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Private developers express interest in participating in Lagos State’s rent-to-own program
Real estate industry stakeholders have emphasized the importance of the Lagos State government promoting the engagement of private developers in its rent-to-own scheme to address the housing shortfall in Nigeria.
These sentiments were shared during the BusinessDay Property Investment Conference 2024, centered around ‘Navigating Real Estate Dynamics: Balancing Rural to Urban Migration Population Growth, and Economic Impacts,’ held on Thursday in Lagos.
“Rent-to-own initiatives, especially in well-populated areas like Lagos State, will enable migrants in the urban area to comfortably own a home within a specified period of time,” Shola Orunmuyiwa, group director, bureau of legal affairs at Adron Homes, said.
The rent-to-own initiative is one the ways buyers can access housing from the 19 housing schemes in Lagos State which have delivered 5,000 housing units, according to Moruf Akinderu-Fatai, commissioner for housing in the state.
Some of the houses were allocated at a discounted price of N3.5 million-N10 million to the low and middle-income groups, while attending to the yearnings of the high-income individuals as well, he said.
He said: “It is based on a 10-year monthly payment plan with a six percent interest rate; with an initial payment of 5 percent of the total cost, a resident who has met the minimal conditions will gain access to the homes.
“As the population in Lagos swells, so do the complexities of ensuring equitable access to affordable housing, basic amenities, and economic opportunities for all residents.”
According to data by the UN-Habitat, approximately 70 percent of the population in Lagos currently live in informal settlements or slums.
Orunmuyiwa highlighted some of the challenges facing real estate developers. “We have issues with ready land available, the high cost of building materials which is affecting a lot of developers right now, and then we look at the issue of project financing.”
Nigeria is currently battling with rising inflation, which quickened to 29.9 percent in January, eroding Nigerians’ spending power while increasing the cost of doing business.
The recent rate hike by the Central Bank of Nigeria to 22.75 percent from 18.75 percent has further made borrowing costlier for businesses.
Tola Akinsulire, chief commercial officer at Mixta, said that compared to big developers, small developers have a hard time getting financing.
“The biggest providers are the banks, but presently rates are over 20 percent. But we can come together as practitioners to make presentations to the government on how real estate is a significant catalyst to the economy,” he said.
Akinsulire said that as a group, developers can push for part of the cash reserve ratio (CRR) by banks to be used for house financing.
The CRR is a specified minimum fraction of the total deposits of customers which commercial banks have to hold as reserves either in cash or as deposits with the central bank. It is set by the central bank.
At the last MPC, the CRR was raised to 45 percent from 32.5 percent.
“Is it possible to push for banks to use part of the cash reserve ratio to provide capital for the real estate sector? This will enable us to access that capital to do what we want to do in the industry,” he said.
Akinsulire said the real estate sector needs to come together with solutions the government can implement instead of problems.
On implementing technology in the real estate sector, he said there are certain technologies that cannot be incorporated yet into housing development in Nigeria. “But also there are technological solutions like solar power currently being incorporated over generators by developers.”
“The way I see some of these innovative technologies, until we start producing locally, it’s going to be difficult implementing it on a mass scale due to the sustainability of such technology. But I also think that like the case of solar power, a large demand for it will enable local manufacturing of such products,” he said.
Kems Nzekwe, the president of the Nigerian Institute of Quantity Surveyors, emphasized the importance of support and cooperation among real estate developers.
“There are a lot of challenges facing real estate like the exchange rate. For developers, there is a need for more partnership. All hands must be on deck to make things more in the construction industry and then we can have affordable housing,” he said.
The Lagos State Government has said it would soon arrange a meeting with developers/owners of distressed buildings on how best to address the redesign and remodelling of such structures by November.
This was disclosed recently by the Commissioner for Physical Planning and Urban Development, Oluyinka Olumide, at a function in Alahusa, Lagos.
Olumide said the prevalence of distressed buildings in different parts of the state was worrisome and needed the urgent attention of all stakeholders.
He said, “The Ministry of Physical Planning and Urban Development as mandated by the Lagos State Urban and Regional Planning and Development Law, 2019, as amended, was willing to extend its responsibility for approving the remodelling of existing buildings to provide technical assistance to developers and owners of distressed buildings, especially on the design and remodelling of such buildings.
The Federal Government has instructed the contractors responsible for the 107km Enugu-Onitsha road dualization to expedite the project.
This directive was given by the Minister of Works, Senator David Umahi, during a meeting with MTN, the Enugu State Government, and the contractors, RCC Ltd and Nigercat Ltd, on Friday.
According to a statement released on Friday, the minister said he is disappointed over the slow pace of work on the project, he said, “Let me express my disappointment over the slow pace of work on that project. It is one of the worst roads in this country.
“Everywhere we have diversion; diverting from the one that RCC and Nigercat had completed, the contractors are not kind enough to even put stone based on the diversion points.”
He added, “So, by the reason of the launching of our Operation Free our Roads, it is now a violation of the policy on the side of the controllers and directors of the Federal Ministry of Works where we have vehicles falling on any project that is ongoing or where there are potholes on our roads.”
He also blamed the sufferings of road users on the lack of commitment and insensitivity of the contractors.
“The public must know that the President’s intention is not for them to suffer while trying to fix the roads, and it is their right to insist that contractors should fix the roads that they are engaged on,” he said.
The Minister commended the Enugu state government for their resolve to fund the construction of a 20 KM section of the road and expressed hope that MTN would execute the second phase of the project.
He noted, “Why the Enugu State government is intervening is because of the slow pace of work by the contractors and because of funding issues. The essence of tax credit is for funds to be made available. And so, I don’t see RCC going to keep their promise to finish this project in 6 months.
“My advice to MTN is to look for another contractor within that axis if they want to get the job done. Division of labour is even the best. While they are doing the road, and if Nigercat is doing a good job, you can give them greater scope to do if you want to finish that job.”
He warned contractors that the Federal Government would not accept phased handovers of projects and has phased out Variation of Price in contract administration.
The Ekiti State government has intervened to resolve a longstanding land dispute between the Elepe of Epe-Ekiti, Oba Ayodele Adesoye, and the Atolagbe family. The government cautioned against the misuse of modernization as an excuse to disregard traditional customs.
In line with the community’s traditions, the government has ordered the release of resources, including palm trees at Oko Oba Farmland, to Oba Adesoye for his administration. This decision ensures the continued adherence to age-old practices.
Ekiti State Deputy Governor, Chief (Mrs) Monisade Afuye, announced the resolution in Ado-Ekiti. The decision was made after considering the Elepe’s claim to Oko Oba Farmland based on historical evidence.
Mrs. Afuye acknowledged the Elepe’s right to be the custodian of Oko Oba Farmland, citing longstanding traditions that support his claim. The decision reflects the importance of respecting historical practices and ensuring their preservation.
The deputy governor, however, told the monarch in clear terms that other princes and princesses from all the three ruling houses should be allowed to farm on the land without payment of royalty.
Mrs Afuye appealed to the community to comply with the government’s position to restore unity, peace and orderliness to the beleaguered community.
Oba Adesoye expressed gratitude for the government’s decision and pledged to foster peace and unity between the throne and the community, aiming to accelerate Epe’s development.
Representing the Atolagbe family, Dr. Yemi Agbeleoba acknowledged their willingness to cede Oko Oba Farmland to the monarch. However, he emphasized the need for all three ruling houses to participate for a lasting and traditional solution.
Agbeleoba expressed appreciation for the government’s directive, believing it will contribute to resolving the long-standing conflict.
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