Political will more than finance is the most critical component of public housing programmes.
Over the years, the country's vision of providing decent and affordable housing has remained elusive for lack of a political will to get it on stream. The closest the federal government got to realising this quest was under the watch of former president Shehu Shagari, who besides being given wastelands in some states did not help matters when his administration developed what critics called chicken coops for human habitation.
Later, even Alhaji Lateef Jakande, who as governor of Lagos State succeeded in doting the state with affordable schemes that are still in use today, has the abandoned Abesan housing estate to show as a sore point in his housing policy.
Now the Lagos government under Governor Babatunde Fashola wants to tread that path and has put what it hopes is a workable system in place to discourage abuse with a new mortgage law that was enacted last week. But there is more to decent and affordable housing, experts in the housing industry state.
Affordable Home Concept
A decent and affordable home does not mean poverty housing but the right to live in an acceptable environment among the larger society. Experts say a primary factor in housing affordability is household income.
"The most common approach is to consider the percentage of income that a household is spending on housing costs. It also looks at the regular earnings of full-time workers who are paid only the minimum wage as set by their government. The hope is that a full-time worker will be able to afford at least a small apartment in the area that he or she works in," explain experts.
Complying with this provision requires slum clearance and these are some of the issues that make affordable housing "a controversial reality of contemporary life, for gains in affordability often results from expanding land available for housing or increasing the density of housing units in a given area," says Alfred Etuk, a property consultant in Lagos .
"It goes beyond political statements because "ensuring a steady supply of affordable housing means ensuring that communities weigh real and perceived housing shortages against the sheer necessity of affordability. The process of weighing the impacts of locating affordable housing is quite contentious, and is laden with all sorts of implications," he noted.
Etuk said Governor Babatunde must have studied the terrain very well before coming up with the state's new mortgage law. "If the government can get it right then Lagos will be scoring a first in affordable housing delivery. Not even the federal government with all its financial muscle has been able to deliver on its promise of affordable housing."
All things considered, not many people have seen the new law to be able to understand it closely. "I'm trying to get a copy to understand the provisions," said Mr. Akin Olaore, a fellow of the Nigerian Institution of Estate Surveyors and Valuers.
The government, sector operators said is moving from its initial stance that government should provide a spring board for the private sector to develop homes rather than get into the fray. "They may have seen that this stance is becoming counter-productive with rising shortages in the housing sector as the population bloats," said Etuk.
He is concerned though that the new law may conflict with the provisions of the Federal Mortgage Bank of Nigeria . He pointed out that the FMBN is the only institution licensed to create mortgages by the Central Bank of Nigeria . The FMBN has a broad mandate to among others link the capital market with the housing markets; encourage the emergence and promote the growth of viable primary mortgage loan originators to serve the needs for housing delivery in Nigeria; mobilise domestic and foreign funds into the housing sector; and collect and administer the National Housing Fund in accordance with the provisions of the NHF Act.
His position is held by other operators in the sector, who also observed that government processes of land documentation remains a clog in the wheel of increasing the state's housing stock. But governor Fasholar explained it differently. "It is not that we are unable to build houses but there is need to build houses that are affordable so that the low income people will also have access to decent homes," Governor Fashola said at the signing of the bill establishing the Lagos State Mortgage Board that would be responsible for driving a mortgage regime for unfettered housing delivery in the state. "It is also a fulfillment of a promise made by us to the people at inception that we will find a permanent solution for affordable housing for the people," he added.
Lagos, he argued does not have a housing shortage. "The missing word is not lack of houses but lack of affordable and sustainable housing delivery. That is what we intend to solve as long as we remain leaders of this state. This is why we started with the law because some may ask why the law? If there is no institutional framework, there is no regulatory framework; there can't be uniform practice."
For a mortgage regime to function fluidly, there needs to be a fool-proof system or something close in place, says Ezeify Emeka, who is a senior executive of a primary mortgage firm in Lagos . " Lagos government must have provisions for foreclosure because that is a very contentious aspect of mortgage administration. You can remain in court with a client for a long time before you can take possession of the property to get your money back," he said.
He explained that the foreclosure law is not well spelt out in the nation's law books. "Initially, the law provided that a mortgage default resulted in the automatic ownership of the property by the holder of the mortgage (sometimes referred to as the mortgagee). But the law developed over the years so as to allow mortgagee time to pay off his/her mortgage before their property was taken away. This process of taking away the mortgagee's property because of default is what constitutes foreclosure. Today, not even the FMBN has regulations to govern foreclosure to protect both the mortgagor and the holder of the mortgage from unfairness and fraud."
He said for instance in the United States, the most important type of foreclosure is foreclosure by judicial sale. "This is available in every state and is the required method in many. It involves the sale of the mortgaged property done under the supervision of a court, with the proceeds going first to satisfy the mortgage, and then to satisfy other lien holders, and finally to the mortgagee. Because it is a legal action, all the proper parties must be notified of the foreclosure, and there will be both pleadings and some sort of judicial decision, usually after a short trial."
Lagos is not unmindful of this booby trap and, though it is sill not clear what the law says, the governor confirmed there is a system in place. "Until we create a system of mortgages that ensures that once you have a job, you can own a house that is the only way we think that we will begin to deliver sustainable housing for this state and for this country. This is the only way everyone can have shelter; this is the only way people can have shops; this is the only way we can stop corruption and other malpractices," Emeka said.
Besides political will, another critical ingredients in mortgage administration, added Emeka is a pool of long term funds to ensure sustainability, adding that the FMBN has been doing a lot in providing mortgages but that it needs more money to make appreciable impact particularly in the low income strata "that presently cannot afford the fund, even though they contribute to it. It is too expensive for that class of society but the model being introduced by the Lagos government if well funded, could meet the desired impact and more importantly will be sustainable since affordable housing delivery is the objective of mortgage administration."
The new law, Fashola said, also anticipates the need for long term funds, which it intends to provide like the British model. The law seeks "to create long term funding that allows not only the state government to build and sell homes to people on a mortgage basis but to encourage members of the private sector who are into housing estate development to build knowing that there is a regime in place that will guarantee the uptake and collect the money back over a long term."