BEING SPEECH
BY HIS EXCELLENCY, THE GOVERNOR OF LAGOS STATE, MR. BABATUNDE RAJI FASHOLA, SAN,
ON THE OCCASION OF THE LAUNCH OF THE LAGOS STATE HOME OWNERSHIP MORTGAGE SCHEME
ON MONDAY, FEBRUARY 3, 2014
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welcome you all our distinguished guests to
this occasion very warmly and with a lot of pride.
I am proud because this occasion affords me
the opportunity to deliver on a promise made on behalf of our Party during the
electioneering campaign.
I am proud because many years of grueling
work, long hours and devotion by our team can now set us on a course that takes
us closer to our desired prosperity.
I crave your indulgence to bear with me today
because I may speak for a longer period of time than you are accustomed to. The
reason is that I will need to explain the details of our Lagos HOMS Scheme which
is why we are all here.
I said Lagos HOMS because that is what we
decided to do. To provide people with a home instead of a house.
The difference is significant and I need to
explain our view of these differences.
For many years, our people have had to acquire
houses; often times being required to pay cash once and for all, as if they
were buying a shirt or a pair of shoes in a shop.
This approach in part explains the reason why
a large number of ordinary middle class and working people cannot afford to acquire
homes on the basis of the their legitimate income derived from hard work that
rewards the dignity of their labour.
In Lagos State, we have taken the view that a
home is not something you buy in one day but over time, in a way that your
ability to acquire it is tied to your income and continued prosperity.
Our view of a home is that it is something
you pay for gradually and it is a place of safety, well built, safe and sound,
to protect you and your family from the hazards of nature such as rain and heat;
a place that will not flood or suddenly collapse. An asset that outlives you.
These and more are the ideals that have
inspired the event that we are gathered to start today; the Lagos HOMS.
Lagos HOMS is the acronym we have created
from the Lagos Home Ownership Mortgage Scheme.
It is a process by which Lagosians will be
given a fair and transparent opportunity to pay for their homes over a period
of not less than 10 years under a mortgage scheme.
Today as we flag off this Scheme there are
1,104 (One Thousand, One Hundred and Four) completed homes while another 3,156
(Three Thousand, One Hundred and Fifty Six units are various stages of
construction, and we intend to start more.
We are starting 132 (One Hundred and Thirty
Two) units in Iponri, 720 (Seven Hundred and Twenty) units in Ibeshe Ikorodu,
420 (Four Hundred and Twenty) units in Ajara Badagry, 648 (Six Hundred and
Forty Eight) units in Sangotedo Phase II, 216 (Two Hundred and Sixteen) units
in Obele, 36 (Thirty Six) units in Akerele Phase II, 48 (Forty Eight) units in
Oyingbo, 1254 (One Thousand, Two Hundred and Fifty Four) units in Ilubirin and
1080 units in Ijora Badia.
The easiest thing to do would have been to
simply sell all the houses today, collect the cash and wait for the next batch
and do the same; but this is not our way.
That is the simplistic way that does not
solve the problem of housing. For us, sustainability is the key and I have
personally benefitted from previous initiatives by my esteemed predecessors in
this regard.
I am happy that we took the decision to
confront this problem and I hope that the solution we offer today will be the
long term solution.
Part of the pride I have about this project
is that we have not had to borrow money to fund any of these housing units. Our
progress so far is the result of rigorous planning and financial discipline,
savings and commitment.
These projects have been fully funded from
the taxes that our people have paid as monthly internally generated revenue
(IGR).
About 3 years ago, when we took the view that
the Lagos State Ministry of Housing on its own cannot deliver all the houses
that Lagosians require without the active support and participation of private
sector developers, this Scheme was born in my mind.
The next hurdle was how to deliver it.
We started saving N200million monthly,
whether the internally generated revenue increased or decreased; and today, we
are now saving N500million monthly, and it is possible to increase this as more
people pay their taxes.
The role of the Ministry of Housing will
increasingly be that of a regulatory one, facilitating private sector housing
development and enforcing housing regulations, leading research into systems
building and cost saving initiatives that increase the affordability of homes
and the speed of construction.
Our ultimate plan is to be the guaranteed
purchasers to developers who will acquire their own land, build to our
specification and to our agreed prices.
This way, many more houses can come on stream
because of private sector participation, and Government will use the IGR from
tax payers’ money to buy from the developers and sell to the citizens on a 10
year mortgage payment.
When I signed the Landlord and Tenant Bill
into law, I explained that it was the beginning of a housing plan for Lagos.
Many commentators who either did not listen to me or did not understand me
reasoned that I should have provided houses first. The truth is that are empty
houses. People simply cannot afford them.
While the Tenancy Law represents our moral
intervention to protect citizens who earn monthly income from landlords who
demand multiple year advance payments, the Lagos HOMS represents our leadership
intervention to increase the stock of affordable housing on convenient payment
terms.
After experimenting with a few designs of
bungalows, room and parlour and block of flats, we have settled on two designs.
A block of four floors, containing 12 flats of 1, 2, and 3 bedroom on each
floor and a block of 12 flats of two units of 2 (two) bedroom flats; and 1
(one) unit of a 3 (three) bedroom flat.
