Lagos State Government, faced with a deficit of 2.55 million housing units, is introducing a Rent-to-Own scheme to bridge the gap. In this interview with MUYIWA LUCAS, the Commissioner for Housing, Prince Gbolahan Lawal, speaks on the administration’s almost one year in office, the efforts and plans to tackle the deficit.
Almost one year in office, what would you say you have brought to the table in terms of housing for Lagosians?
Government is a continuum. The first governor of the state, Brigadier-Genral Mobolaji Johnson, who started with policies, such as the tenancy laws, also built houses under various home ownership schemes. Alhaji Lateef Jakande’s administration set out to build 200,000 housing units. But, after four years, he was able to do his bit.
Asiwaju Bola Ahmed Tinubu came in 1999 and did his own bit. So, in the beginning of democracy in 1999, Tinubu came up with various policies; he noted that the government alone could not bridge the housing deficit in the state. He introduced the middle and low income earners scheme and also for higher end earners. Babatunde Raji Fashola came up with the LagosHOMS – a policy whereby first-time home buyers will have their own homes; it is the first mortgage scheme to be introduced by any government. Now, Mr. Akinwunmi Ambode’s administration has come up with the Rent-To-Own (RTO) and the Master Craftsmen policies. This is because we realised that the productivity of our people has to be enhanced. At the same time, we are looking at various homes; we are working with the private sector so that we can have a robust housing policy.
The Rent-To-Own scheme is a novel idea. What does it entail?
When this administration came on board, we were bombarded with a barrage of complaints by people, saying they could not afford the government’s housing scheme. So, we conducted a study; and from the report we gathered that there is a need to come up with a more- inclusive housing policy like the RTO. So, for a consenting home owner, you will deposit five percent of the cost, and the interest rate is six per cent, with 10 years’repayment period, after which the house becomes fully yours.The conditions that qualify a person for the scheme is that you must be a Lagos resident; be tax compliant; must have the ability to pay, that is be in the informal sector or in paid employment. If you have a source of income then you have the opportunity of owning a home in Lagos State. It is also part of the financial inclusion of the government. Its is a win-win situation.
What happens to a person that loses his job, say six years after keying into the scheme?
Yes, that is very germane. Security of job is very important. What we plan to do in this situation is to hedge the percent of job loss. The risk sharing part of the RTO is very important. As the government, mortgagor and mortgagee, we all have to bear risk. That is why insurance companies have to come in and guarantee payment for say six months in the event of a job loss. We believe that if we can hedge our risks, then it will be better. The government must be able to position itself to support of subsidise if there is any default in anyway like for three months. Housing is not a pair of shoes that you just go to the market to procure; it has to be well planned for the long term. There must be opportunities for people to have access to mortgage. The entire value chain is being looked into and its going to be very robust.
Are you reviewing the conditions for getting LagosHOMS for the RTO scheme?
The only issue there is tax compliant. The other is, we have considered our people in the diaspora. And for these category of people, we have opportunity for them to buy outrightly. It’s not possible for someone in the diaspora to do RTO. We have opened it up for them. We are in 32 sites, and by the end of this year, 2, 663 housing units will be ready for off take.
You plan to create 50 housing units in each local government area. How do you intend to achieve this?
That is the new policy of this government. We believe we must collaborate with the local governments as it is being done in other countries. The state government cannot boast of owning all the land; the space for housing development is going to be a major challenge.
We cannot say we want to have 200 housing units in a place like the Lagos Island, for instance. Wse must find a way around it. With 50 units in LGs and our one – in 16 model that is coming, it means we just need like three blocks to development and won’t need so much land. Because of the problem of productivity of workforce, we want people to live near where they work; while we are working on other social infrastructure. With that, we will be able to have growth.
What will be the segmentation of this houses, vis-à-vis pricing and location?
