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Stakeholders blame soaring prices of building materials on high cost of accommodation nationwide – NAN survey


Abuja, Dec. 21, 2014 (NAN) Stakeholders in the housing sector have blamed the soaring prices of locally-produced and imported building materials on the high cost of accommodation in major cities nationwide.
They told the News Agency of Nigeria (NAN) in separate interviews that the instability in the price of building materials was responsible for the high cost of accommodation in the country.
The stakeholders, including professionals in the housing sector and estate developers, urged the Federal Government to provide tax relief for local manufacturers and importers of building materials in order to reduce the high cost of accommodation in major cities.
Mr Ayo Adejumo, Executive Secretary, Association of Town Planning Consultants of Nigeria (ATOPCON), said Nigerians would continue to pay more for accommodation in major cities until the cost of building materials was subsidised through tax holiday.
According to him, if the government can grant tax holiday to the producers of building materials, it will go a long way in reducing the cost of building houses in the country.
Adejumo also urged government to provide enabling environment for the private estate developers to strive by providing them with proper incentives, credits and mortgages.
Mr Danjuma Abalaka, the Publicity Secretary of the Nigerian Institute of Building, however, attributed the ugly trend to lack of effective legislation guiding activities in the housing sector.
Abalaka said the non-passage of the Building Code by the National Assembly had made it difficult for effective regulation of the activities of operators in the housing sector.
“The institute has a bill on building code, which has been at the National Assembly for so long.
“If the bill can be passed, it will help to regulate and monitor the activities of both professionals and private developers.
“So, it is when this law is in place that the issue of high rent can be checked.
“NIOB has been tasking government to industrialise the country so that the cost of most of the building materials will be affordable. The Ajaokuta Steel Company is still lying fallow after so many years.
“High cost of building materials and reinforcements is another problem confronting people who plan to build their own houses.
“If the government can revitalise our industrial base, the cost of building materials will come down and many people would be able to build their own houses.”
Abalaka also explained that many completed housing estates remained unoccupied because of the high rent attached to them as against the meagre income of the average Nigerian worker.
He said that an average Nigerian worker must contend with the lack of access to affordable land and mortgage facilities.
“The inaccessibility of land has been a major hindrance to Nigerians having their own houses. In Abuja, the cost of buying a land is much more than building a house.
“Civil servants cannot afford the houses due to their meagre earnings. It is also difficult for them to access mortgage loans.
“The high cost of rent makes it difficult for people to purchase these houses. The percentage of workers that can access mortgage is very appalling.”
Abalaka stressed the need for the government to evolve a clear housing policy to regulate the activities of private estate developers in the country.
Mr Gandu Zakari, a Quantity Surveyor, attributed the high cost of rent and phenomenon of unoccupied estates to corrupt tendencies of some Nigerians.
“Some people embezzle money and due to the Central Bank Cash Transaction limit policy, it makes it impossible to lodge certain amount of money without drawing attention.
“So, they invest in property with pseudo names with no plans to rent or make the rents unaffordable.
Zakari suggested the introduction Property Tax, whereby anyone who has more than two houses would be made to pay higher tax on such properties.
‘’This will help to check the rate at which people acquire property greedily,’’ he said.
He further suggested that unoccupied housing estates whose ownerships could not be properly ascertained should be confiscated by the government and auctioned.
“Some people acquire properties they do not even need. It is just sheer greed,’’ he said.
Mr Emmanuel Okafor, a civil servant, expressed sadness about the whole situation.
“I do not think the government has the civil servants in their plan for housing; if they do, the process of acquiring housing loans should be made more civil service-friendly, since they know how much they pay us,’’ he said.
Mr Kashim Ali, the President, Council for the Regulation of Engineering in Nigeria (COREN), however, urged the Federal Capital Territory Administration to fast-track the development of infrastructure in the satellites towns to check the high cost of accommodation in the nation’s capital.
He attributed the prohibitive cost of rented accommodation in the FCT to the high cost of land and building materials.
Ali said that massive development of the satellites towns would provide the people access to buy land to build their own houses.
“In Abuja, there should be more efforts in the development of satellite towns. Government should embark on massive development of infrastructure in the satellite towns.
“That way, people will have access to land and people can easily buy plots of land to build their own houses.
“That way, the pressure on the city centre would reduce and crash rent charges.’’
He noted that most completed housing estates in Abuja were unoccupied because of the high rent demanded by the estate developers whose aim was to earn more profits from their investments.
“Some of these houses are built using bank loans. So, the owners want to pay their debt and in the process overcharge.
“They charge high rent in order to make profit from their investments. Many people cannot afford to pay the high rent, so the estates are unoccupied.
