‘Govt should provide system for land information’

How do you see the mortgage system in Nigeria? I look at it from two angles; which is from the market angle in the sense that is there market for Nigeria? If there is, how big is the market? I will tell you that there is a very big market in Nigeria for mortgage, I […]

How do you see the mortgage system in Nigeria?

I look at it from two angles; which is from the market angle in the sense that is there market for Nigeria? If there is, how big is the market? I will tell you that there is a very big market in Nigeria for mortgage, I call mortgage a leveler and a strong discourager of corrupt practices. The  housing gap in Nigeria is said  to  be N75 million and  if you have to put N5 million for the cost of a unit of a house which might be more than that, we will be looking at about  N75 trillion to block the housing gap.  And when you are talking about N75 trillion, even if all the asset of commercial banks in Nigeria is put together, I am not sure that they can finance mortgage in 5 years to block the gap, this is an indication that the market is very huge. Now,  if we have to look at it from the mortgage bank when the market is  there I will tell you that there are not leveraging of that market because they are incapacitated.

Mortgage, I call it a leveler because it makes anybody to become a home owner in respect of his level of income. If you look at one of the reasons why most people go into corruption is the fear of the unknown. They always have it in mind that they have to take care of themselves after retirement but if there is an effective mortgage system, you don’t need to do all that because a mortgage system gives you an opportunity to have what you cannot readily afford. If we have a mortgage of such that anybody can be contributing 20,000 every month, can live in his own house, I will tell you everyone will have an advantage and the way we look at housing in Nigeria, we look at it like a dead stuck. There is no other usefulness  rather than shelter but that is even very small when you look at all the benefits of having a property of your own. There is a form of capital formation, if you have a business you want to venture into and you don’t have money, you can tell the bank to hold the papers of the house and collect money from them that your property is worth it, you have the  money, you are living in the house and the money is working for you.

Land titles are often not readily available, how  can  we  fast track it?

In fact, there are three major hindrances that have been bogging down the mortgage business in Nigeria. 

One of it is the land title, the second one is foreclosure and the third one is long time liquidity. These three are very key for the survival of mortgage business. For instance, from the Land Use perspectives,  Federal Government has  small land as  most of the lands are within the power of  state governors by the virtues of Land Use Act and most of these state governors do not know that if they liberalise land use system they will unleash the potentials in that area. But they feel it is their own oil that they have to hold. if I think down the memory lane, before Land Use Act, the land ownership was through families, investors will always want to come around to develop and if it is difficult for them to locate the owner of the land, the government comes to be the central pulse for effective allocations of land  on behalf of those people that own the land, but you know in  Nigeria, when we put a policy in place and if you are not careful, as you are going along bottleneck will be created which may cause corrupt practices otherwise there is no reason for  government to be selling land.

Government can ease land process by putting cadastral system in place where information about land will be readily available to anybody.

Is there any state you can pinpoint that is getting it right in the aspect  of land administration?

When we look at the land administration system, I think for now Lagos state is outstanding.  For instance, if you want to perfect legal mortgage in Abuja, you must have your C of O and how many estates in Abuja have C of O? I know about 4 estates that we all participated in developing and we are still working to get C of O. We have done all what is required, the land was given to the developers under Public Private Partnership (PPP) whereby the developer was meant to build, sell and send the name of the buyer to FCT for direct issuance  of C of O and that has been done severally by  some of our developers and none of them has  gotten. And in Nigeria, we still recognize paper  (C of O) even our Land Use  Act recognizes that as well, so if you don’t have it, it is not valid, you can’t perfect your mortgage. For banks, what they are dealing with is business of money, the money is not there they belong to Nigerians so they have to ensure that the money they give out for mortgage comes back. So with that they must verify that the title to the land is genuine, it is owned by the person and the person has the authority to transfer, if he doesn’t have the authority and you create mortgage on it, it is like you are building something on nothing so what government can do is to liberalize that, have cadastral system whereby all the land available is captured.

You mentioned Lagos state as a success in land administration. Can you shed more lights on that?

For Lagos state, most of the lands in Lagos have their route title and after that you can just register their day of assignment and from our experience, it doesn’t take two months to do that, but in Abuja, unfortunately, I have been here for about 12 years, I can’t tell you the number of packages we have been able to perfect.

Can you attribute that to one of the reasons why cost of renting houses in Abuja is on the high side?

That is a different ball game entirely, you know where there is no rule everything goes. Why rents are expensive is the cost of house, many people have their different mission for going into property; some want it as shelter while some want it  as investments and when you look at it from the investment angle, those are the people who  give it out for rent and the cost of investments determine the returns you will be expecting. 

The second thing is that we don’t have a regulatory body that regulates rents in Nigeria and we can actually have that. The third issue is  – lack of infrastructure and I keep telling people that when you buy a property in a place where there is no infrastructural development you are buying a possible slum. In advanced countries, they plan, you cannot put a block down if infrastructure is not available. 

You work with developers and one wonders how you ensure a fruitful business  deal with them.  

Estate developers are partners in progress, you can’t create mortgage on nothing apart from housing, so, if the house is not there you can’t create, one of our strengths in Infinity Mortgage bank is that before we go into an alliance with any developer, we check their integrity, capability and the genuineness of their land titles.  

As investors how do you check building collapse?

Building collapse leads to the loss of investments and even human life. We believe in professionalism, we believe that quacks should leave the housing construction. As a  mortgage banker, what we do is to join them in finances, we don’t do direct building.

So there is no  risk control measure in place? 

What we do when we have projects with estate developers is that we get their business plans and from that we know their major staff and qualifications and look at what they have done in the past. We ask questions and if we are not satisfied with them then we do away with them. We should encourage professionalism and allow those   qualified in construction to do it. 

What is your view on the FISH housing scheme of the Federal Government? 

The intention behind it is laudable. How they are going about it? I think they can do more than what they are doing now by involving more  stakeholders. They should carry the Mortgage Bankers Association of Nigeria along and that is a very strong stakeholder.

Will that add value to the housing scheme?

Of course, if  you look at affordability and   sustainability of it  and you look at the fact that when people are given loans to buy houses, they pay back as well and you look at the channels of which they are paying is fraud proof. So if they don’t carry mortgage banks along how do you ensure this? 

What is affordable housing? 

 Affordable housing should be a house that is sustainable and  what can  make  housing affordable is to put in place  long time payment plan and single digit  interest rate on mortgage.

Are you in support of rent –to- own policy of the Lagos State Government to be adopted by other states?

We should not look at housing from only business perspective, especially in a country where we have a huge housing deficit and affordability issue. If you look at it from business perspective you will be building for those at the top of the ladder, but the big gap is at the bottom of the pyramid. Abroad, they do rent -to –own- especially on estates that are not commanding markets. It entails people paying rents and after they finished paying they will be the owner of the houses.

We do rent–to-own here, mortgage banks can do rent- to -own because it is part of our mortgage store. We are working on a mortgage micro finance here now – developmental stages financing. We are doing every initiative that will attract big markets because if you don’t look at that big market you can’t call your business a reasonable one.

What is your interaction like with FMBN?

Federal Mortgage Bank has improved in the past few months.  One of the problems we have is the time that it takes to process a loan but that has been streamlined and the process has been efficient than before.