There is a need for us to have new settlement, new towns and also economic activities across. If you want to reduce rural-urban migration, you must be able to stimulate economic activities in such rural areas and their environs. For instance, look at Epe; it is close to Lekki where we have the free trade zone, so people can conveniently live in Epe and live in Lekki, which is just about 10 minutes’ drive.
Land is static, yet everybody wants to have a plot of land. Is it possible to have four people share a plot of land due to the shrinking land size in Lagos?
The self-built models is everywhere now and it is a challenge. Lagos is just 3,750 square kilometres. Now we know we have to go vertical construction way in other to accommodate more houses and people. In our estates, we encourage four floors and as physical infrastructural facilities improves, we can move up to six floors. Our physical planning regime will change. When that time comes, the Physical Planning ministry will adjust the policy of government where it says you cannot go above four floors in certain areas. Rapid population is a major concern- the growth rate is 2.8 percent; but is housing growth rate commensurate with population growth rate? The answer is NO; so we have to find a way of making the hinterland liveable, making economic activities expand to those places so that it will help in reducing rural urban migration.
It is believed that there is a 17 million housing deficit in the country. Lagos accounts for 2.55 million of this figure. What is your target?
The World Bank told us there is over 16 million deficit in Nigeria. The last time we checked, 600, 000 people come into Lagos yearly. It is for the government to say can we do the 2.5 million houses in four years? Yes, but it is a challenge. Where is the space? Is it the same traditional way of construction? Are we going to go into technology whereby we will be manufacturing homes? Our job is to build affordable homes so we have to also look at the cost. As the government, I cannot come out and say my one bedroom unit of a house is N10 million. We have to look at the cost of a unit. But if you are looking at the high end homes, then no problem because if that is what you choose you should be ready to pay for the extras. But for the homes government wants to build which is to make it practical, we will have to continue to subsidise it – 25 per cent subsidy is already in those our LagosHOMS – being the cost of infrastructure and land already deducted. Our prices are competitive. But on the 2.5 million houses in five years, the idea is this: the deficit we have now is 1.6 million; but for us to close the gap to forestall more deficit, we must be able to say lets put the deficit at 2.5 million. But with the way we build, only the government funding with tax payers money, you and I know that it will be difficult because there are too many pressing needs for the state. Technology and private sector must come in to make this possible. We need primary and secondary mortgage banks to partner with us so that we can look and the mortgage and construction finance aspect of building.
How do you regulate prices if private investors build for the people to buy?
Well we have our own quantity surveyors and other experts. If government provides land, our experts are able to determine what the cost of building will be. So we can fix a price for the sale, and if a private developer cannot sell at that price then we are not in business. We already have primary mortgage banks that will take care of people in the formal sector. The primary mortgage banks will have to go for refinancing. We are already working with the Nigerian Mortgage Refinance Company (NMRC); we are looking at the MoU and others before we finalise.
In all of these, how does this key into social housing? What is the policy thrust of your administration on social housing?
In those climes where social housing are being implemented, like the USA, UK and other European countries, they have developed a template. Their financial institutions are robust. Once you are working, the mortgage banks there would fund your initial deposit of 10 per cent while another one will fund the remaining 90 per cent. But here, we are not there yet. So government must come up with a policy that would be very fool proof whereby the entire value chain of housing will be taken care of. We call ours “economic housing”, not social and it is just a matter of semantics. The social housing scheme in Europe started in 1948 after the second world war. In England, about 426, 000 units social houses were built using the various housing associations and government; but as at 2013, it has dropped to less than 30, 000. This is because the cost of financing is huge and also the global financial crises. New York housing city authority that we try to benchmark our housing development policy with used to call it welfare housing. It is called Section 8 which provides that government pays or subsidise considerably vulnerable people in the society- like the war veterans, elderly people and those that have proof that they cannot afford to pay rent. This is less than 20, 000 in some parts in New York. So because of the global economic crises, it may not really encourage social housing. As a government we have to come up with sustainable policies.
