Apparently buoyed by the success recorded so far under Lagos’ rentto- own housing policy, developers, the Federal Government and states have been implored to tinker with the idea. Dayo Ayeyemi writes
When the Lagos State Government disclosed plans to begin the rent-toown policy in order to enhance homeownership, many doubted the sincerity of the government, considering its numerous empty houses with high price tags.
However, the policy, which has produced 500 new homeowners in the last three months, is gradually becoming the cynosure of all eyes as real estate developers are considering the option.
Highly motivated that the scheme works in Lagos State, President of Real Estate Developers’ Association of Nigeria (REDAN), Mr. Ugochukwu Chime, a surveyor, has tasked private developers, federal and state governments on to tap into opportunities inherent in rentto- own to reduce the 17 million accommodation shortfall in the country.
According to him, rent-toown option will reduce default in mortgage payment if fully embraced by developers.
Speaking with New Telegraph by telephone, Chime appealed to private developers to embrace the Lagos example.
He advised them not to jettison any option that would guarantee sales of housing units in their estates.
“Federal, states and private developers should emulate Lagos state government,” the REDAN boss said.
Lauding Lagos authorities for the initiative, he explained that provision of construction finance and mortgage for subscribers would reduce fraud in the country.
Rent-to-Own is a kind of sales contract that enables a buyer to rent-to-own the property they wish to buy.
Typically, a buyer will rent a property until it is paid in full, and then the deed transfers from the seller to the buyer.
Chime pointed out that in rent-to-own, title (Certificate of Occupancy) of the property would not be given to the prospective buyer until he or she completes the payment.
He described the scheme as a way of guaranteeing default in payment. According to him, the equity contribution is low compared to classical mortgage, which is the range between 20 to 30 per cent.
“In rent-to-own policy, rent has covered equity fund to own a home,” Chime said.
In the Lagos example, tenants turned landlords in the state have had cause to commend the scheme as their dreams of owning their own houses were made easier through the Lagos State Government initiative.
A beneficiary and civil servant in the state, For Mr. Musa Olugbenga, overwhelmed with joy, said: “ I am now a proud owner of a two-bedroom flat in Chois Estate, Agbowa.”
He narrated how he applied for the scheme and was asked to deposit five per cent of the housing cost.
According to him, the house costs N3.5 million and I paid N176,000 as equity and other charges for insurance and facilities to qualify for the scheme.
“In all, I paid almost N280,000,” he said.
Another beneficiary Mr.Kazeem Olajide, said he never believed the government when the policy was announced, but “my wife encouraged me.”
While commending the state government, he said: “The five per cent commitment fee to qualify for the house is unbeatable.”
Also, Mrs Olowo Oludotun, a civil servant, who said she would be retiring soon, said the rent-to-own policy of the state government had provided her unique opportunity to become home owner.
“I will have a place to lay my head at last,” she exclaimed. Handing over keys to third set of allottees under the housing policy, Commissioner for Housing , Mr. Gbolahan Lawal, hinted that 10 private real estate developers had been engaged on public-private-partnership (PPP) basis in order to increase housing stock in the state and Nigeria in general.
With 500 homes already allocated, Lawal said it was estimated that housing would have been provided for not less than 2,500 people taking an average of five persons per family.
The commissioner said that houses were allocated from Sir Micheal Otedola, Odoragunshin, Epe; Chois Gardens, Agbowa; Oba Adeboruwa, Igbogbo-Ikorodu; Hon. Olaita Mustapha and Alhaja Adetoun Mustapha,Ojokoro.
He said that more schemes were coming up. He disclosed that apart from 4,445 housing units already available for the policy, additional 3,315 units would be added to housing stock soon.
Recalling the commencement of the initiative, Principal Partner, Stephen Jagun and Co., Mr. Stephen Jagun, said he was present when former governor Babatunde Fashola, first hinted about the programme.
“He informed the gathering that they saved enough fund to make the programme revolving and self-sustaining,” Jagun said.
He noted that Governor Akinwunmi Ambode had introduced some modifications to the scheme, urging the need to make the plan more impactful.
Jagun, who is an estate surveyor, valuer and facilities manager, urged Fashola to introduce rent-to-own policy at federal level.
He said: “Fashola should look into it with caution because what works in Lagos may not work in some other parts of the country without modification.”
To qualify for housing units under the policy, applicants must be resident in Lagos, be a first time home buyer not below 21 years and must be tax compliant.
Applicants must also be ready to make five per cent commitment of total house’s cost and pass affordability test and not more than 33 per cent of the monthly income as payment.
Rent-to-own housing policy has come to stay in Lagos. Other state governments and real estate developers should explore this option to increase homeownership among Nigerians.