Five states of the federation are expected to conclude the passage of their draft housing bills into law before the end of year.
Findings by our correspondent show that Ogun, Osun, Kebbi, Plateau and Edo states are at various stages of passing the law, which is expected to improve access to mortgage and homeownership for their residents.
The governors of Ogun and Osun states have presented draft housing law to their Houses of Assembly for review and passage while in Kebbi and Plateau, the draft bill has been presented to the Executives for review.
In Edo State, it was gathered that a joint working committee has been set up to finalise a draft bill and present it to the governor through the Ministry of Justice for approval.
The housing law comes under the Model Mortgage Foreclosure Law, an initiative of the Nigerian Mortgage Refinance Company, which calls for the creation of a state mortgage board as a single window clearance mechanism to facilitate accessible and affordable mortgages for residents of the state.
The initiative also seeks to promote legislative reforms to improve processes in land administration towards creating an enabling environment for mortgage origination; reduce the time stretch it takes to issue Certificates of Occupancy by delegating top government officials to sign the governor’s consent rather than the governor alone; and make land and property ownership transfer easy, among other benefits.
A team of six Senior Advocates of Nigeria was mandated to develop the draft MMFL, to address the multiplicity of laws governing mortgages in different states as well as difficulties and delays in perfection of mortgages due to consent requirements of the Land Use Act 1978.
It was gathered that the adoption of the law would lead also to increase in taxable income to the states as well as improvements in the internally generated revenue profile.
Newsmen reported last year that in addition to Lagos and Kaduna states which had enacted their own mortgage model laws, and had worked on their property rights and land digitisation, 11 other states had shown interest in the initiative and were at various stages of implementation.
Mortgage plays an important role in homeownership in other developed countries but the reverse had been the case in Nigeria, where the processes, as well as the interest rate, impede the growth of the industry.
Both the mortgage foreclosure law and the NMRC are initiatives under the Nigeria Housing Finance Programme of the Central Bank of Nigeria.
The CBN is implementing the NHFP, an initiative of the Federal Government, supported by the World Bank with an International Development Association loan of $300m secured in 2014.
Deputy Director and Head, Project Administration Team, Nigeria Housing Finance Programme of the CBN, Mr Adedeji Adesemoye, told our correspondent that the constraints to homeownership in the country, showed that there was a need to develop resilient and affordable housing finance markets that would be accessible to the lower and informal income and middle-income households.
According to him, this requires managing risks, regulating the lending industry, as well as implementing targeted and responsible policy interventions.
He said, “A buoyant housing sector is an indication of a strong programme of national investment and is key to future economic growth of a nation. Therefore, the total housing delivery is a major factor in a nations’ Gross Domestic Product and reflects the state of a nation.
“According to the 2018 report for Centre for Affordable Housing Finance in Africa, housing production in Nigeria is at approximately 100,000 units per year and this is insufficient because at least 1,000,000 units are required yearly to bridge the 17 to 20 million housing deficit by government’s target date of 2033 if the population continues at its annual growth rate of 3.5 per cent.
“The Land Use Act is part of the constitution and is cumbersome but in areas that affect mortgage finance, the CBN cannot fold its arms.”
Adesemoye said the law when adopted, would serve as a paradigm shift from supply-driven housing development to demand-driven where developers would not be building without having demand for their products.
“Currently, developers are building but not looking at effective demand; so, we have buildings on the ground that are not in demand; there is a disconnect between demand and supply. And then the banks will be suffering because of the loan taken for the development. But the new structure will enable homeowners to decide what they want according to their income and go for it,” he added.
The Chief Executive Officer, Trustbond Mortgage Bank Plc and President, Mortgage Banking Association of Nigeria, Mr. Niyi Akinlusi, said a lot of progress had been made in Lagos and Kaduna states where the law had been signed and adopted.
He explained that a lot of initiatives had been created recently in the mortgage industry to make it more attractive and accessible.
“There are a lot of things that still need to be done, but a lot is being done now and we are making progress. It has been slow but steady,” he said.
Akinlusi stated that parts of efforts to derisk the mortgage market included the CBN working with other stakeholders such as MBAN, NMRC and the Federal Mortgage Bank of Nigeria to create underwriting standards for people in formal employment.
He said, “But we also know that the market does not comprise only those in formal employment, a lot of Nigerians are self-employed, and constitute a large part of the society but because of the instability in their income, they cannot get access to mortgage. The CBN working with other stakeholders came up with underwriting standards to capture them.
“Thirdly, there are people in the country, who by virtue of their faith will not accept mortgage because of the interest, so there is also an underwriting standard for non-interest housing finance. All of these make it a lot easier to dimension and evaluate the risks in the mortgage market.”
The Deputy President, Real Estate Developers Association, Mr. Akintoye Adeoye, described the mortgage foreclosure law as one of the fundamental laws that would drive mortgage as it should be across the country when adopted.
According to him, it will create an impetus for the stakeholders to do more to propel growth in the real estate industry.
“When the lender is sure to repossess a property after a loan default by the mortgagee without having to be in court for too long, the industry will attract more funding,” he added.