“People would not take such houses but would rather go to the outskirts of the city for similar houses that are affordable and a bit cheaper.
“The cost of construction is pretty high. The investment in the cost of land and materials translates into high rent.
“Having spent so much money in building houses, the owners expect high returns hence the high rent charges.
“Because of the level of investment they have made in the buildings, owners cannot just give them out for paltry sums, especially within the city centre,” Ali said.
The COREN president, therefore, called for adequate funding and effective monitoring of mortgage financing institutions to ensure that their services are accessible to more Nigerians.
Prof. Timothy Nubi of the Department of Estate Management, University of Lagos, suggested the overhaul of the land registration system to facilitate housing development and enhance wealth generation.
Nubi said that efficient land registration system would enhance wealth generation, provide more housing accommodation and create investment opportunities.
According to him, computerisation was essential to have an efficient land registration system.
“A good land registration system will create land markets and enhance access to credit facilities, thus eradicating poverty.
“It will open up the property market for more local and foreign investors alike,” he said.
Nubi said that the system should incorporate global best practices to improve the process of procuring land titles and documentation.
According to him, many operators and companies had left the property industry due to the difficulties encountered in the country’s land registration system.
NAN reports that the existing land use law (The Land Use Act of 1978) empowers only the governor of a state the sole right to give assent to land titles.
“Duplication of work; lack of consensus decision making process with professionals; lack of public awareness and transparency have all combined with the weak rule of law to create a basis for corruption.
“These factors are enough reasons to call for complete overhaul of land administration system in Nigeria,’’ Nubi said.
The don suggested that government should educate the general public on land policy, individual responsibility, and right of ownership.
“Government should stimulate people’s interest in land title registration and conversion of customary titles to statutory right of occupancy at minimal cost.
“By the time a civil servant pays 60 per cent of his income on house, it definitely affects his general well being.
“The United Nations (UN) standard is that nobody should pay more than 30 per cent of his income on rent.
“By the time you pay more than 30 per cent it means that the houses are not affordable. UN believes that if you pay 30 per cent on rent then you have the other 70 per cent to meet your needs but in Nigeria the reverse is the case.
“You cannot do other things, your basic needs can never be met, that is why the UN says 30 per cent is the threshold of what is affordable.’’
Mr Lewis Ladipo, Chairman, Nigerian Institute of Architects (NIA), Lagos branch, identified policy inconsistency as the bane of development in the housing sector in Nigeria.
“An administration that formulates a housing policy never accomplishes it,’’ he said.
According to him, the housing sector has been known for contributing to the economic renaissance of many countries.
“Unfortunately, in Nigeria, we have been experiencing governments that never accomplished what they set out to achieve.
“Policy inconsistency is unhealthy for the growth of any country’s housing sector,” he said.
Ladipo advised the Federal Government to adopt strategies that developed nations had used to optimally provide accommodation for their citizens.
“Promoting security of tenure is a prerequisite for sustainable improvement in housing and environmental conditions.
“The federal government and local authorities should design, adopt and implement pro-poor city development strategies and ensure sufficient availability of land for housing development.”
He urged the Federal Government to pool resources together to overcome the challenges confronting its housing sector.
However, Mr Makinde Ogunleye, a former Chairman, Nigerian Institute of Town Planners (NITP), stressed the need for stakeholders to support the federal governments’ efforts to provide affordable housing for Nigerians.
Ogunleye said that partnership between public and private sectors would not only guarantee availability of housing finance but would also enhance speedy housing delivery.
He said that the mortgage sector should be looked at as a value chain for the success of the partnership.
According to him, production of the building materials, creating enabling environment in the area of titling as well as ensuring vibrant primary mortgage market have to go hand-in-hand.
Ogunleye said that there would be no secondary mortgage market without a vibrant primary mortgage market.
He said that mortgage banks were facing challenges of how to design flexible products for potential house owners to help them achieve their goals of home ownership.
“The mortgage banks need to put in place appropriate products as well as build adequate information infrastructure to be able to deliver effective mortgage banking.
“There is also the need to have the right people in terms of training and capacity in the development of the mortgage industry,” he said.
In Lagos, Mr Chuks Omeife, the immediate past President of the Nigerian Institute of Building (NIOB), described the housing situation as ‘’very, very uncomfortable”.
“This is giving the fact that the state is overpopulated with serious deficit in housing stock.
“The challenge, however, is that the rate of housing production and the rate of population growth is opposite. While population is growing at geometrical rate, housing provision is far below expectation.
“The private sector that would have filled the gap is not producing houses that are within the reach of an average Nigerian.
