How to own a home with less than N4m in Lagos

Unknown to many, it is possible to own a home in Lagos State with less than N4 million paid at a very convenient way. Such a home, which is targeted at first time buyers, is available at N3.5 million.

First time home buyers are generally low and mid-income earners who do not own homes anywhere in the state but are desirous of owning one. Lagos State government has a special housing scheme for this category of residents.

Thus far, the administration of Babajide Sanwo-Olu has delivered 19 housing schemes in various parts of the state. These schemes, according to Moruf Akinderu Fatai, the state’s commissioner for housing, has added about 5,000 housing units to the state’s housing stock.

These projects achieved the state’s Ministry of Housing, Lagos State Property and Development Corporation (LSDPC), and Joint Ventures with private investors, have brought about livable communities that are adding values to the lives of many people. In addition to the ones delivered, there are also other schemes that are virtually ready and waiting in the wings to be released to the people.

It is from the available stock that first time home buyers of low income level can own homes at discounted price of N3.5million. “This category of residents can either access home through direct purchase or via our convenient home ownership plan tagged Rent –to- Own scheme,” the commissioner explained.

“This scheme is based on a 10-year monthly payment plan with single digit interest rate. With the initial payment of 5 percent of total cost, a resident having met the minimal conditions will gain access to the homes,” he added.

The high points of this scheme are the easiness and convenience of its acquisition process and the relative cheapness of its value. Where private sector operators demand about 30 percent initial deposit for an installment payment arrangement, the Lagos scheme demands 5 percent.

Additionally, for the private sector’s 18-22 percent interest rate, Lagos is demanding single digit rate that is as low as 6 percent and also allows repayment tenor that is as long as 10 years as against private sector’s three to five years.

Rent-to-own is a scheme that allows a home seeker to rent a home, pay the rent over a period of time, in this case, for 10 years, and owns the house after fulfilling other necessary conditions such as the initial deposit of 5 percent of the value of the house among others.

Housing delivery in Lagos, according to the commissioner, is central to the developmental plans of the state, adding that, being the economic hub of the nation as well as one of the fastest growing megacities in the region, the state considers it a strategic policy move to pay particular and deliberate attention to provision of housing.

For various reasons, housing is very expensive in Lagos. According to the UN-Habitat, Lagos is the smallest state in Nigeria with a limited land size of 358,862 hectares, which stretches along a coastline of about 180 kilometers. This represents approximately 0.4 percent of Nigeria’s territorial land area of 923,773 square kilometers.

The state has the highest urban population, which is 27.4 percent of the national estimate. The Lagos population is growing 10 times faster than that of New York and Los Angeles; its population density ranks among the highest in Africa, with a growing population of about 25 million inhabitants.

Of this population, the metropolitan part of Lagos accounts for over 85 percent on an area that is only 37 percent of the land area of the state, reflecting the magnetic pull of the city for millions seeking economic opportunities.

For these and other reasons, demand for housing is very high and because of the high land value in the state, commercial real estate developers sell their products at premium prices which shuts out a good number of the urban poor who resort to renting.

As a result, the state’s rental market is one of the most active and also the most exploitative in Africa. Over 80 percent of the city’s residents live in rented accommodation, according to the commissioner.

The good news is that while this is a challenge to the state government, it is a huge investment opportunity for housing developers, especially those that invest in built-to-let apartment houses.