PROPERTY TRANSACTION GUIDE

Stakeholders brainstorm on slow pace of housing development in Enugu
By Adelani Adepegba

Punch, Monday 12th April 2010

Enugu is widely regarded as one of the most pleasant cities to live and raise a family in Nigeria.

The city‘s layout is even, traffic is relatively light and basic infrastructure like roads, water and security are receiving attention from the state government.

What is more, the hustle and bustle and stress of modern city life is almost absent. The only challenge before the residents are the prohibitive cost of accommodation.

Landlords are striking gold in the coal city, and this is no exaggeration. Depending on the location, a three-bedroom flat goes for between N250, 000-N350, 000 per annum and a prospective tenant is required to pay two years rent. A duplex goes for about N800,000 to N1m.

Ubiquitous estate agents, usually jobless youths would also be settled. Their charges range from N100,000 to N200,000 depending on the type of apartment.

To tackle the housing crisis in the state, the state government allocated tracts of land to private estate developers and granted them waivers on certificates of occupancy to encourage them to provide affordable houses to the masses. Of the many developers given land, only COPEN Services Limited, has developed part of its allocation.

Worried by the slow pace of housing projects, stakeholders organised a workshop on affordable housing in the state last Thursday to brainstorm on how the situation could be reversed.

The event had the support of the Office of the Commissioner for Lands and Housing, Real Estate Developers Association of Nigeria, Federal Mortgage Bank of Nigeria and Beracah Consulting Limited.

In his presentation, the commissioner for Lands and Housing, Mr. Albert Edoga, stated that the state government made land acquisition for housing projects easy by paying compensation for economic trees to host communities and also allocate compensatory plots of about 10 to 15 per cent to such communities.

He submitted that the government threw its doors open to all private developers in order to meet its targets on housing. But in hurrying to achieve this objective, no policies were put in place to identify real developers from phoney ones, he added.

"So many beautiful presentations have been made, so many approvals and land allocations have been made, but very little reciprocal actions for these gestures have been received. In one or two cases, the developers abandoned the initial proposals on the type and quality of buildings and went on a voyage of discovery resulting in houses that cannot be sold and cash-trapped houses," Edoga moaned.

The commissioner said the time was ripe for policies that would define the criteria for genuine developers, noting that such policies would help the government to produce achievable plans for its housing programmes and would restore confidence in the mind of real developers.

Edoga observed that workers and artisans contributing to the National Housing Fund in order to have their own homes need special government policies to reduce cost. He noted that the state government had come to their rescue through reduction in fees and even outright waivers of fees and through provision of basic infrastructure.

The government, he further said, had once more entered into the NHF programme, refunded deductions made from workers‘ salaries to the FMBN, and facilitated collection of passbooks for the deductions.

On the funding of housing projects, Edoga said there was a need for government policy on access to the funding arrangement between developers and bankers.

He said that the state should not be used as a platform to defraud banks by diversion of housing fund to other selfish ends, insisting that money released for housing should be used and seen to be used for housing development.

He also harped on the need for security of investment and called for the identification of core factors for rapid housing development in the state.

"We should all recognise the huge potential of successful provision of adequate housing for the people. It will stabilise families, reduce crimes, ensure proper up-bringing of our children, fight poverty, boost our economy and above all, restore confidence and pride in our continued existence as human beings," Edoga submitted.

The Principal Consultant of Beracah Consulting Limited, Mr. Ugochukwu Chime, in his address traced the high house rent in Enugu to the influx of people from different parts of the country to the city on account of its peaceful nature and its political status as a former regional capital.

He explained that the dearth of affordable housing gave rise to increase in house rent making Enugu one of the most expensive cities in the country when compared to available productive opportunity.

He observed that if the trend was not effectively handled, it might impinge on the overall growth of the city and well-being of inhabitants.

Chime said that it was the realization of this challenge that led to the convocation of the workshop, the purpose of which was to harness ideas and energies towards a bottom up approach policy formulation, which would result in addressing the challenges hindering affordable housing provision.

He said, "In developed and developing economies, the housing sector accounts for an average of 15 per cent of the GDP. The transaction dynamics, the regulatory and legal frameworks needed to house citizens are clearly spelt out, with the input and timing mechanism properly defined thus reducing transaction time/cost.

"Housing and related construction activity creates multiplier effect in the local economy and provides awesome employment opportunity. Investment in housing accounts for 15 per cent to 35 per cent of aggregate investment worldwide, compared to 0.4 per cent in Nigeria. Presently at the national level, we have between 14-16 million housing units deficit. A trip to Ogui urban area (of Enugu ) and other slum area will amply reveal the glaring need for urgent intervention."

The surveyor lamented the removal of safety nets or subsidy for the poor "for macabre reasons", saying it was only in Nigeria that such is done, arguing that the people had been marginalised because their votes do not count. He noted that the government hides behind public-private participation, commercialization and so on to abdicate its responsibility to the people.

"State housing corporations now build for the rich contrary to their original mandate of social/affordable housing. Infrastructure is provided for the rich areas free of charge, but the poor in the housing estates pay for theirs. This state of affairs is unjust, unjustifiable and therefore unacceptable. It is only in Nigeria that the apex mortgage institution is capitalised to the tune of N2.5bn, while commercial banks have over N25bn share capital. It is only in Nigeria that the pension contributions of the poor meant to finance real estate development for them are diverted to the capital market for use of the rich."

Chime stated that the era of finger pointing and complaining was over, and rallied stakeholders to synergise on the way forward.

For the Real Estate Developers Association of Nigeria, the set goal of providing 400, 000 housing units over the next few years may not be achieved giving the gaps in the implementation of the national housing policy.

Executive Secretary of REDAN, Mr. Anthony Okwa believes there should be formulation of state housing policy, establishment of housing facilitation committee, land provision and infrastructure and easy access to land for estate developers.

He suggested a reduction in statutory and land/mortgage transaction costs which currently average 10 per cent transaction.

"As currently practiced, and with need for serial registration of deeds of assignment, primary and secondary mortgage as required under the NHF scheme, this sums up to as much as 30-33 per cent of the cost of the house as against 13 per cent in most developed countries," he said