Adeniyi Akinlusi, the MD/CEO of Trustbond Mortgages Plc, said in Lagos.
Trusbond is part of a consortium comprising mortgage banks and developers who have come together to find solution for not only mass housing, but also affordability in the housing market through a combination of factors that include shared expertise and comparative advantages.
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Other interests in the consortium are Imperial Homes Mortgage Bank Plc, Homebase Mortgage Bank Limited, Gran Imperio Group, Ocean Springs Estate Limited and Vestril Limited, and these will, in the next 18-24 months, deliver what they have called Grand Lake Estate, a residential community holding promise for about 5,000 housing units to be built on almost one million square metres.
“What we want to achieve with this partnership is a large stock of houses which mortgage banks can leverage to create products”, Adeyeye Ogunwusi, Gran Imperio MD, who represents estate developers in the consortium, explained to BDSunday recently, adding, “we are delighted and excited to be part of this consortium because, in unity, we can achieve a lot; we cannot do it alone as developers and it is interesting that, for the first time, mortgage banks are coming together to support developers”.
Ben Akaneme, the MD/CEO of Imperial Homes, assured that these houses would be provided at affordable prices, pointing out however, that affordability did not consist in just the pricing of the housing, but in the structure of the housing finance that will be given to buyers to purchase the houses.
“Homebase Mortgages membership of this group is quite strategic because Femi Johnson, the MD/CEO of this bank is the president of Mortgage Banking Association of Nigeria (MBAN) and also a director in the Nigeria Mortgage Refinance Company (NMRC)”, he said, assuring that it would help the partnership.
Johnson described the partnership as a good beginning, pointing out that it was one of the partnerships that would define Nigerian economy going into the future because “here we are talking about land of almost a million square metres and houses that will be on it will be about 5,000 units”.
“We have the weight of the entire mortgage banking sector behind this partnership; we also have the weight of the NMRC behind it. We have introduced some standards into the sector and so, we have uniform offer letter for people and also uniform underwriting standard and we are working closer and better as a group of mortgage operators and this is going to enhance all of that”, he assured.
According to Akinlusi, the more the number of Nigerians that own their own homes, the better for capital formation, for investment and for the economy, hoping that “it is from here that we can see our economy grow; and to make it easy for those who will be coming to subscribe to Grand Lake, the three mortgage banks are to harmonise their lending terms so that whichever one of them a subscriber goes to, the lending rate will be the same”.
Based on all of this, houses in Grand Lake Estate will be relatively affordable with flexible payment options including a mortgage for between five to 20 years and single digit interest rate, while a one-off payment on any of the houses will attract five percent discount. Payments are allowed in three installments of 30 percent, 40 percent at roofing stage and the final 30 percent at completion.
One-bedroom at the estate located in the Ajah axis sells for N7.95 million, two-bedroom for N10.95 million, while a three-bedroom bungalow and a four-bedroom terrace house go for N13.95 million and N17.95 million respectively.
Under its site and service scheme, a 600-square metre residential plot costs N18 million per plot, while 800- square meters plot is pegged at N24 million. The estate promises a unique man-made lake with a relaxation centre to complement the magnificent landscape, paved road network, recreational facilities, a gym, AstroTurf etc.
CHUKA UROKO