In each case, each block will have 12 flats
and in this way we can optimize the use of our limited land space.
We are still working on a design of a block
of 18 flats with lifts while we are looking for ways to power the lifts without
increasing the cost unreasonably.
We have also taken pains to design the flats
such that they have more space than most of what is available in the open
market.
For example, our one bedroom flat is 60.22
square meters while the 2 bedroom is 75.79 square meters and the 3 bedroom is
123.88 square meters.
They all contain more living area than many
of the standard 1, 2, and 3 bedrooms in the market, which are ordinarily
available to middle and low income bracket people who are out target under this
project.
In terms of pricing, our policy is about
affordability and accessibility.
This is so because we have not yet found
cheap or low cost cement, neither have we found low cost iron rod or low cost
labour.
The continuity and sustainability of the
entire project depends on our ability to build more at break-even cost without
profit, in a market where there is increasing inflation; fluctuating exchange
and interest rates and a high dependence on housing inputs that are imported
and priced in US Dollars against a struggling local currency.
Accordingly, we have applied an across the
board discount of 25% to the total actual cost of land, infrastructure and
building which is the total cost of the home.
The homes become more competitive against
what is available on the open market because there is a minimum period of 10
years to pay for it and the mortgage payment will attract a maximum interest of
9.5% per annum. There is no other payment plan superior to this in the country
today and this is our starting point, from where we hope to get better.
Indeed I have commissioned a study on the
total number of mortgage loans in the portfolio of all banks in our country and
the result is that there are approximately 200,000 (Two Hundred Thousand)
mortgages for a population of about 160 million people.
The lowest interest rates are about 11% while
there are higher regions of 25% or above. Similarly, there are tenures of
repayment as little as 4 years to as long as 30 years, but none of them is as
low as 9.5%, which is our maximum interest payment.
Therefore at the very start we have
established a capacity to out strip what exists by way of mortgage funding in
the open market.
I can only guess at this time that many of
you will be asking the question, how do I qualify to become a home owner?
My response is that after about 27 meetings,
spanning over 3 years, many debates and disagreements, we have resolved that this
project will only be for first time home owners.
In other words, only those who have never
owned a home whether acquired privately or brought from Government, will be
eligible.
So applicants will be required to swear an
affidavit to this effect, which is already part of the documents we have
prepared, within a contract that entitles us to re-possess the house anytime,
even in the tenth year, if we have proof that you owned another home when you
applied to this Scheme.
We intend to vigorously enforce this policy
and others that I will now announce.
In addition, only Lagos residents who are tax
payers will benefit.
For our people, we have taken the definition
of Residency applicable in the Tax Laws of the Federal Republic of Nigeria
which is a continuous period of residency for a minimum period of 180 days, or
about 6 months, irrespective of where your original roots are.
It will help applicants if they are able to
show us their residency card under Lagos State Residents Registration exercise
which is meant to register people who live in Lagos. The application forms have
been designed to demand this information.
Apart from residency, applicants must show
proof of payment of tax for a continuous period of 5 years preceding their
application.
This must be so because, as I said all these
houses have been built from taxes paid by our residents, and it seems to us
only fair that those whose taxes paid for it must get the first opportunity to
benefit.
While we welcome payment of tax arrears from
those who owe it, I must say that we have resolved that it will not entitle
such a person to qualify. He must wait and be a good citizen.
We also expect successful applicants to
immediately pay a deposit of 30% of the house they choose as their equity which
is global best practice, while the balance will be paid on a monthly basis over
10 years.
Accordingly, we will match house choices to
applicants’ proven income sources to determine eligibility and it is only
eligible applicants, whose forms will go into the ballot from which successful
applicants will be picked. We already have trained mortgage counselors to deal
with this process.
In the first instances, we intend to allot
200 homes per month, and increase that number to 300 per month and beyond, as
the number of completed homes increases and sustainability is guaranteed.
Accordingly, from the 4th of March when the
first draws will hold in public for the first 200 homes, I expect that subject
to the ability of our contractors to keep building quickly and qualitatively
and that all things being equal, there should be a minimum of 200 new home
owners in Lagos every month even beyond my tenure of office, with a capacity to
increase the monthly number until we strike a decisive blow at the housing
deficit in Lagos.
In order to help us manage the flood of
applications, let me advise applicants to only bid for houses in the areas
where they are prepared to live and not for every house that is put on the
market.
We will not allow any successful applicant to
rent out the houses. If you do not live in the house that you win, you will
have violated our first home owner rule and it is a ground to re-possess the
house, pay you off and offer it to those who really need a home.
As I said, we are building across Lagos and
we will all do well to wait for a home to be advertised where we want to live
or close to it.
For example, if you wish to live on the
Island, or in Surulere, you can bid for a home in Oyingbo, but certainly not
one in Ikorodu with a view to renting it out.
We will only allow you to rent it out after
10 (ten) years when you have fully paid for the house.
