Stakeholders in the real estate sector say that the Lagos State government needs to reconsider the terms of its partnership with private sector operators in order to deliver housing on a scale and price level capable of bridging the huge housing deficit in the state with population in excess of 20 million.
The stakeholders say that the main problem with the Lagos state housing model is in its pricing, which is often above the heads of most of those who require to own their homes.
This problem they say can be resolved by following the Jigawa model, in which the state government provides land free of charge to their private partner developers, thus reducing production costs, and consequently the price at which the houses are sold to the public.
In the Lagos State model, they say, land is not absolutely free because apart from the fact that land is ‘scarce’ in the state, a lot depends on the size of the land that the private developer wants and the location where he wants it, adding that much negotiation goes into the partnership , unlike the earlier example, where government gives out land unconditionally.
The stakeholders who spoke amidst doubts enveloping the implementation of the much celebrated Lagos Mortgage Home-ownership Scheme (HOMS), say that the state government’s approach to providing housing for the poor is inadequate because the demand far outstrips supply and the prices of the houses so far built for the scheme are beyond the reach of the would be buyers.
Three times the state government has indicated its intention to begin the allocation of about 5,000 housing units said to be ready under the HOMS programme, and thrice it has shifted it; from September to December 2013, and from January to February 2014.
Aside the fact that the housing units will be acquired through a mortgage arrangement, comprehensive modalities for their allocation, less than one month to the new February proposed date, remain vague and unknown to most members of the public, with the completed units allegedly going for prices beyond the reach of millions of people who truly need their own houses in the state.
Lagos state governor, Babatunde Fashola, it is said, will personally unveil the terms for accessing the houses.
BusinessDay reliably gathered from a source within the state ministry of housing, that houses in the Emeka Anyaoku Estate, in Ikeja GRA, which is one of the estates completed for the HOMS project, are going for N35 million each, while the three/four-bedroom flats at Gbagada, which are also ready, will be offered for between N10 million and N15 million.
Analysts are of the view that the high prices at which the government intends to offer the houses will defeat the purpose of bridging the housing deficit, as low income earners who constitute the majority of home seekers cannot afford them. This they say will expose the houses to the rich who already own their homes but would buy the said houses to resell for profit, or rent out to the same low to mid income earners, for whom the scheme was intended in the first place.
The stakeholders say Lagos needs volume affordable housing to bridge its housing deficit, adding that it is difficult to do this form of housing without making land available to the private sector, with whom the government should effectively partner.
Jide Awosode, president/CEO, Grant Properties Limited, says he does not do mass housing because he is neither a philanthropist nor a government, stressing that the business of mass housing in a certain perspective, belongs to government.
“But if anybody wants me to do mass housing, I will do it on the condition that I must get land free of charge, or at least it must be given to me at a huge concession. Also, I must get title for the land just by asking, that is, once I apply, I am given. Even at that, it must be given to me almost free of charge or at a huge concession”, he told BusinessDay.
Hakeem Ogunniran, the Managing Director of UAC Property Development Company (UPDC)Plc, shares this view, arguing, “if as a developer you have to buy your land from the open market as other people do, it means you have to undergo the same approval and permitting processes; you actually have to struggle to get the land ready for development. After all this, it will be difficult for you to come up with a selling price that will be agreeable to you as developer, or a price that will be affordable for the buyer”.
He recommended that government should create a separate window for affordable housing and all developers have to key into it, explaining, “what that means is creating another category of products that will appeal to that segment of the market”.
A developer who did not want to be named, disclosed to BusinessDay that acquiring land for development in Lagos is enough to send somebody out of business, explaining that paying as much as 15-21 percent of the value of the land for titling does not make business sense.
“When you are working in partnership with the state government, you have to pass through all the approval processes and yet turn round to share your profit with the government; that to me is not partnership”, he said, recommending the Jigawa State example for the state.
In Jigawa State, he explained, government in its determined effort to provide housing for the citizens, is partnering with private developers to whom it gives free land to develop housing and sell at affordable prices to the people.
Lagos has the biggest housing problem in Nigeria and according to a report on the state of the housing market in the state published by Pison Housing Company in 2009, “65 percent of the state’s 18 million people live in rented accommodation, spending over 50 percent of their income on house rent”.
By: CHUKA UROKO & JOSHUA BASSEY
