The housing sector in Nigeria remains unsettled two years after the Senate raised the hope of investors and prospective home buyers with a promise to resolve issues around the Land Use Act and the National Housing Fund (NHF).
These are two critical issues intended to be homeownership enablers, but have failed due to inconsistencies in policy formulation and implementation in the housing sector.
Attempts to amend or review the Land Use Act remains a herculean task because that involves expunging it from the Constitution, which is another kettle of fish as it would call for parliamentary action.
Ahmed Lawan, the Senate president, disclosed at a housing event in Abuja that the Land Use Act and NHF were included in the legislative agenda of the ninth Senate for intervention.
“The importance of housing cannot be over-emphasised,” Lawan pointed out, adding, “Our needs are enormous while resources are lean. But the best thing about the future is that it comes one day at a time. Today presents us with the opportunity to consolidate on what we have built and to start new projects where necessary.”
Continuing, he said, “I am aware that there are critical areas that require legislative intervention like the Land Use Act, the National Housing Fund (NHF), housing regulations, and many more enabling policies. It is in the legislative agenda of the 9th Senate to see that all policies required to get us closer to our dreams are achieved.”
By these pronouncements, Lawan showed an understanding of the issues in the housing sector, but the Senate under his watch is yet to take steps towards solving them despite worsening housing situation in the country with wide demand-supply gap, unaffordable house prices and rents, and soaring building materials prices.
The implication of the Senate’s intended action on these two issues is that access to land for productive purposes remains a problem and house prices continue to rise because land is ‘scarce’.
The larger implication is that the homeownership level in the country remains low while the housing deficit continues to increase. Among its peers, Nigeria is at the bottom in terms of homeownership level.
As against Kenya’s 73 percent, South Africa’s 56 percent and Indonesia’s 84 percent, home ownership in Nigeria remains very low at 25 percent despite efforts by private developers to increase housing stock and close the demand-supply gap now estimated at 20 million units.
Besides Land Use Act and NHF, there is also a combination of factors that impedes housing development and this includes lack of credit facilities from banks and government’s policies that either delay or frustrate developments through long, cumbersome and costly land titling.
Ubosi Eleh + Co, a frontline firm of estate surveyors and valuers, in its report on the real estate sector gives an analysis of data in the third quarter of 2019, which shows that the nation’s housing industry grew only once since 2016.
The report notes that the sector’s slow growth has to do with the little or lack of funds made available to the sector for delivering homes, citing data from the Central Bank of Nigeria (CBN) which notes that loans granted to the real estate sector recorded seven consecutive declines dating back to the third quarter of 2017.
Over all, the Land Use is pivotal to real estate transactions. Mortgage loans are given out on only properties that have valid and mortgageable land title. The Act, which was aimed to ease access to land for housing, industrial and other economic purposes vested ownership of land on state governors.
But the governors have bungled its implementation; land has now become a political tool in the hands of the governors. It is used for political patronage or victimization, depending on the side of the divide the prospective beneficiary stands, according to Yemi Madamidola, an estate manager.
The NHF is a federal government intervention in the housing sector but implementation has defeated its good intentions. Established in 1992 to aid the demand-side of housing, the fund was aimed to provide single digit interest rate to a subscriber seeking mortgage loan. The repayment tenor is 20-30 years.
Though Akeem Akinfenwa, a mortgage consultant, describes it as “the only true mortgage in Nigeria today”, the fund is avoided by home seekers because the primary mortgage banks (PMBs) through which the fund can be accessed have made it not only inaccessible, but also unaffordable because of too many demands from subscribers.