“The houses obviously are grossly inadequate in all respects, including not being enough for civil servants due to the continuous growing population arising from the influx of Nigerians looking for greener pasture in Lagos.
“The measures currently put in place are far cry from what is expected. The major cause of the high cost of accommodation in Lagos is, therefore, attributable to the high deficit in housing stock in the state.’’
Omeife blamed the ugly trend on the absence of effective mortgage system, adding that ‘’this is one of the major challenges Nigerians have faced for a long time trying to acquire houses.
“It is very unfortunate that mortgage industry in the country has been haphazard and this has contributed to the problem.
“In other climes, people do not have to buy a house by cash-and-carry, mortgage is always available where individuals can purchase a house and pay over a long period.
“This is what is missing here. The recent Mortgage Refinance Company set up by the Federal Government is an initiative in the right direction and it is hoped that if this fully comes on board it will provide a relief for Nigerians in an attempt to access housing provision.
“It is expected that with the level of work done by government in the housing sector giving the various housing initiatives and partnership delivery platforms, Nigerians might start witnessing a boom in the housing sector,’’ he said.
But Mr Yakubu Garba, the Chairman, Nigerian Society of Engineers, Abuja chapter, has attributed the high cost of accommodation in the FCT to insecurity in parts of the country which resulted in the influx of many people into the city.
He said that the issue of insecurity in several parts of the country had compelled many people to abandon their erstwhile places of abode for the FCT, which they perceived to be safer.
“People feel safe in Abuja. This attracts large population coming into the city, thereby causing the high rate of tenancy in Abuja.
“But there are some people who, no matter the economic situation in their place, will still choose to remain there so long as they are safe.
“But if your place is not safe, nobody wants to die. Nobody wants to stay where he is not secure. People will surely move to where there is security.
“The activities of government are happening in the centre because in the states, many people do not have the hope of making it.
“Everybody thinks that when he comes to Abuja, this is where he can get something. So, the high rent is the effect of demand and supply.
“There is high demand for housing here in Abuja because there is a huge influx of people into the city.
“Anytime we have election, new members of the National Assembly would buy houses to accommodate their personal aides and families in Abuja.
“New set of Ministers would be appointed. New set of MDs and DGs of parastatals would be appointed. Some of them may be staying outside Abuja before the appointment. This demand jacks up rent.’’
Garba urged the Federal Government to embark on massive establishment of centres of economic activities across the states and zones, to discourage people from moving to Abuja.
“Let there be government activities spread across the nation everywhere. If we cannot do for each state, let the government initiate projects in each zone.
“That will attract people to go and make a living from those places. That is when the centre (Abuja) would be relieved of this onslaught; but in as much as it remains this way, the tenancy rate would continue to rise.’’
He also advised the government to commence the dredging of River Niger to provide environment conducive for economic activities to spring up in Lokoja and the neighbouring states.
“That would decongest Abuja because the issue of freight loading and off-loading and clearing and forwarding would attract people and make Abuja no more attractive.
“So, the government should start looking at the potential in every zone; establish some economic activities that would attract people and when demand for housing drops in Abuja, rent will go down.”
He said that Nigerians should be empowered economically to own their houses, adding that it would be impossible for the government alone to address the housing deficit by directly building houses for the people.
In Port Harcourt, Dr Victor Obinna, a senior lecturer at the Rivers State University of Science and Technology, said that there were no concrete measures in place to ease the difficulties in providing affordable housing.
“Delay in the issuance of titles and Certificate of Occupancy, minimal access to credit for private developers and failure of government to regulate rent also cause high rent,” he said.
Obinna said most of the unoccupied housing estates were privately built and the rent could not be within the reach of the poor class.
“There is no regulatory mechanism to compel private developers to rent out their houses within a given period because it is not within the purview of government,” he said.
Obinna said that most of the private developers were not abreast with the federal government policy on affordable housing which had contributed to the high cost of accommodation in major cities.
“Housing is one of the basic needs of life as good housing leads to higher productivity and self esteem, if you are well housed, you have better health,” he said.
Obinna observes that there were lots of conditions that poor people could not meet in accessing the mortgage finance funds which were also insufficient in the face of increasing demand.
He said the National Housing Fund (NHF) Act of 1992 that was designed to generate funds for channeling into the mortgage institutions had not worked very well.
Meanwhile, some residents of Port Harcourt said that the high cost of accommodation in the ‘garden city’ had deepened poverty in the state.
They said in separate interviews with NAN that if the ugly situation was not urgently addressed, some of them might be forced to relocate from the city.
NAN investigation showed that rent for one room “self-contained” apartment cost between N150, 000 and N200, 000 per annum, while a one-bedroom flat cost N250, 000 to N350, 000 per annum, depending on the location in the oil city.
