Pros and Cons of Joining a Housing Cooperative Society In Nigeria

The system of owning a house through a housing cooperative society in Nigeria has its own perks and advantages on a good day, but it also has its disadvantages.

Right now, one of the surest routes to owning a home in Nigeria is to go the cooperative society way.

However, it is one that is less traveled by many, despite having been around for a long time. Personally, i think the reason for this is because not a lot of people are aware of the benefits inherent in the system, and that is exactly what we would be talking about today.

But before we proceed into what the likely benefits of this system are, I would like to break down what an housing cooperative society in Nigeria really entails.

Housing Cooperative Society In Nigeria – The Breakdown

A housing cooperative is a type of cooperative whose social objective is to provide its members with housing,  premises and other real estate, acquire land to build and urbanize the acquired land for habitation.

The ultimate objective is to help members buy land, own a house or an apartment, invest profitably in real estate and other opportunities.

In the last five decades or so, the unbridled increase in housing deficiency across the country has led to the emergence of housing cooperative societies in Nigeria, although they still represent a low percentage from the point of view of the cooperative movement.

Worried by the huge housing deficit in the country, which is about 17 million, few cooperative societies are now taking the lead in mobilising resources to tackle accommodation challenges while creating wealth through real estate investment.

Although, cooperative society in Nigeria is nothing new as it has being existing five decades before now. What is however, new is the reawakening among citizens to use the model for home ownership and wealth creation.

So until the economy is fully back on its feet and the low/middle income earner can live comfortably well, the housing cooperative society may continue to be an interesting formula for the average Nigerian to be a landlord.

Since the inauguration of Cooperative Villa, Badore, CHOIS Estates in Abijo and Agbowa in Ikorodu, there has been a rebirth of cooperative housing models among civil servants, police, Armed Forces and private corporations to meet accommodation needs of members.

It is no longer news that only two per cent of Nigerians are investing in real estate, while the remaining 98 per cent either lack the financial capacity or knowledge to take advantage of benefits that real estate sector has for the economy.

Keying into this opportunity, a number a reputable cooperative society in Nigeria, notably BERSAMA Multipurpose Society and Prime Asset Cooperative, are currently taking the lead to explore the model for accommodation needs of its members and general public.

Those two come highly recommended.

Advantages and guarantees of housing cooperatives.

• A primary advantage of a cooperative society in Nigeria is the pooling of the members’ resources so that their buying power is leveraged, thus lowering the cost per member in all the services and products associated with owning a home.
• Another is that each shareholder (member) in the entity is granted the right to enjoy dividends from joint investments, have access to affordable landed properties, apply for loans for their building projects among other benefits.
• It is easy to join. The co-op is membership-based, with membership granted by way of a share purchase (initial membership fee) in the cooperative.
• Availability of loans at low rate of interest to either purchase a land, house or possibly develop a land or make renovations to procured buildings.
• It helps you cultivate a good savings and investment habit, that is the hallmark of wealthy people.
• Investments are secured. Because it is jointly owned, there is an elected board of directors that must approve each potential member.This is an essential part of the co-op’s governing, for the benefit of the people who are already members and share ownership. The approval procedure requires close scrutiny of every applicant.Cooperatives want to be sure that the people who come to join as shareholders are responsible people that can meet up with their financial obligations and would not default on debts.

Disadvantages.

• If one of the member defaults on any of the payments, whether it is the co-op maintenance, taxes, loan repayment or contributions, the other co-owners are also affected. However, since a strict check & balance method is being employed, this occurrences rarely happen.
• There a dubious cooperatives out there, so there is a need to be careful and carry out your personal investigations well before committing.Do your homework on the available cooperatives offering ‘amazing’ opportunities because some are really not well positioned to deliver on their promises.This could be for reasons of bad, fraudulent and/or ignorance leadership, lack of an expert in the real estate field able to assist them in their project.

Precautions to be taken

1.  It is important to ensure that the cooperative society you’re looking to join is duly registered at the Corporate  Affairs Commission C.A.C and other relevant authorities.
2. Also obtain information on the following aspects:

   -ownership of the land or estate they claim to own.

   -the structure of the cooperative,

   -the amount of the necessary financial contribution.

   -possible withdrawals and interest rates.

3. But above all, it is fundamental to analyse the bylaws of the cooperative.  Bylaws are the written rules guiding the conduct of the members once they are part of the organization and it defines the rights and obligations between participants, among other aspects.

In closing, i would like to say that many shy away from procuring properties because they lack the right knowledge or connection needed to get good and valued properties in exchange for their money.

The housing cooperative society system in Nigeria is however set up in a way that offers access to both of strategic these resources.

It is therefore safe and recommended to procure a land, building or the like through a cooperative society.

Do not forget to check out the two cooperative houses i mentioned earlier (BERSAMA and Prime Asset Cooperative).

Like i said, they come highly recommended, with a proven track record and trustworthiness. You can check them out and your own homework on them too.