Maduka Nweke
Great opportunities abound in the social housing sector of the economy but successive governments in the country have not been able to utilise these opportunities to the benefits of the public.
The social housing sector has all the hallmarks of a sector that will see increasing challenge over the next few years.
Recent industry debate has focused on the need for, and means to deliver, accelerated levels of consolidation through various activities. The need for social housing stock has never been greater, but there will inevitably be winners and losers as the sector works through its issues.
Social housing is an umbrella term used to refer to rental housing which may be owned and managed by the state, by non-profit organisations, or by a combination of the two, usually with the aim of making it affordable.
Social housing may also be referred to as a public housing which may be a form of housing tenure in which the property is owned by a government authority, be it federal, state or local government authority.
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When you talk about social housing for the masses, the words that come to mind are cheap, affordable, non-profit driven, mass produced houses that could be occupied by low income earners, who may wish to save towards eventually buying such houses over time.
Generally, social housing deals with housing solutions that are priced and financed in a way that would ensure low-income occupants could satisfy their other basic needs.
Even though the scarcity of affordable housing affects all segments of the society, it is notably low-income earners who are most affected. The way and manner government build estates does not show that the poor masses are borne in mind.
The property market ought to service the low income earners in the society. The Nigerian urban housing market primarily targets high income earners and thus leaves large parts of the Nigerian population excluded from formal housing provision.
In general, low-income households face a number of barriers such as weak individual purchasing power; lack of access to housing finance; unavailable complementary goods, such as land and infrastructure; and insufficient housing supply required to meet the actual demand of the urban poor.
Executive teams, boards and their lenders need to be proactive in assessing the impact of recent policy changes and their options and response to them.
With the range of stakeholders and the clear public policy interest, it is likely to take significant time and effort to deliver credible solutions for those providers with the most challenged business models.
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Social Housing, in its various forms, has been an increasingly important part of the UK provision since the boom in house building following the end of the Second World War.
There are a variety of private, public and charitable enterprises that build, manage and maintain housing stock, with standards and rent levels subject to a high degree of regulation.
As of September 2015, there were 1,783 Registered Providers (RPs) of social housing who were registered with the Homes and Communities Agency (HCA), the sector regulator. The sector supplied some 2.7m homes in England, representing an increase of 1.5 per cent on the previous year.
Much of the growth in the sector was attributed to the increase in Affordable Rent Stock to a new high of 123,000 units (Source: BBC, April 2015).
The creation and provision of social housing is towards ensuring housing affordability. Affordable housing is therefore defined as housing which costs no more than 30 percent of the income of the occupant household. This is the generally accepted definition of housing affordability.
Frankly speaking, Nigeria’s housing problem is derived from a historical lack of focus on housing development.
Over the years, the country has not been able to develop a viable and sustained housing finance system either because of lack of expertise, up to date and knowledgeable industry leaders especially in the policy making arms, lack of funding for relevant institutional agencies/department, political and selfish gains. Housing plays a special role in the social, political but more importantly economic dialogue in most societies.
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Housing has been known to be a major component of creating stable and healthy communities and it is often the largest single category of household expense. For housing to be successful, a country like Nigeria needs to have a stable macroeconomic environment. Moderate to high inflation rates and nominal interest rates as witnessed in Nigeria are typical features of volatile economies.
These features have strong effects of reducing the affordability of mortgages. A volatile economy also affects the supply of funds and the types of mortgages offered by lenders. In such an environment, lenders are concerned about liquidity risk and are reluctant to offer long term loans.
The solution to this, then, becomes government’s strong institutional intervention in terms of favourable policy drafting and implementation.
The coming on board of the Nigerian Mortgage Refinance Company (NMRC), is a commendable step towards scratching the surface of this challenge. This is despite the fact that the NMRC is dragging the feet in most of the roles it should take.
Another distinguishing characteristic of housing finance is the ability to mortgage the property to secure the loan. This means that the land laws and processes (title registration, foreclosure laws, etc.) have to be put in place to allow enforceability.
An accurate and comprehensive land registration system is a necessary condition for effective property rights. This is largely absent in Nigeria. However, it is important to mention that a few states have begun to address this problem through the setting up of several land registries at the
state level.
It is pertinent that the states are encouraged to get these initiatives to a cruising altitude. At the Federal Mortgage Bank of Nigeria (FMBN), tireless efforts are being made to also contribute to solving this problem through the bank’s centralised repository land and assets registry system.
At the Federal level, creating or sponsoring a Mortgage Electronic Registration System as is done in the United States and other emerging markets will also help to increase the ability to mortgage properties.
Social housing delivery is therefore housing delivery that not only provide good quality and affordable housing, but allocates its benefit equitably between the rich and the poor. It also regenerates the environment rather than destroying it.
Also, it empowers the poor to have access to decent homes at affordable cost rather than mitigating or excluding them. In sum, it can be described as housing delivery system which gives priority to the disadvantaged groups, enlarging their housing choice and opportunities and giving
them a say in decisions that affect their housing needs and lives (Agbola and Alabi, 2000).
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