Lagos is realigning its home ownership scheme with the current economic realities, as it jettisons the previous arrangement which required first-time home seekers to deposit 30 per cent cost of the housing unit sought for, under the Lagos Home Ownership Mortgage Scheme (LagosHOMS).
In what is seen as a departure from the former arrangement which put the rich and middle income earners at advantage, the state government has unveiled two pocket-friendly options. They include rent-to-own and monthly rental.
With these new options, rather than making applicants for the home scheme to pay 30 percent equity contribution, successful applicants would pay only 5 percent of the cost of the flat, with the balance of 95 percent spread over a period of 10 years.
An applicant for the Igando scheme, for instance, where a three-bedroom apartment goes for N6 million, is expected to make N300,000 equity contribution and the N5,700,000 balance is spread over 10 years. The monthly rental requires the prospective home seeker to rent the house like any other house in time. The successfully applicant moves into the house and continues monthly payment to the government without any prior huge payment.
Gbolahan Lawal, the state Commissioner for Housing, told BusinessDay that the options have been introduced into the home ownership structure, with the low income bracket in mind and “in line with the resolve of Governor Akinwunmi Ambiode to run an all-inclusive government where every citizen feels belonged”.
“The rent-to-own and monthly rental is designed to give equal opportunity to eligible all residents of Lagos. This is unlike the old arrangement where first-time home seekers were required to deposit 30% cost of the type of house they wanted to buy, with the 70% balance spread over 10 years,” said Lawal.
The new options which have taken off the financial burden of 30 percent down deposit, the commissioner said would enhance the chances of low income earners.
Lagos had, early in 2014, under former Governor Babatunde Fashola, launched the LagosHOMS, the state government’s intervention aimed to enable more residents to own their own (first) homes through a mortgage scheme that offered mortgage package at a single-digit interest rate and for 10 years repayment tenor. The low point of the scheme, despite its considerable merits, was the 30 percent equity contribution successful applicants were required to make before they were given the mortgage facility.
“It is not easy for a winner of a three-bedroom flat, under the state government’s present housing scheme, to make an initial payment of about N5 million, for instance, before spreading the balance through monthly payments”, Governor Akinwunmi Ambode recently explained, stressing that this informed the decision to rework the scheme to suit present economic realities.
The housing schemes being offered for the rent-to-own are the Sir Michael Otedola Estate in Epe, consisting of a room and parlour apartment as well as 1 and 2 bedroom bungalows, and the LagosHOMS housing estate at Igando in Alimosho, consisting of 1, 2 and 3 bedroom flats, and the Oba Adeboruwa Estate in Ikorodu, all consisting of 1 and 2 bedroom flats.
Lagos has an estimated population of 20 million people and about 30 percent of this population, representing about 900,000 people, cannot on their own afford homes and therefore require some form of ‘cheap’ housing with government’s heavy input.
A recent report on ‘The State of Lagos Housing Market’ which puts the housing deficit in the state at 3 million, notes that about 80 percent of the residents lives in rented accommodation, pointing out that the state government needs to build consistently 187,000 housing units annually for the next 15 to 20 years to close its housing demand-supply gap.