commercial insurance trends 2009
One of the major factors facing housing developments in this part of the world is the subject of funding. Housing and Development Finance. Development Real estate involves a capital outlay. Although it is the desire and the dream of most people to own their own homes, means of achieving this is sometimes hampered by lack underfunded. This has contributed to rising housing shortage. In 1991 there were about eight (8) million units of housing shortages. In 2007, this proportion has more than twelve (12) million units.1
The percentage of people who make their own personal funds from the savings of his life to building their own homes is quite low. Very often, they are unable to complete the project or may have to come down into their original plans due to lack of sufficient funds.
Nevertheless, the level of development of construction has not diminished. The people day are still able to be involved in real estate development with the help of loans. However, the percentage of developers to access these loans is still low.
Since independence, individual governments in an attempt to curb this trend embarked on a variety of programs and policies to provide low-cost housing and, owner occupier housing to meet the needs of the public. All these efforts have not really stem the tide.
It is in an attempt to offer citizens access to loans to develop their own homes that the government enacted the National Housing Act (No. 3, 1992). This law was intended provide a set of funds for the construction, acquisition or rehabilitation of their own housing needs. The fund is a contribution by the government, companies Insurance and banks operating in Nigeria. The law also relies exclusively on the contribution of 2.5% of basic workers' salaries for a period of time to workers to be eligible to qualify for the mortgage. This led to the restructuring of the Federal Mortgage Bank of Nigeria (FMBN) and the establishment of key institutions of mortgage (PMI) that we see today.
To qualify for the loan, the person must have contributed by any of the PMI, at least 6 months and that such a contribution of up to 20% of the cost of the desired development. The PMI will contribute to the balance about 80% but not exceeding 90% of the cost or value of the property, such as mortgages through the Federal Mortgage Bank (FMBN). The loan is expected to repaid in 20-25 years with an interest of around 6% until it is liquidated.
However, there are challenges here. The maximum loan that a person can have access to a miserable five million naira ($). The borrower must have a valid title. You should also obtain and submit the plans necessary and appropriate for development must comply with planning laws and regulations.
The problem here is that the cost of acquisition the terrain, can be close or even more than the loan they are trying to access and given the high cost of land in most urban areas. The process and the period for obtaining these loans may make nonsense of the amount loaned, such as inflation, global economic crisis and changing trend of the construction can affect their efficient use.
The only option left, then, for most developers today is access to finance mortgages from commercial banks or their subsidiaries in the arms of high interest rate mortgages. The NHF is only background somewhere safe leaving the sea of people who need not be accessed.
The FMBN agree that is Managing Director General is (in January 2009) disbursed a total of N41, 958,756 primary mortgage institutions (PMIS) and property developers, representing approximately 52% of the N79, 515,416,273 approved2. He noted that home ownership in Nigeria is currently about 25% of the population (143 million). 3 Nigeria requires about 700,000 housing units per year for recorded an improvement in the provision of housing appreciation.
The home ownership can be achieved with the government and the review of funding This mortgage scheme as well as redefinition of the roles of FMBN and PMIS. Purchase of land / property laws must be loan must be reviewed to eliminate taxes, transfer length.
- Finance key to the house property in Nigeria-Mr. Ataghar Moses, MD / CEO FMBN (2007)
About the Author:
The Author is a Real Estate Appraiser, current affiars commentator and writer with interests in the human enviroment, living and life.
Article Source: ArticlesBase.com – Assessing Mortgage Finance in Nigeria
Insurance P&C – Spotlight November 2009
