Experts task corporations on rental housing for low-income earners

Experts have charged the managers of housing corporations and developers in the real estate sector to come up with realistic plans for the sustainability of rental housing in the country.

They spoke during the national workshop organized by the Association of Housing Corporations of Nigeria (AHCN) in Uyo. The Chief Executive Officer, Family Homes Funds Limited, Femi Adewole who led the call at the forum said the realities of the Nigerian housing market is that the sector was struggling with increasing pressure and demand for housing that are affordable due to increasing rate of urbanization.

In view of the reality, he said it was important that sustainable plans must be put in place for affordable rental housing demands for the low and middle-income earners. He said: “There is the need for a feasibility study – Is it right for us? Plan for change, strategy development and organizational change. Do a pilot for 500 units. Consult and sell the business model. Then, from lessons learned to scale up. The Family Homes Funds will provide technical support.”

Adewole noted that Nigerian cities are some of the fastest-growing in the world with over 80 percent of urban dwellers rent their homes from informal landlords and sometimes not out of choice.“There are less than 100,000 mortgage loans representing a small percentage of the population. Most of the new homes being built are unaffordable to people on low to medium income.”

He said the formal rental housing has potential for significant demand with future growth envisaged as urban areas grow and mobility increases, low competition due to the fact that most of the rental housing available for people on low/medium income is informal, poor quality, insecure and inequitable and strong potential for creating long term financially sustainable housing organizations.

Adewole alluded to the fact that Singapore’s public housing agency formed in the 1960s; houses about 85 percent of Singapore’s 4.5 million people while 78 percent of residents enter homeownership through rental. An ex-banker, Tony Okogwu in his contributions attributed the poor performance among housing agencies on lack of direction, vision, and mission to drive the organization and make it relevant in the emerging property market.

“In emerging markets, investors don’t just invest but focus on top estate projects, where they are able to identify profitability coupled with a relatively good rental return. To be relevant in emerging property market, organizations must develop a vision and a mission to give direction to their activities. Those with vision and mission that are not performing lacks a winning attitude.”

According to Okogwu, the housing industry is inundated by too many problems, some of which include, too many national housing policies, a huge rise in apartment rent, the influence of bank capital and vacant apartment that are not within the control of the low-income earners.He expressed dismay that more slums are being created all over the country even as the Nigerian government involvement in housing, is thinning out, poor living infrastructure is being built, lowering building material quality and poor standardized professional input in the housing sector.

He said the required change by housing agencies should, therefore, focus on, “How to enhance profitability and lower capital charges, how to depart from business as usual and come out with operational risk management and market risk management, rating of customers to determine activities, create new face for the organization with new mission and vision, acquaint staffers with the new vision through effective communication channel and effect changes in management structure to reflect new vision.”

“Any business that is not ready to move with the global wave of change that permeates governance and businesses is certainly not ready for progress and should prepare for imminent failure and total collapse, therefore change is the only answer for the sustenance of housing agencies”, he stated.

On the impact of technology in the industry, he stated that globally, many housing transactions are consummated online, realtors are making money online in the emerging housing market while blockchain technology is warming up to take over the housing market from the planning stage to construction, marketing, disposal and to the perfection of title documents.

Also speaking, the Executive Secretary, Association of Housing Corporations of Nigeria, Toye Eniola said despite the prevailing funding challenges faced by housing agencies, there are golden opportunities for funding options. These he said include, funds for development, the fund for rental, for land bank development and off-takers loans support. Eniola said, “Let’s take advantage of the following, Family Homes Fund opportunities, the Federal Mortgage Bank of Nigeria, labor and cooperative societies, relationship with government, off-takers database from a civil servant in the state, and bank and use your assets to create wealth.”

                                                 Source: Victor Gbonegun