Let me add that prompt payment of monthly
mortgages will be rigorously enforced because we have seen that default of
payment and difficulty of re-possessing houses from defaulters has been a major
disincentive to investment in the property sector, by the private sector
developers, whose participation in housing development is critical to our
ability to increase the supply of homes.
We have therefore resolved to quicken
recovery by using Arbitration Rules which have been drafted into the contract
of sale and the mortgage agreement and the arbitration proceedings are expected
to be completed in 21 days.
We hope that we will receive the full
co-operation from home owners, lawyers and judges who must refrain from seeking
and granting injunctions to mortgagors who are in default, and submit to
arbitration.
As for the application process itself, we
have heard the fears of genuinely concerned citizens about the transparency of
the process and we are not unaware of the dismissive conclusion of the cynics
that we have pre-sold the houses to ourselves.
We have listened to all well intentioned
concerns and our response is that we intend to make the process transparent,
subject to the rules I have stated and the luck of the applicants at the
monthly ballot.
Accordingly, we have opened a website,
www.lagosHOMS.gov.ng where all the FORMS can be downloaded and all the housing projects
are displayed with their prices, floor plan, drawings, videos of the interior
and exterior and a mortgage calculator to help applicants calculate their
equity contribution and their monthly mortgage payment.
What the website has presently:
Download application form
Download full application pack
Apply online
Search for properties, floor plan and prices
Track your application
Calculate your mortgage payments
Check everything about Lagos HOMS –
Information sheet, draw rules, eligibility criteria, latest news, FAQs etc.
Some pictures and video
Therefore, the only time applicants will come
into contact with our staff is when those who cannot complete it online come to
submit their completed forms and are taken through mortgage counseling by our
Lagos Mortgage Board.
Distinguished ladies and gentlemen, this is
the outline of the work we have done behind the scenes to bring us to this day.
It is not finished, and we remain flexible to
review the process and make modifications as you engage with the Scheme.
We also anticipate that you will have
questions that my speech may not cover and we have designed and printed copies
of answers to what we think will be frequently asked questions, in English,
Yoruba, Igbo, Hausa and Egun.
We intend to update the range of answers as
we get feedback from you.
Distinguished ladies and gentlemen, in the
process of building these houses, we have created jobs on various construction
sites that have benefited 134 (One Hundred and Thirty Four) construction
companies, 459 (Four Hundred and Fifty Nine) sub-contractors employing over
1,168 (One Thousand, One Hundred and Sixty Eight) persons, 7 (Seven)
consultancy companies, 5,442 (Five Thousand, Four Hundred and Forty Two),
suppliers, artisans, labourers, and numerous citizens who are employed in the
supply chain of sand, gravel, wood and fittings, as well as food vendors and
transports.
We see the possibility for many more as we
increase construction.
The Lagos HOMS is not about providing a home
alone. It is also about a total lifestyle change. We are moving our people from
a desperation for shelter, to an orderly and planned living.
Because it is a mortgage driven scheme we
expect that people will take their jobs more seriously and apply themselves
more diligently in order to retain the ability to pay the mortgage.
In the normal course of things, you are only
likely to lose your home if you lose your job. And you are only likely to lose
your job if you misconduct yourself on your job.
Our Contributory Pension Scheme in Lagos has
been perhaps the most well-funded in the country. We hope that amendments to
the national legislation will be sensitive to home ownership and will open a
window for employees to secure their homes with some of their pension benefits
in the event of retirement before full liquidation of their mortgages.
We therefore expect to see not only increased
productivity which will benefit our economy at large, but we also expect to see
a progressive reduction of unethical conduct in the work place.
I will now conclude by thanking all of the
members of the Lagos HOMS Committee within and outside Government who have
served with me to bring us to this day.
Mr. Olasupo Shasore SAN, Mr. ’Dele Onabokun,
Mr. Ben Akabueze, Mr. Ade Ipaye, Mr. Tokunbo Abiru, Mr. Bosun Jeje, Mr.
Olutoyin Ayinde, Mr. Jimoh Ajao, Mr. Ayo Gbeleyi, Mr. Sonnie Ayere, Mrs.
Felicia Awofisayo, Arc. (Mrs.) Y.O.A Ajayi, Mr. Hakeem Muri-Okunola, Mr. Kunle
Awofeso, Alhaji S. A. Yusuf, Mr. Taofeek Oki, Mr. Tunde Jinadu, Mrs. Tayo
Gbajabiamila-Olamona, Mrs. Oyinkan Badejo-Okusanya, Ms. Shola Shasore, Mr.
Bayowa Foresythe, Mr. Kodjo Sagoe, Mrs. Mobola Fashola, Ms. Wande
Adeniyi-Williams, Mr. Bello Salihu, Dr. Yemi Isiba, Ms. Iyabode Oshodi, Mrs.
’Keji Onabolu.
It seems to me that the future is now here.
To the glory of God, towards a new home
ownership culture and a new work ethic that secures the future through hard
work, I inaugurate the Lagos HOMS website which opens the door today for
applicants within the next few days for the first 200 (Two Hundred) homes that
we are making available with the draw holding on 4th of March 2014.
Babatunde Raji Fashola, SAN
Governor of Lagos State
February 3, 2014
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