PenCom, CBN, others partner to bridge N16trn housing deficit

Plans are underway to allow pension contributors access 25 per cent of savings in their respective Retirement Savings Accounts (RSAs) for mortgage finance. The new arrangement is to enable the federal government close over N16 trillion housing deficit in the country. Vice President Yemi Osinbajo had in November 2018 hinted that Nigeria’s present housing deficit stood at a staggering 20 million houses, which experts, said would require over N16 trillion to address.

To this end, insider sources in the pension industry revealed that the National Pension Commission (PenCom) is into talks with the Central Bank of Nigeria (CBN), mortgage firms, and other relevant stakeholders to fine-tune the current guidelines to regulate the initiative.

When the guidelines are released, they will facilitate access to home ownership by pension contributors as well as bridge the housing deficit in the country. Section 89 (2) of the Pension Reform Act (PRA) 2014 provides that a Pension Fund Administrator (PFA) may, subject to guidelines issued by PenCom, apply a percentage of pension fund assets in the Retirement Savings Account (RSA) towards the payment of equity contribution for residential mortgage by an RSA holder.

While this provision is already in the guidelines for the country’s pension scheme, the regulator is now working on the implementation by dialoguing with the relevant stakeholders. When the initiative starts, the intending beneficiaries are expected to make formal applications to their respective PFAs, while such contributors are only allowed to access a maximum of 25 per cent of the RSA balance as equity contribution for a mortgage loan. Moreover, it was reported that a contributor can only access this mortgage finance once in a lifetime. With such beneficiaries expected to be in active employment, either as a salaried employee or self-employed, the RSA holders too, according to findings, must have been contributing consistently for a minimum of 10 years, prior to the application for a draw-down.

The title to the property, according to the proposed guidelines, must be a fully perfected one and free from any encumbrances, while the property to be financed through pension fund must have a comprehensive insurance policy in the name of the borrower, to cover the replacement or reinstatement cost of the property. The insurance policy is expected to note the RSA Fund as one of the first loss payees, to cover the equity contribution released by the PFA. The mortgage loan amount is a minimum of N1.5 million and a maximum of N50 million with the tenor of the mortgage loan ranging between five and 20 years.

In an interview, the acting director-general of PenCom, Mrs. Aisha Dahir-Umar, confirmed that the commission was working on the guidelines to enhance the implementation of the initiative.

According to her, “the commission is currently working with the CBN and other stakeholders in the mortgage sector in developing appropriate guidelines. These guidelines are expected to be issued in 2019, and will allow RSA contributor to access and utilise part of his/her RSA balance towards equity contribution in respect to home-ownership mortgages.” This, she said, would boost the real estate market and equally contribute to the socio-economic development of the country.

Before now, the chairman, Petra Real Estate Investment Club, Mr. Emmanuel Oyewole, had said that the government was not doing enough to address the housing deficit in the country and that experts put Nigeria’s housing deficits at 17 million units. The figure has since surged as there has not been a corresponding increase in supply as the population increases.

“The situation is worse in the cities where demographic distribution averages 15 per cent for high income earners, 25 per cent for middle income earners and 60 per cent for the low income earners whereas the available trends in the provision of housing units, by both public and private organisations, are unfortunately, 70 per cent, 20 per cent and 10 per cent in favour of high, middle and low income earners respectively,“ he stated.

Osinbajo, who was represented by the permanent secretary, Political and Economic Affairs Office (OSGF), Gabriel Aduda, at a conference recently, charged the Federal Mortgage Bank of Nigeria (FMBN) to rise to the greater responsibility of seeking innovative ways to attract funding for housing provision, through Public-Private Partnerships (PPP) and partnership with relevant government and financial institutions.

He noted that the raising of long-term housing bonds and other specialised financial instruments would guarantee the provision of affordable housing for the public. He directed that these initiatives must be targeted at achieving the ultimate aim: more affordable houses for the greater numbers of Nigerians.

Credit: Leadership