Ilustration of the proposed Luxuria in Ikoyi, Lagos
Towards increasing housing accessibility in the country, professionals in the sector have canvassed the introduction of a housing tax credit scheme for operators in the value chain to boost supply.
They also want federal and state governments to unlock wealth through conversion of idle spaces and assets rather than using taxation to boost revenue.
The experts spoke at a real estate webinar organised by the Lagos Chamber of Commerce and industry (LCCI).
The immediate past president, Mortgage Bankers Association of Nigeria, (MBAN), Niyi Akinlusi, who spoke on the affordability gaps in the real estate sector, explained that three major factors are responsible for the housing affordability gap in the country.
This, he said are house prices, household income and mortgage interest rates and cost for transportation.
He said: “To reduce house prices, supply must be increased. We need to look inward by focusing more on space-based development to create wealth rather than using taxes. We can borrow the idea of infrastructure tax credit for the construction of new roads and deploy it in the housing sector. Some of the players are already in the housing value chain like Dangote and BUA and Access bank”
“We can also use this as a means of delivering affordable homes and call it a housing tax credit. We can engage such organisations. The beauty of it is that unlike the one for the road, which is not recoverable, the one for housing tax credit will be recoverable because housing built under the housing tax credit, will be recouped by the government through sales proceed of those houses. This will ensure delivery of affordable and quality houses.”
Every investment in housing, he stressed has a multiplier effect on other sectors like creating employment.
Besides, he said tax incentives could also be given to existing developers after delivery of agreed units to increase supply.
On mortgage interest rates, he said, the interest rate is quite low in terms of the margin for mortgage banks. “It is the closing cost that is high, which include the cost of titling, insurance, survey and others. Government agencies should reduce the cost of perfection it titles.
“We are canvassing for 1:3:1 formula, which states let the cost of perfection and titling not be more than one per cent, shouldn’t take more than three days and should be one desk, while engaging with the government and its agencies,” he said.
The Managing Director, WEMABOD, Mr. Yemi Ejideran, said building collapses have the potential to discourage investment in property, especially in luxury high-rise structures as well as reduce confidence by institutional and foreign investors.
To restore confidence in the sector, he suggested regulation and regulatory compliance with standard codes, development of right and adequate teams for projects, focus on value and integrity rather than cost reduction strategies and deployment of basic project tents, standards and principles.
Ejideran, who stated the importance of technology in driving real estate and homeownership in the sector, stressed that technology must take the centre stage of development in the real estate sector.
Technology, he said will enhance the delivery of homes through housing manufacturing, while innovative technology in building materials ensures sustainability.
Executive Vice Chairman, Eximia Realty Company, Hakeem Ogunniran, bemoaned the low growth rate in the real estate industry.
He lamented that Nigeria is still grappling with the basics of real estate value creation, which centres on creating assets, issue of regulation, titling, building approval and intervention of human beings in the value creation process.
The Special Adviser to the Governor on Housing, Mrs. Toke Benson-Awoyinka, said the government is restoring investors’ confidence in the sector and ensuring the growth of the industry
She said the state government wants transparency in the sector, plans to issue licenses to operators and provide support for the players.
Benson-Awoyinka, who was the special guest of honour at the forum, said the real estate law currently in place, seeks to establish a database in the sector, where people both home and abroad can go into a website do their activities without recourse to talking to human beings.
“We have introduced the Geographic Information System (GIS) where land transactions can easily be done virtually. We have introduced the mediation process and gotten about 130 petitions, which we are dealing with, we taken some to court and others to security agencies,” she said.
According to her, in a few weeks, the state will pass the Lagos State foreclosure law by the state house of assembly and it will come for the governor’s assent.
In a presentation, the Chief Executive Officer, Economic Associate, Dr. Ayo Teriba, said out of the assets that countries own, a minimum, which is about 60 per cent, are in the built environment. This, he said indicates that the real estate sector is the hub of the economy.
Earlier, LCCI President, Dr. Michael Olawale-Cole, called on operators to embrace modern technology for service delivery. He also urged the government to deploy technology in the land documentation process and create a platform for property identification, ownership and transactions.
This, he, noted will make the sector more regulated and attract more investment.