The recent launch of the rent-to-own housing scheme with the approval of the board of the Federal Mortgage Bank of Nigeria, FMBN, is specifically to make housing more affordable for Nigerian workers who, ordinarily, cannot build or buy homes from their meagre income.
The scheme is another strategic move by the apex mortgage bank designed to make home ownership more accessible and affordable for Nigerian workers.
It is also an innovative affordable housing product which provides an easy and convenient payment plan towards home ownership for workers in the country.
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Unlike similar schemes promoted by private sector operators which demand higher interest rate for shorter repayment tenor, the FMBN scheme is designed in a way that makes it possible for workers to move into homes built by FMBN as tenants, and commence payment for units which will eventually become their property having completed payment through monthly or yearly rent payments spread over a period of up to 30 years.
To further increase affordability, the units will also attract a single digit interest rate of 9 per cent on the price of the property on an annuity basis. The product will cover property with the maximum value of N15 million.
Unlike the rent-to-own scheme operated by the Lagos State Government which targets all civil servants in the state who are first-time home buyers, the FMBN scheme targets workers nationwide but mainly those who are contributors to the National Housing Fund, NHF, and will be implemented in phases. About 3,000 houses are planned for the pilot phase.
Housing affordability became a big issue in Nigeria when government stopped direct involvement in housing delivery, such that large scale developments like the Shagari Low Cost Housing at the federal level and the Jakande Low Cost Housing in Lagos State have become history.
But to deliver on the rent-to-own housing scheme, FMBN will be partnering with reputable estate developers for the construction of quality, cost-effective housing stock nationwide. Payments for the houses will be domiciled with the Central Bank of Nigeria, CBN, through the Treasury Single Account, TSA. Properties planned for the rent-to-own scheme are existing estates that are funded by FMBN nationwide and non-funded estates.
“This rent-to-own scheme is yet another ground-breaking initiative of our bank that is targeted at increasing access to affordable housing by Nigerian workers who fall into the low-medium income bracket,” explained Dangiwa Ahmed, the managing director/chief executive officer of FMBN.
Continuing, he said: “The rent-to-own housing product is designed to make sure that any worker who collects a 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.”
He commended the Federal Government for its commitment to the development of housing and for the continued support for the ongoing reforms to re-position FMBN on the path of efficiency and impact.
Dangiwa added that the implementation of the scheme would totally eliminate the burden of equity contributions by workers for housing loans, complement the existing products of the bank by widening the home ownership bracket, increase housing stock, and help the bank to utilise abandoned estates that are to be transferred to the scheme.
