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Experts seek reform in mortgage sector

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Seeks Dutch strategy to counter erosion
Experts in the real estate sector have called for reform in the nation’s mortgage sector to allow for long-term funding. They reasoned that the mortgage system as presently constituted does not provide the needed support for housing in Nigeria

Co-founder, DNJ Properties and Investment, Limited, John Okorie made the call at the launch of Phase II of the Vantage Courts Project in Lagos.

According to him, “the mortgage system in Nigeria is not developed at all. It’s nothing near developed. So, in a situation whereby an individual has a mortgage plan, then before the mortgage can be given to us, it takes six to eight months and by then, the project is already done.

“So, we cannot wait that long. We need the money so we can continue with the project and get far, but we’ve had so many clients coming for the mortgage plans, but because of the duration of the time it takes for us to be funded, most of them lose out”, he said.

He added, “We seriously need to improve on it. Even people who have savings with the mortgage houses, before they can get their money out, it takes a whole lot of time.

“Other challenge as a developer has always been the drainage system. For instance, all the water coming out of Shapati deposits in our drainage channel in Richland Garden which is not big enough to take it. So, if we have estimated to spend like N22 million on our drainage channel, we are going to spend N40 million now, because we need to make our drainage channel to become a canal.

“Of all the estates that are mostly flooded, VGC is highly hit. If not for the fact that they have interlocked roads, most people would have moved out of VGC. The drainage channel is very poor, more so, those living on the Island. So, drainage is a big problem for us. The government needs to intervene

On his take that by 2050, half of Lagos will be submerged in water and if he considers the mainland as a suitable location for developers, he said, “the mainland is already full. What we can just do is probably go the Dutch way because the problem we are having now is what the Dutch are having too and their land is not flooded. Perhaps if we can invite Dutch engineers to come into Nigeria to help us work out the drainage system, we are good to go.

“On the right-hand side, we have the Atlantic and on the left-hand side, we have the lagoon, and in the middle, we have Lagos metropolis which is underwater, but it can still be managed but we are not managing the system well enough.

“There is no drainage, so that means that all the water coming from our house looks for the lowest level and just stays there.

“But on our part, we are doing raft foundation. The raft foundation is higher than the road level. So, what helps with water is if your foundation is higher than the road level. Even when it rains, it does not flood.

On the project, he said, “We are proposing about 40 units for phase II. We have over 70 three bedrooms on phase 1, and it is sold out. We are no longer selling. We started the project in January. That’s for Ph1, but its currently sold out.

On the target market, he said, “It’s basically for middle-class because; when Vantage Court 1 was being launched, some of them were asking if they could take it up. So that was when we got the idea for Phase II.

On the duration on the project, he said, “On Phase 1, our duration was in August, but now we are sold out. We started in January and the duration for the project hinges on many things. Take, for example, it is raining heavily, there was a time we were unable to work for three days. And again, the COVID-19 pandemic, we were not able to do much, so it is very hard to call out duration, but give or take, November this year.

Similarly, former chairman of the Lagos State Branch of Nigerian Institution of Estate Surveyors and Valuers (NIESV), Stephen Jagun expressed worries that the mortgage system in Nigeria is not supportive enough.

Jagun, a past president of the Nigerian Chapter of the International Facility Management Association (IFMA) said, “mortgage is one of the easiest ways that the government can give leverage to the majority of citizens to climb the ladder in the housing sector and should be a form of social responsibility on the part of the government.

He stressed that the Nigerian mortgage rate is either outrageous or the tenure too short or the sum very inadequate. On his part, a fellow of the institution, Azuibike Unigwe, lamented that the interest rate of mortgage is prohibitive and not attractive to long term investment like housing.

Mortgage, he said, is usually a long term vehicle that is supposed to operate within a low-interest margin so that it will make some sense economically, coupled with the fact that Nigeria is largely a cash economy.

He said that the Central Bank of Nigeria (CBN) has tried to reduce the interest rate for the health sectors while the mortgage rate is still very high and it doesn’t encourage people to borrow.


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