FG To Embrace Mortgage System To Ensure Housing Affordability– Fashola

FG To Embrace Mortgage System To Ensure Housing Affordability– Fashola

Saturday, December 3, 2016 6:01 pm



The Federal Government plans to embrace the mortgage system to drive the on-going National Housing Programme when it finally comes on stream, Minister of Power Works and Housing, Mr. Babatunde Fashola SAN, said in Abuja at the weekend.

Fashola, who spoke after the inspection of sites and building materials production facilities of some of the Private Sector partners in Housing Development in the Federal Capital Territory, assured that when the scheme takes off, government would issue mortgages which would be tied to the incomes of prospective beneficiaries.

Fielding questions from newsmen after the exercise which took the inspection team to the sites of Brains and Hammer Limited in Gwarimpa, Life Camp and Galadimawa; Citec International Estates Limited’s sites and building material component manufacturing facilities in Gwarimpa; and Le Chase Morgan/ Net Construct’s Sunny Vale in Apo, the Minister said government was already putting measures in place to strengthen the Federal Mortgage Bank to be able to handle the programme.

Fashola, who expressed delight that the bank was already on a recovery trend after six year of loss balance sheet, hinted that government would inject fund into it to enable it recapitalize as soon as it returned to clean books and could expand the Housing Fund under its management.

According to the Minister, “The new management of the Federal Mortgage Bank, still in an acting capacity, has reversed the loss balance sheet of the company and for the first time in about six years, they are returning surplus from deficit in billions; they have a surplus of about N472million as at Q3 from N3-4-5 billion negative position”.

“So once the bank goes back to clean books and expanding the housing fund which it is managing, government can say, as a matter of national policy, ‘look, capitalize, we will inject fund just as we have done with Bank of Industry and we are planning to do with Bank of Agriculture, we can do the same thing”, he said adding, however, that although the possibility was there, there must be a market in which to spend the money.

The Minister said embracing the mortgage system in the Housing Programme would also bring relief to the ordinary Nigerian worker as it would move the society away from the system whereby landlords demand rent in advance from tenants who receive their salaries in arrears.

Fashola told the newsmen, in response to a related question on why people who collect salaries in arrears would be expected to pay rent in advance as currently prevalent, “In our own scheme when it starts, we hope we will be in a position to issue mortgages and if you have a mortgage, clearly it can only be tied to your income which is in arrears”, adding, however, that how much progress the country could make as a nation would depend on how much love Nigerians would want to show to themselves.

He declared, “So, if I build a house and I know you are going to be paid at the end of December and I tell you to go and bring a rent up to 2017 that you haven’t worked for, do I really love you? So let us show the kind of nation that we want”.

“What does a landlord lose if he tells the employer of his prospective tenant to guarantee deduction of the money from the man’s salary at the end of the month? If we can reach that kind of arrangements it will give a lot of people relief because that is the kind of thing that causes inflation, hiked prices”, the Minister said adding that in many parts of the world people pay their house rents when they collect their salaries.

Noting that the advance payment of house rents fuel inflation, the Minister cited the example of a worker who has to pay N17,000 in advance to rent a room, adding, “He must be looking for all sorts of ways to make it. Anybody he too has to render service, he just gives a cut throat price and the person then passes it on”.

He urged landlords and home owners to reflect the fact that by doing so they inflict pains on fellow Nigerians adding, however, that to the extent that there are also bad tenants who would rent a house and the landlord would have to be in court for 10 years just to get him out as a result of rent default, government would find a balance.

On the readiness of the local housing materials manufacturing and building partners to meet the nation’s housing demands, Fashola, who said government was now at the stage where letters of awards were being issued, said since there was already a design, the builders would be told that once the design was validated then they would embark on mass production using polystyrene and other locally manufactured components.

Pointing out, however, that the typical concrete block models was being used to start with, the Minister reiterated, “Once we validate the designs then we do mass production”, adding that polystyrene models were not being used at this stage until when production was ready for industrialization. “That is what polystyrene brings, we industrialize construction”, he said.

The Minister, who also stressed the importance of the cost and the delivery time of the houses, said the partners were being given the government designs to ascertain how fast and at what cost they could build and sell the houses with the designs adding that government could then ask them to build for it to buy on behalf of the people.

He noted that Citech, one of the building component production partners, promised to bring their cost down by 10 per cent, a reduction he described as significant for residential housing. He added, however, “But it is not only cost of building but also delivery time; because that is when the deficit then comes under threat; we can now assault it vigorously with industrialized capacity”.

Fashola, who said there was need to develop a system, noted that the models by some of the partners doing industrialized capacity would bring down the construction time and also reduce some of the costs, adding, “So we are giving out that design now of our own housing to them to say go and look at these designs, can you build it better and cheaper than us?”

“As soon as they can show us that they can do that, we are going to the stage where we would say to them, ‘build, we would buy’. So if they have government as a ready buyer, it then becomes easier to contemplate a situation where they will finance because there is a guaranteed market”, the Minister said adding that the Federal Mortgage Bank would then do its core job of funding demand.

According to the Minister, there was need to address the supply side first before the Mortgage Bank would be asked to come in and do its part. He declared, “Thought out differently, if the Federal Mortgage Bank issues 100,000 mortgages to workers today, there are no 100,000 houses waiting to be bought; so we must address the supply side first”.

