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Developers, MBAN optimistic on PENCOM guideline for residential mortgage

By Chinedum Uwaegbulam
03 October 2022   |   4:08 am
Operatives in the real estate development and mortgage industry have praised government on the approval of guidelines by the National Pension Commission (PenCom), allowing Retirement Savings Account (RSA) holders to access 25 per cent of their savings for residential mortgage.

Operatives in the real estate development and mortgage industry have praised government on the approval of guidelines by the National Pension Commission (PenCom), allowing Retirement Savings Account (RSA) holders to access 25 per cent of their savings for residential mortgage.

They acknowledged that the new policy would reinvigorate the mortgage and real estate sector, as well as boost homeownership among low-income earners and reduce housing deficit.

President, Real Estate Development Association of Nigeria (REDAN), Aliyu Wamakko, said it would enable civil servants, who are in dire need of equity contributions to key into housing projects.

The Mortgage Banking Association of Nigeria (MBAN) in a statement issued by its President, Ebilate Mac-Yoroki, and Executive Secretary/CEO, Kayode Omotoso, urged the Federal Government to operationalise the Nigeria Mortgage Guarantee Company (NMGC), a credit enhancement platform, which it said was already being finalised by the FSS2020, a department of the Central Bank of Nigeria (CBN).

MBAN commended the initiative that resulted in the approval, saying it is one of the landmark steps and decisions for which the Muhammadu Buhari-led administration will be remembered, praising the Director-General of PenCom, Aisha Dahir-Umar, for her role in the approval.

“We are indeed glad and elated that this novel idea has finally become a reality. It commenced silently as an advocacy issue with PenCom that originated from MBAN, which thereafter was escalated to full advocacy issue by stakeholders on the platform of the former Nigerian Housing Finance Program (NHFP).

“With granting of the approval that allows Retirement Savings Account (RSA) holders to access 25per cent of their balance towards payment of equity for residential mortgage, government will be solving more than just the problem of housing, but will also be giving the economy a boost as many mortgage-related sectors, like construction and banking, will receive more vigour.

“As an association, which is directly concerned with the mortgage market, MBAN will, in its usual approach, be doing everything necessary to support government in ensuring that the primary target of giving the approval, which is eliminating the housing gap and creating an easy environment for beneficiaries to acquire their dreamed homes, is achieved to the adequately.”

The association appealed to the Federal Government to give incentives to local companies in the business of manufacturing building materials like tiles, wires, cement, doors and other building accessories, saying it will help in the reducing the cost of buildings, just as it will positively affect the economy.

The Managing Director, Nigeria Integrated Social Housing (NISH) Affordable Housing Limited, Dr. Yemi Adelakun, said the new guidelines have the potential of brightening the hope of pension contributors to own homes of their dream.

“This policy should improve affordability and eligibility profile of housing off-takers and increase their chances of qualifying for mortgage. This will in turn invigorate the property market and reduce housing deficit for medium low income earners. The multiplier effect of housing development on the growth of the economy in general and job creation in particular cannot be over emphasised.

According to him, there is need for strategic approach to the implementation of the guidelines for successful outcomes. “Also, control mechanisms should be in-built to avoid exploitation of the contributors in the process. A special purpose vehicle and fit for purpose financial instruments may be necessary to enhance optimal utilization of the huge capital that will be unlocked by this pension for housing policy,” he said.

Adelakun said pension contributors should not be placed at the mercy of mortgage companies and developers. “There must be safeguards in place to ensure that equity contributions paid to mortgage banks towards purchase of properties are utilised for the intended purpose. There are known cases of payment made for properties that are never delivered.

“The use of escrow account may be a step in the right direction. The Federal Government Staff Housing Loans Board offering housing loan at 3 per cent interest rate should be included among mortgage institutions approved for the purpose of paying pension for housing equity,” he added.

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