By Alex C
In advanced economies such as the United States of America, United Kingdom, etc., financing housing is synonymous with mortgage. This is because the only known way of buying and owning a home is by applying for, and accessing a mortgage facility.
In Nigeria, the story is different with homeownership realised from almost 100 percent from own savings or through communal and co-operative efforts. In Lagos, where over 60 percent of this population lives in rented accommodation, it is believed that about 86 percent of the housing stock in the city is funded from household income.
Experts have revealed that housing finance by public authorities in Nigeria is about 10 percent; mortgage banks contribute about 2 percent, while contribution from banks and other institutions is insignificant.
Making a comparative analysis of what obtains in Nigeria, Ghana and South Africa, Sonnie Ayere, CEO, Dunn Loren Merrifield, disclosed that in South Africa, mortgage contributes about 40 percent of housing finance while in Ghana, our much smaller West African neighbour, the contribution is 3 percent.
Ayere noted that the low mortgage contribution to housing finance in Nigeria is the cumbersome and unfriendly land administration in the country, pointing out that Nigeria ranks highest in property registration and construction permits.
“Nigeria is ahead of all other African countries in procedures legally required for registering property; it takes about 360 days to register property here as against Ghana’s less than 10 days. In Lagos, the cost of registering property is about 15 percent of the value of the property.
With about 16 stages and 60 steps required to get a property registered in Lagos, Ayere stated that this explains why it is difficult to get mortgage for housing finance.
“This is against what obtains in other economies including Ghana and South Africa. Ghana before now had a dysfunctional land administration, long and expensive procedures that lasted up to five years and involving six different agencies supervising which resulted in inefficient state land bureaucracy and customary tenure,” Ayere stated.
Hakeem Oguniran, managing director, UACN Property Development Company (UPDC) plc, identified five drawbacks to housing finance including cost, character, capacity, collateral and conditions.
While the problem with land registration was much with the system, Oguniran explained that the system is people-driven and not process-driven. He however recommended that there should be one-stop-shop for perfecting title and should be made business-like.
Abimbola Olayinka, MD/CEO, Resort Savings and Loans plc, stated that Land Use Act should be used to empower the people and not as an economic and political tool by state chief executives. Olayinka stated that the Act should be taken away from the constitution so that it could be easily tinkered with.
“Land administrators should adopt a three-one-three strategy for land registration. Land titles should be perfected in three days at one central place, and at the cost of 3 percent of the value of the land,” Olayinka added.
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