Low Cost Housing through Mortgage Housing Scheme

Peter Adeyeye, Lagos Community Manager
Lagos, 13 September 2016

Housing as a fundamental human need occupies a central role in 21st century development discussions in view of increasing rural-urban drift and rapid urbanization. Lagos, as one of the most populous cities in Africa, has huge housing deficits that have been a concern for its urban planners. In 2011, a report from the Lagos Housing Survey showed that about 2.55 million units of housing was required to meet the housing needs of Lagos residents in the five years period after the study. The same report showed that 72% of the city’s residents are tenants paying a rent as high as 50% of their income.

In view of the housing needs of its teeming population, the Lagos government in 2011 commenced the Lagos Home Ownership Mortgage Scheme (Lagos HOMS) to provide affordable and respectable housing for low and middle income earners in the city. The scheme is designed to create and encourage First-Time Buyer (FTB) residents in the city to purchase decent housing through a system of long-term payment. It is overseen by the Lagos State Mortgage Board which serves as the intermediary between the government and the public and facilitates the selection of those that will benefit from the program. Meanwhile, the Lagos Building Investment Company (LBIC) facilitates the construction of those housing units.

How does this work? The Lagos HOMS is targeted at residents of Lagos with a track record of tax payment and a stable source of income that can ensure the complete payment of the housing unit over the stipulated period of time. All applicants must meet the eligibility criteria: applicants must be 21 years and above, they must be permanent resident of Lagos with the proof of Lagos State Residents Registration Cards, must have evidence of tax payment in the city 5 years prior to application, must be a first-time house buyer, and must be able to pay an initial deposit of 30% of the total cost of the housing unit.

Despite the pre-qualification criteria, the demand is often higher than available housing. Applicants that fulfil the requirements are eligible to purchase a form of interest at a low fee, and they are assigned a drawing code on completion. As a means of ensuring transparency and fairness of the system, all eligible applicants are scheduled for a drawing conducted periodically on announced dates, through a transparent and well publicised process. Successful applicants are directed to the LBIC for mortgage processing while unsuccessful ones can re-apply.

The Lagos HOMS has been instrumental in reducing housing shortage in the city as 600 units of housing were awarded through the scheme between 2012 and 2015. The city administrator, Akinwumi Ambode plans to build 187,000 units of housing annually over the next 5 years to address the 2.5 million unit shortage. Numerous benefits accrue from this mortgage housing scheme. Perhaps most significantly, it provides low and middle income earners the opportunity to own their home over a minimum period of ten years which saves them of the exorbitant cost on rents. It is also an incentive to tax payers and serves as guarantee from fraudulent acts that may be involved in purchasing properties in the city. Moreover, more housing options creates competition on housing which will reduce housing cost for the poor that cannot partake in the schemes and provide a better planned and sustainable housing solution in the city.

Please Note: I tried to access the Lagos Household Survey data but I could not get it. The data about housing needs and the Lagos Household Survey was found in the Economic Intelligence Report of State Partnership for Accountability, Responsiveness and Capability (SPARC) programme – A DFID project in Nigeria. It can be assessed here.

Photo credit: Peter Adeyeye

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