Experts have advocated for the introduction of a tax credit scheme for developers, and conversion of idle spaces and assets by federal and state governments, to bridge Nigeria’s housing gap.
According to the experts, a tax credit scheme for developers would provide the needed finance for building more houses while space and assets conversion would unlock wealth.
The Federal Government in its Executive Order 7 came up with a tax credit scheme on infrastructure that allows big organisations to construct or rehabilitate roads, for instance, in lieu of their tax obligation to the government.
Adeniyi Akinlusi, former CEO, Trustbond Mortgages, says the idea of infrastructure tax credit for the construction of new roads can be deployed in the housing sector, noting that some of the players in this space are already in the housing value chain like Dangote and BUA are building materials producers.
“We can also use this as a means of delivering affordable homes and call it a housing tax credit. We can engage such organisations,” he said, explaining that the beauty of that scheme is that, unlike the one for the road, which is not recoverable, the one for housing tax credit will be recoverable because housing built under the housing tax credit, will be recouped by the government through sales proceed of those houses. “This will ensure delivery of affordable and quality houses,” he reasoned.
Akinlusi who, along with other experts, spoke at a real estate webinar organised by the Lagos Chamber of Commerce and Industry (LCCI), said that Nigeria’s housing deficit, estimated variously at 17 million, 20 million, and 22 million, is unaffordable house prices, low household income and high mortgage interest rates, and cost for transportation.
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He explained that mortgage interest rates are quite low in terms of the margin for mortgage banks, adding that it is the closing cost that is high, which includes the cost of titling, insurance, survey, and others. He advised that government agencies should reduce the cost of perfecting titles.
Because of these challenges, the housing sector in Nigeria is not growing fast despite the high demand. Hakeem Ogunniran, executive vice chairman, Eximia Realty Company, agrees, noting that the country was still grappling with the basics of real estate value creation which centre on creating assets, issue of regulation, titling, building approval and intervention of human beings in the value creation process.
But all hope is not lost as Toke Benson-Awoyinka, the special adviser to Governor Babajide Sanwo-Olu, of Lagos State, on housing, assured that the government is restoring investors’ confidence in the sector and ensuring the growth of the industry
She said the state government wants transparency in the sector, plans to issue licenses to operators and provide support for the players.
Benson-Awoyinka, who was a special guest at the forum, said the real estate law currently in place, seeks to establish a database in the sector, where people both home and abroad can go into a website and do their activities without any human interface.
“We have introduced the Geographic Information System (GIS) where land transactions can easily be done virtually. We have introduced the mediation process and gotten about 130 petitions, which we are dealing with. We have taken some to court and others to security agencies,” she said.
According to her, in a few weeks, the Lagos State Foreclosure Law would be passed by the House of Assembly and it will come for the governor’s assent.
Ayo Teriba, a renowned economist and the chief executive officer, Economic Associate, noted that out of the assets that countries own, a minimum, which is about 60 percent, are in the built environment. He explained that real estate sector is the hub of the economy.
Michael Olawale-Cole, on his part, called on operators to embrace modern technology for service delivery. He urged the government to deploy technology in the land documentation process and create a platform for property identification, ownership and transactions.
According to him, this would make the sector more regulated and enable it to attract more investment.