Similarly, a two-bedroom flat goes for between N400, 000 and N650, 000 per annum, while a three-bedroom flat and four-bedroom bungalow cost between N800, 000 and N1.3 million per annum, respectively.
Mrs Precious Lloyd, a civil servant in Port Harcourt, said that rent in the city was fast getting out of reach of civil servants, stressing that it was now difficult for an average civil servant to live in good apartments.
She called on government to evolve policies that would control house rents and other issues associated with housing.
“Government should also have a mutual understanding with landlords to enable them collect one year rent for new tenants instead of the two-year rent that is attainable here,” she said.
In Kano, civil servants blamed the high cost of rent on the failure of the state government to regulate the activities of estate agents who deliberately jacked up the prices of rented accommodation.
“You will be surprised to know that most landlords or property owners prefer to deal with tenants through agents or touts instead of dealing with them directly.
“Such agents when they rent you a house, they have to collect administrative charges from the tenants in addition to receiving a certain per cent on total rent.
“All these if put together will lead to high cost of accommodation,’’ Alhaji Musa Abdullahi, a civil servant, said.
Some of the civil servants, however, blamed the high cost of accommodation in the country on the failure of the three tiers of government to come up with a sustainable housing policy.
According to them, the only solution to the problem is for the government at all levels to embark on massive construction of housing estates for low and middle level income earners in the country.
Malam Abdu Mahmud, a resident, said if the federal, state and local governments could embark on massive construction of houses for low and middle income workers, it would go a long way in reducing the high cost of accommodation.
To provide sustainable solution to the problem, Mrs Akon Eyakenyi, the Minister of Lands, Housing and Urban Development, however, appealed to state governments to make plots of land available for the Federal Government’s mass housing project for Nigerian workers.
She made the call at the inauguration of the 100,000 Nationwide Workers’ Housing Scheme in Abuja.
“Evidently the support of the private sector is essential to shore up the level of investment required to meet the enormous demand for housing and provision of infrastructure, which is beyond the scope of government alone.
“Because of our firm commitment to better manage our rapidly expanding cities and our acknowledgement of housing as not only one of man’s basic needs but as a fundamental element required for the rapid growth of the economy.
“ I wish to seize this medium to appeal to all the 36 state governments to make suitable an un-encumbered land available for the expansion of this worthy scheme for the benefit of Nigerian workers nationwide,“ Eyakenyi said.
Eyakenyi said the government was working out modalities to reduce the housing deficit in the country to promote access to home ownership and affordability by giving free lands to developers.
She, therefore, urged state governments to do the same as it would help reduce the cost of houses while increasing the rate of construction of more houses to alleviate the plight of low income earners.
She commended the FCT Administration (FCTA) for providing land for the take-off of the initial 20,000 units of various types to be built and the two workers’ unions for their concerns for Nigerian workers.
The minister said the funding for the first phase of the scheme in Apo, FCT, was provided by the Federal Mortgage Bank of Nigeria through its national housing scheme.
According to her, the scheme is a veritable source for long-term financing mechanism for affordable home ownership, which calls for further strengthening and re-capitalisation of the bank to enable it to perform its function.
The Minister of FCT, Sen. Bala Mohammed, who spoke at the occasion, said the land swap initiative of the FCTA was to leverage on Public Private Partnership to provide housing for FCT residents.
Mohammed said FCTA intended to develop 15 new districts to provide housing for one million residents, create 500,000 new jobs, and reduce housing deficit in Abuja.
“It will also encourage capital inflow of above one trillion naira in the next five years; this will provide 22,000 houses for low income earners in the FCT.
“With the Goodluck Jonathan and the Sen. Bala Mohammed estates, there will be more houses.’’
The FCT minister added that 1,000 hectares of land had been made available to the Ministry of Lands to provide social and affordable housing for Abuja residents.
The President of the Nigerian Labour Congress, Mr Abdulwaheed Omar, and his Trade Union Congress counterpart, Mr Bala Kaigama, lauded the federal government for the initiative, saying that when fully delivered, it would alleviate the plight of Nigerian workers.
They appealed to President Jonathan to ensure that the percentage of the initial deposit for the houses was reduced from 30 per cent to 10 per cent so that workers could afford the houses.
Owelle Nicholas Ukachukwu, the Chairman, Good Homes Development Co ltd., an estate developer, said the first phase of the project would be completed in May 2015.
Ukachukwu said the project would provide jobs for 10 million Nigerians and that it would be of standard quality.
NAN reports that 100,000 housing units are expected to be built for workers nationwide with Abuja accounting for 22,000 units. (NAN)

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