How Feasible Is FMBN ‘Rent To Own’ Housing Scheme For Poor Nigerians ?
The Oasis Reporters
August 18, 2018
The announcement by the Federal Mortgage Bank of Nigeria (FMBN) Board approving the implementation of the ‘Rent-To-Own’ pilot housing scheme to begin with 3,000 houses nationwide was greeted with cautious optimism by housing development experts even though the news sounded sweet at first.
Nigeria suffers a lot from the housing deficit owing to a number of factors from lack of access to affordable mortgages to a complete lack of government’s policy direction in the face of a rising population and the high costs of building materials as well as land.
The end result has become the rise in huge urban slums in decrepit conditions and decaying infrastructure nationwide. Rapid and unplanned urbanization leads to stress, rising communicable diseases and crime.
It was cause for cheer when a statement signed by Mrs Zubaida Umar, FMBN Corporate Communications Group Head, on Sunday in Abuja, stated that the scheme was a strategic move designed to make home ownership more accessible and affordable for Nigerian workers.
The FMBN ‘Rent-to-Own’ scheme is an innovative affordable housing product, which provides an easy and convenient payment plan towards home ownership for Nigerian’s workers.
The scheme is designed for workers to move into FMBN homes as tenants, pay for and own the properties through monthly or yearly rent payments spread over periods of up to 30 years.
Umar noted that the properties would also attract a single digit interest rate of nine per cent on the price of the property on an annuity basis to increase affordability.
“The product will cover properties with the maximum value of N15million.
“The rent-to-own housing product targets Nigerian workers who are contributors to the National Housing Fund (NHF) and will be implemented in phases. About 3000 houses are planned for the pilot phase with 3000 beneficiaries.
“To deliver on the rent-to-own housing scheme, FMBN will partner with reputable estate developers for the construction of cost-effective housing stock nationwide.
“Payments for the houses will be domiciled with the CBN through the Treasury Single Account (TSA).
“Properties that are planned for the rent-to-own scheme are Existing Estates that are funded by FMBN nationwide and non-funded estates,” She said.
Speaking on the development, FMBN Managing Director, Mr Dangiwa Ahmed, was quoted as saying that the rent-to-own was another groundbreaking initiative targeted at increasing access to affordable housing by workers in the low-medium income brackets.
“The rent-to-own housing product is designed to make sure that any worker who collects salary should be able to live in his own home and pay conveniently over periods as long as 30-years!
“This is a massive relief especially given how little workers earn.
“I am delighted that we have successfully added this product to the many other initiatives that we have made possible to make home-ownership a lot easier for Nigerian workers”.
Ahmed commended President Muhammadu Buhari for his commitment to the development of housing and the Minister of Power, Works and Housing, Babatunde Raji Fashola for his continued support for the ongoing reforms to re-position FMBN.
He added that the scheme would eliminate the burden of equity contributions by workers for housing loans, complement its existing products and help the bank to utilise abandoned estates that were to be transferred to the scheme”, concludes a NAN report.
In analyzing this ‘jump for joy’ scheme of the Federal Mortgage Bank of Nigeria, how feasible is it for a salaried civil servant to afford the maximum 15 million naira housing loan, payable in 30 months tenure at 9% interest rate?
To repay 15 million naira in thirty years means a retirement of 500,000 naira annually. The mortgagor would of necessity, add some 10% being the interest rate, and perhaps sundry charges. That amounts to five hundred and fifty thousand naira (N550,000.00) every year. Breaking it further down, in a month, the mortgagor would need to set aside the sum of at least 60,000 naira monthly to play catch-up comfortably in other to meet up with the target, barring any unforeseen circumstances like ill health, premature retirement, loss of job due to extenuating factors etc.
But then, in considering what wage factors are feasible and available to the average Nigerian worker, is this FMBN option really as attractive as it seems on paper?
The suggestion here is that it is worth a try. But other options need to be further explored to make Housing For All a realizable option in the country.
