… homeownership remains a dream for many residents
The parlous state of the Nigerian economy and high equity contribution have been identified as major factors slowing the up-take and demand for homes in the various housing schemes put forward by Lagos State government to enable residents access and own their own homes.
Lagos has almost 2,000 housing units dedicated to its Lagos Home Ownership Mortgage Scheme (LagosHOMS), which allows subscribers to buy houses through mortgage, and also for the newly launched Rent-to-Own housing scheme through which subscribers rent houses and ultimately own those houses.
“With a large and growing population estimated at 21 million, Lagos has a challenging housing situation with its 3 million housing deficit that requires it to build over 1,000 housing units annually for the next 20 years to bridge,” Roland Igbinoba notes in a report on the state of the Lagos housing market.
According to Igbinoba, about 60 percent of Lagos residents live in rented accommodation paying over 50 percent of their monthly income on house rent, hence the need for pocket-friendly housing schemes to address these challenges.
The LagosHOMS, a brain-child of the Babatunde Fashola administration in the state, came as a child of necessity to enable residents acquire homes through a 9-percent interest rate mortgage with 10-year repayment tenor. Though the scheme has its appeal with the single digit interest rate and the relatively long repayment tenor, its demand for as much as 30 percent equity contribution from subscribers is a major constraint.
“What this means is that a home seeker who wants to buy a N15 million house under this scheme should be looking for close to N5 million as down payment”, noted a resident who did not want to be named, pointing out that if such a subscriber had such money in his pocket, he should be thinking of building his house by himself rather than buying through mortgage.
Some other residents who spoke with BusinessDay shared this view while others blamed it all on the economy and lack of steady flow of income which has limited people’s ability to key into the schemes despite the crashing of house prices.
According to them, the state government should reconsider both the mortgage and the rent-to-own schemes with a view to relaxing the conditions required for accessing the houses and also making the schemes attractive to people who are truly in need of them.
Rent-to-Own housing scheme is relatively new in Nigeria but rapidly gaining traction in the housing market. Though Lagos has done well by blazing the trail in the public sector space, its best in implementing this scheme and making it pro-poor are yet to be seen.
In addition to being a registered resident, a subscriber to this scheme is also required to have steady monthly earnings (employee or self-employed), evidence of tax payment, proof of total monthly salary after tax and total annual salary (with pay-slips as proof), three bank account statements, 5 percent down payment for any apartment of choice (I, 2 or 3 bedroom).
“The rent-to-own option is encouraging because of the reduction in the down-payment required from 30 percent to 5 percent. But even at that, it is still a tall dream for millions of people in need of housing in Lagos. It is even worse with the current economic recession”, said Thompson Adebayo, an Ikeja resident, who spoke with BusinessDay.
Adebayo cited example of the Oko Oba scheme in Agege, where a 2-bedroom flat is offered for N13.7million, wondering how many of the first time home buyers being targeted by the government can comfortably afford the 5 percent down payment required by the scheme.
“Perhaps, the state government still needs to crash the down payment to 3 per cent while retaining the 10-year payment plan, which I think is okay”, he advised.
Igwe Sunday, a staff of a Lagos-based Construction Company, identified irregular monthly incomes as a constraint to accessing the apartments. According to him, hit by the effect of the economic recession, a lot of companies are forced to stagger staff salaries.
“You are supposed to pay monthly upon winning the flat. You rely on your salary to do this. What happens if you are owed for four, five or six months as is the case now in some companies; you forfeit the house? I think our economy is a factor in accessing homes. People really desire to own homes, but they won’t go into a project they are not certain they can see through,” Sunday noted.
