Nigerians may start paying property rent on a monthly basis going by the latest resolution between the federal and state governments on the matter.
The clamour for the monthly payment of rent by clients in the housing sector received attention at the recently concluded sixth meeting of the National Council on Lands, Housing and Urban Development.
The council is the highest gathering of senior officials from the federal and state governments, as well as stakeholders and experts in the built industry.
At the meeting of permanent secretaries during the council, senior government officials from the 36 states and Federal Capital Territory, as well as those from the Federal Ministry of Power, Works and Housing (Works/Housing sector) agreed to enact a law that would allow monthly rental payments across the country.
In a 52-page report on the meeting of permanent secretaries at the sixth NCLHUD, which was obtained by our correspondent from the FMPWH in Abuja, the officials also resolved that the law would be enforced, as they noted that its enforcement would enhance access to housing finance.
The Minister of Power, Works and Housing, Babatunde Fashola, recently charged property developers to reduce their rents and the value of properties in consideration of the economic hardship across the country.
He advised them to work out ways of tackling the problem of high house rents and advance payments, particularly in major cities across the country.
Fashola had said, “Let me just ask you a question since everybody is here. Is there nothing that we can do in this country about this practice of demanding rent for two, three years in advance from people who get their salaries monthly in arrears? Is there nothing that can be done? We can’t continue like this.”
The minister, while buttressing his argument, insisted that operators in the sector must question the practice, stressing that the increase in the cost of other commodities could also be as a result of high rents being charged by developers and landlords.
He said, “We must first of all question the practice, look at its strengths and weaknesses and its damage to the entire economy. For instance, as a minister, my salary is N900,000; so, when you ask me to go and bring rent for two years in advance that I have not earned, and I actually bring it, shouldn’t you start worrying?
“So, when you suddenly see that the prices of water, food, etc., begin to spike, are we really gaining? Because one way or the other, I’m going to get back what you collected from me. It’s a matter of conscience. Can you pay for a taxi before you board it?”
In order to address the issue, permanent secretaries from the relevant agencies in the federal and state governments resolved at the meeting during the sixth NCLHUD to produce a law that would allow the monthly payment of rent.
In the Memorandum on Provision of Adequate and Affordable Housing, which was submitted at the meeting by the FMPWH, the council noted that the “enactment of the law would allow monthly rental payments and its enforcement would enhance access to housing finance.”
They also upheld that the rent-to-own scheme of the Federal Mortgage Bank of Nigeria, if included in the housing finance policy, would address the problem of poor access to housing finance.
They further recommended that all tiers of government should improve on intervention strategies to provide affordable housing, as well as provide enabling environment for active participation of the private sector in housing delivery.
The permanent secretaries urged the federal and state governments to consider all income groups in their housing delivery programmes, and to encourage the development of secondary mortgage market in order to strengthen mortgage refinancing.
At an earlier meeting with Fashola in Abuja, the Chairman, Estate Surveyors and Valuers Registration Board of Nigeria, Mr. Olayinka Sonaike, stated that the pressure on operators from lenders with respect to the repayment of loans was one major factor that often warranted the demand for advance payment of rent by property developers.
He, however, stated that if there were substantial mortgage loans from the FMBN, the situation would not be the same.
In its submission on the matter at the sixth NCLHUD, the FMBN admitted that housing affordability had been a major challenge due to low purchasing power, but argued that while down payment on mortgage was up to 40 per cent and interest on mortgage loan was between 16 and 32 per cent, the FMBN’s National Housing Fund Scheme offered six per cent interest on its loan products.
The bank, in a memorandum it submitted at the council meeting, stated that its rent-to-own concept adopted transaction dynamics under which real estate property was leased to beneficiaries in exchange for monthly payments, with option to purchase the property at some point during the agreement period.
It said, “Under the agreement terms, the FMBN (the landlord) collects monthly rent payments from beneficiaries (the tenants) over a specified period to accrue what would have been a bulk equity contribution.
“Beneficiaries are given the opportunity to move into the properties as tenants from commencement of the transaction, and after a two-year period, the rental arrangement is converted to a mortgage transaction. Accordingly, the balance of the house price is repaid through mortgage repayments.”
The bank further stated that under the scheme, there would be improved mortgage inclusion and access to affordable housing to more Nigerians who would otherwise be unable to afford equity down payments.
“Up to 100,000 new homeowners could be created within the next three to four years through this product to boost the present administration’s one-million-new-homeownership target,” it added.
It urged the council to endorse the adoption of the rent-to-own concept by all tiers of government, in order to improve housing inclusion, growth and economic prosperity.
The FMBN also stated that subject to the inputs of the council and the approval of the works and housing minister, the bank intended to pilot the rollout of the concept over a 12-month period, commencing with workers of the FMPWH and the mortgage institution.