Fashola also emphasized the need to “re-sensitize” and “re-dimension” Nigerians in terms of what should be their legitimate expectations concerning what government could do and what it should do by way of the provision of infrastructure pointing out that it would be impossible for any government to provide the entire infrastructure needed by the people.

According to the Minister while responding to a question on how far the government in providing infrastructure support to private developers, “In cities, for example, part of the responsibilities for infrastructure like roads belong to the state governments, some belong to the local governments; and so long as we have those clearly defined responsibilities for provision of infrastructure, you can’t, in good faith, begin to encroach any body’s jurisdiction”.

“So we have to understand this. What we must do is to continue to manage this kind of communication with members of the public”, he said adding that in his recent meeting with members of the Nigeria Labour Congress, he urged them to start the process of re-sensitization of ordinary Nigerian’s “so that we redimension their legitimate expectations; what they should legitimately expect in terms of what government can do and what it should do”.

– Government would inject fund into the Federal Mortgage Bank to enable it recapitalize, as it returns to surplus for the first in 6 years from deficit in billions

– Ministry of Power, Works and Housing currently at the stage of issuing letters of awards for housing construction across the country

– Minister tour sites, production facilities of Private Sector building development partners, expresses delight that that many more people are getting back to work with fewer people fighting

– Instead of fighting, let’s come together and build this country, we can do it , he says

The Minister reiterated that as much as nations try to increase the number of house ownership and reduce the number of rentals, not everybody could be a house owner in terms of affordability, adding, “Nations try to improve employment and therefore provide shelter by ownership and by rental; but some people may have to rent for life and we must find a system that responds to that market need”.

Urging the Private Sector to also look at that as an investment opportunity, Fashola said it might also be a very useful area for very sensitive funding like the Pension Fund that requires quick returns so that it could pay pensioners adding that it may be useful to invest some of the fund in build-and-rent-to-own so that payments would be made monthly.

The Minister, who recalled the recently concluded Habitat 111 Conference in Ecuador where, “we articulated that in the National Housing Policy, affordable housing was the way to go”, said what was missing was the programme that could deliver Affordable Housing adding that government was now developing that programme, including design, building types, cost and supply.

Asked why he was visiting the sites and facilities of building development companies from time to time, Fashola said he was at the sites to keep his own side of the bargain to ascertain the authenticity of the claims of many of the sponsors, during the Ministry’s Affordable Housing Summit, who had said they had the capacity to build. “I said I would come and see what they are doing; I am keeping my own side of the bargain today. So I will be taking it in bits and pieces now we are here”, he told the media team.

Reiterating that “no government in the world has ever been able to unilaterally supply the needs of the people”, Fashola cited transport where there is both public and private transport, Health, where there are government hospitals and private hospitals and the Oil Sector where the NNPC has said it could not supply everybody’s fuel and so must have independent marketers to fill the gap.

The Minister declared, “The same thing has to happen here if we really want to solve the problem. So we are going to need the Private Sector to build. What is missing is how we will converge this Private Sector with the market so that what they build is affordable to all the people”.

“We see five bedroom houses; majority of the people who need houses are not look for five-bedrooms, they cannot afford it. Majority of those people are workers like you. How can we fit their incomes into a programme that attracts these people to want to supply them?” he said adding that those were the issues being addressed in the Ministry.

Explaining that Acceptability and Affordability were at the core of the Housing Development, Fashola declared, “So we can bring our cost; we can meet the market; because when we do that the Federal Mortgage Bank will do its work. Our work will now be more of research, assisting to improve design qualities that reduce cost”.

He recalled the Citech industrialized construction sites, where, “end to end, from iron mongery to cement, to interlocking blocks, to furnishings, to roofing” the company has everything in one place including patching plants for its roads and concrete rings for waste treatment, among other building accessories, adding, “So it is ready to go”.

“We saw doors, we saw windows too and we saw window nettings too. So that is more of what we want to see. Not just buildings but now also supplying demands for all those people who do not want to get involved in manufacturing of construction materials. They may also choose to industrialize but we want to see more of the Citechs using polystyrene”, he said.

Fashola expressed delight over the existence of local capacity development programme in the housing sector like young people engaging in apprenticeship in the factories of some of the companies adding that focus should be more on those kinds of stories “because, whether you like it or not, in spite of the depression, people like these are investing, they are moving on, they are committed”.

The Minister again declared, “Instead of fighting, let’s come together and build this country; we can do it. In all of those sites we saw people at work; that is what interests me, that is what we should do, that is what interests our team; many more people getting back to work and fewer people fighting”.

Noting that of the three sites visited, two were being dominated by women, Fashola expressed joy that more women were now getting involved directly in what traditionally was men’s job adding, “Again people are getting on with their lives; it’s tough but those who are trying to distract and just complain, should learn one thing or the other from these people”.

The Minister recalled what is now going on in the Agriculture Sector especially concerning rice production adding, “So it is not a lost cause. Go and ask the farmers now, they are getting more money in their pockets. So perhaps those of us who are still here who don’t want to get their hands dirty, if you don’t want to get your hands dirty you won’t get rich”.

“So you have to be ready with your jeans, with your hard hats and with your hands because it is a lot of work to do. Mining, you have to get your hands dirty; oil exploration, we have to take it over, slowly and gradually we have to go and get back nature’s gift for our own use”, he said.

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