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Improving access to affordable housing by the common man

By Daniel Ighakpe
14 December 2018   |   3:43 am
Shelter is one of the basic needs of man, and the idea of affordable housing to cater to this need is both practical and viable. According to the The United Nations Human Settlements Programme (UN–Habitat), 30 per cent of the world’s urban population resides in slums, with deplorable conditions, where people suffer from several deficiencies,…

[FILE PHOTO] Mass housing scheme in the Federal Capital Territory

Shelter is one of the basic needs of man, and the idea of affordable housing to cater to this need is both practical and viable.

According to the The United Nations Human Settlements Programme (UN–Habitat), 30 per cent of the world’s urban population resides in slums, with deplorable conditions, where people suffer from several deficiencies, including lack of access to improved water, absence of sewage facilities, living in overcrowded conditions, and in buildings that are structurally unsound.

There are conflicting figures about Nigeria’s housing deficit, but experts often quote between 17 and 21 million.

Affordable Housing refers to housing that addresses the needs of the low-income earners in the society. This is the section of the society whose income is below the medium household earnings, and the majority of masses of Nigeria belong to this category.

With over 170 million people, Nigeria, the most populous country in black Africa, has a population of over 70 million low-income people.

Recently, a minimum wage of N30,000 was approved for the Nigerian workers, while the disposable income of majority of the fresh graduates (not the ones employed in blue-chip companies) is less than N60, 000 per month.

Affordable housing has remained elusive to the average Nigerian, in spite of numerous programmes to tackle affordable housing challenges in the country.

The low and middle income earners especially, are the most affected by this.

Due to affordability, they live in densely populated or informal ‘slum’ areas. The high income earners, 1% of the population, occupy a small percentage of the housing stock.

Therefore, the majority of newly built homes in city centres are left unoccupied. Thus, the problem of affordable housing remains a critical issue in the socio-economic wellbeing of Nigeria.

For example, in Lagos State, the price tags placed on the units of the Lagos HOMS Project cannot be classified as being for low-income earners, especially when considered from the United Nations standpoint, where an adult is not expected to spend more than 30 per cent of his/her income on housing (By international standards a house should not cost more than three times the occupiers’ annual income.)

Let us take the N4.3 million apartment as an example. You are expected to pay the 30 per cent down payment and the rest over 20 years. The minimum wage is N30, 000 and the annual cumulative is N360, 000.

Thirty per cent of the N4.3 million apartment is N1.29 million and monthly payment would be N25, 083.00, which is almost equal to the basic salary.

Since the United Nations said you should not spend more than 30 per cent of your income on housing, the 30 per cent of the basic annual income is N108, 000.

It means a Level One officer should not spend more that N108, 000 annually on housing, because it is assumed that from his earnings he would make provisions for transportation, school fees and feeding.

So, you know he cannot even afford it and it is not affordable. These prices or rents cut-off the masses who need the accommodation.

When you add the interest rate of about 9.5 per cent, the total sum goes to about N17m to N18 million to be paid over 10 years.

So, it is obvious you are not also planning for middle-income earners. So, the Lagos HOMS is still feeding the high-income earners.

A Level 14 officer should have put in an average of 10 years of service, but in spite of that, he cannot key into the state housing project.

If such officer cannot, then for whom is such a project meant? Things like this kill motivation among the workforce.

For instance, someone is earning N150, 000 per month, minus 30 per cent present accommodation need, minus other needs, including school fees and feeding.

What would be left that would serve as disposable income that can be put into housing programme? So, first and foremost, I cannot afford the 30 per cent down payment from my salary.

It becomes a burden and one begins to wonder how long it would take to own a house in Lagos.

In view of the above, some steps to alleviating the problems of affordable housing delivery include concentrating on ways to provide the enabling environment for mass housing production.

Basic building materials should be given tax and duty relief and government could develop incentives to encourage both the public and private sectors to use indigenous building materials.

Other strategies may include granting tax holidays to developers and providing free land to them to reduce the cost of producing houses.

Sites and service plots could be provided to private sectors, housing cooperatives, Real Estate Developers Association of Nigeria (REDAN) and individuals.

Plots could be allocated at different rates per square meter for different uses. The low-income earners should have the lowest rate with the size of each plot not more than 150 square meters.

The basis of allocation should strictly be one man one plot, members of (REDAN) should be encourage and motivated with tax incentives, subsidized building materials and discounted rate per square meter.

Plots allocated for affordable housing schemes must not be fraudulently used for medium or high income housing projects.

There should be sanctions and strict penalties for violation of terms and conditions stipulated on the letter of allocation.

For successful implementation of this scheme, it is imperative to study and assess the actual housing needs of the low income earners.

It should be known that before low-income earners can afford to buy or rent houses the price or rent must be low or subsidized by the government.

“Until we are able to provide housing that artisans can afford, that is when the people would say that there is affordable housing for the common man. With that, low-income earners would have some housing units targeted at them.

Ighakpe wrote from Festac Town, Lagos.