From Magnus Eze, Abuja
Accumulated draft bills on housing at the National Assembly have been identified as part of the factors frustrating the provision of affordable housing in the country.
A document entitled, “Housing Delivery in Nigeria: Challenges and Prospects”, obtained by Daily Sun in Abuja from the Mortgage Bankers Association of Nigeria (MBAN) listed 12 draft bills that had been pending in the federal legislature for amendments since 2001, which, according to them, were hindering affordable housing.
According to the document issued by MBAN’s Executive Secretary, Kehinde Omotosho, the pending draft bills include the Land Use Act 1978; National Housing Fund (NHF) Scheme Act 1992; Mortgage Banks Act 1989 (subsumed in BOFIA); Federal Mortgage Bank of Nigeria (FMBN) Act 1993; Trustees Investment Act 1962; Nigeria Social Insurance Trust Fund (NSITF) Act 1993, and the Insurance Act 2002.
Others are the Investment and Securities Act 1999; Federal Housing Authority (FHA) Act 1990; Securitisation Bill as well as Foreclosure Law Bills-Residential Mortgage Act and Residential Mortgages (Incentives) Act.
The mortgage bankers also mentioned difficulty in access to land title and documentation constraints as another major challenge, pointing out that cost of titling or title transfers, averaged over 15 per cent of the value of the property across the 36 states of the federation and the Federal Capital Territory (FCT).
Omotosho lamented that, “the cumbersome process of title documentation on land ownership, which is reinforced by an inadequate Cadastral System affects mortgage financing thereby making affordable housing very difficult. This has been seen as one of the factors responsible for slow disbursement of the funds under the National Housing Fund (NHF) scheme.
“Process of obtaining governor’s consent to mortgage is also very slow, cumbersome, unreliable, inefficient and very expensive.”
He also cited high interest rates on mortgage loans to borrowers, which ranged from 18-20 per cent per annum, low pricing/return to mortgage banks on lending due to fixed/negotiable interest rates and lending fee as well as poor infrastructure to support housing construction as clear impediments and challenges to affordability.
Nevertheless, MBAN was optimistic that with the coming of the Nigerian Mortgage Refinance Company (NMRC), there would be a huge leap in affordable housing and related activities in the country, through Public-Private-Partnership initiatives with the attendant multiplier effects.
Omotosho projected that from the existing portfolio of mortgages arising from the affordable housing programme, there will be growth from 20,000 to 200,000 in the next five years, with the delivery of over one million housing units per annum across the country.
He also added that at least three million direct and 500,000 indirect jobs will be created on annual basis, after the initial project period, while the contribution of the mortgage banking/housing finance sub-sector to the nation’s GDP would grow from the current 0.5 per cent to at least 5.0 per cent in the short run with the salutary effect on the economy.
Going forward, MBAN said it envisaged a period when the current bundled mortgage origination processes would be unbundled such that different market players would play their distinct roles from originating to closing of mortgage loans, “as this would enhance specialisation in housing finance, result in better due diligence in mortgage loan origination, less risk and subsequently, lower cost to the individual mortgage loan borrowers.”