New policies and directions in property, security rights in Nigeria’s housing sector



To understand the phenomenon of the relationship between housing and the general economy is not far-fetched. Housing development and its associated activities generate a ripple effect of other productive activities in the real sector through a network of backward and forward linkages; housing generates employment both during and after development construction; housing typifies periods of economic boom while providing some form of stability for the economy during economic busts; provides a new class of investments by way of investment opportunities in asset-backed securities; to mention a few.

Adequate housing as a right
For a proper and common understanding of this presentation, the following are definitions of terms used in this paper:
Property right: This means the right of ownership. The right of ownership entails a bundle of rights: the right to use, sell, pledge, bequeath and subject to some limitations, even the right to destroy property owned.

Security Right: This is the right of an individual in any living arrangement to be free from forced eviction, harassment and other threats such as arbitrary interference with one’s home, privacy and family.

Right of residence: This is the right of a person to choose his/her own residence or determine where to live.
Right to adequate housing: This is the right to live in security, peace and dignity. It is an embodiment of both property right and security right.

A number of conditions necessary for the existence of the right to adequate housing in terms of property and security rights can be identified as follows:
Security of tenure, Housing, land and property restitution, equal and non-discriminatory access to adequate housing, participation in housing–related decision-making at the national and regional levels, availability of services, materials, facilities and infrastructure, affordability condition where the cost of housing does not threaten or compromise the occupant’s enjoyment of other human rights, habitability condition where housing guarantees physical safety, adequate space and protection against health and structural hazards, accessibility criterion where adequacy of housing takes into account the specific needs of disadvantaged and marginalized groups of people, location where housing is not cut-off from employment opportunities, health care services, schools and other social facilities; and lastly cultural adequacy where housing respects and takes into consideration the expression of cultural identity.

It is worthy of note that the Right to Housing is a component of the right to property. Indeed, having a secured place to live is one of the fundamental elements for human dignity, physical and mental health and overall quality of life to enabling a person’s all-round development.

Within any society, the provision of the socio-economic and political environment adequate for the realization of property and security rights requires appropriate and a robust set of legislative and regulatory measures to be adopted. These measures are necessary to prevent any form of violation to the individual’s rights to adequate housing.

It is interesting to note that there is no shortage of legal declarations, charters and legislations providing and protecting the right to adequate housing. For instance, the Universal Declaration of Human Rights  (Article 25) recognises the right to housing as part of the right to an adequate standard of living. It states:

“Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.”

The African Charter on Human and People’s Right recognizes the existence and preservation of private rights to property. Equally, the Constitution of the Federal Republic of Nigeria 1999 (Section 43) provides that “every citizen of Nigeria shall have right to acquire and own immovable property in Nigeria.”

As laudable as they are however, these declared rights will however not be realistic or material without governments enacting necessary legislative means that ensure and enhance the availability of and access to land.

A good, efficient and effective land policy administration would engender the development and growth of homeownership at a high level and robust housing and mortgage finance systems in the Nigerian economy. However, asides from an effective land policy, a number of regulatory framework measures are critical to upholding the wide array of individuals’ rights as they relate to housing and they will be examined in due course.

Current policies and directions in Nigerian housing sector
Housing is said to be the second most important element in the hierarchy of human basic needs. Therefore, the need to examine the property and security rights vis-à-vis the Nigerian Housing sector cannot be overemphasized.

According to studies carried out by the National Bureau of Statistics and United Nations some years ago, the national housing deficit was then estimated at between 12 – 16 million housing units. The recommendation by the UN then was that 720,000 housing units are required to be constructed on an annual basis.

Based on the annual population growth of 2.5 per cent per annum, 49 per cent urbanisation growing at five per cent per annum – all some of the highest rates globally, it is not difficult to imagine the deficit increasing significantly to 23 million by the year 2020.

To have a better understanding of the desired changes in the policies required to drive the Nigerian housing sector forward, it is imperative to first understand the contemporary land administration policy in the country and the impact on the housing sector. The ideal starting point for this discourse in the Nigerian context is the Land Use Act.

The Land Use Act:
Promulgated in March 1978, the Land Use Act is the principal legislation on the Nigerian land policy. A major feature of this Act is the vesting of the ownership of land in Nigeria to the Nigerian public, held in trust by Governors of the federating units of the country and the Minister for the FCT for land inthe Federal Capital Territory.

The Act was set up to facilitate land acquisition and reduce issues of ownership, curtail land speculation, facilitate the transfer of land and help manage urban growth.

Embedded in the Act, is the provision that any property right to be enjoyed by an individual is expressly stated provided in the Certificate of Occupancy (C of O) issued to the individual by the State through the mechanism of a land allocation committee/authority.
However, the Act has not failed to achieve its main objectives primarily due to delays and high cost of property transactions.

Policies on taxation and fees:
The levy on housing development and provision, in the form of taxes and approval fees constitute considerable additional expenses for real property transactions. For instance, Value Added Tax (VAT) is deducted at various stages of processing building approvals to add-on as much as 30% to the cost price exclusive of title fees, stamp duties and other sundry expenses. Multiple taxations on property transactions at Federal and State levels are a case in point.
Local government/customary land registration

The Land Use Act vests powers in a Local Government to dispense land within its territory and issue title documents to allotees. A major issue is the poor nature of record keeping at most local governments around the country.

It is difficult to obtain accurate and reliable information regarding these properties. Local inhabitants and their village chiefs wield strong control over the land thus making it near impossible for any person seeking to acquire/develop the property to peacefully enjoy his or her rights on the property. The difficulty of enforcing any right over properties discourages financial institutions to accept these properties as security or to create mortgages.

Adequate finance for real estate/housing sectorThe dearth of long-term funds for housing finance has always been a challenge despite legislations put in place. For instance, apart from contributions deductable from workers’ monthly and contributions of the Federal Government, Sections 5(1) and 5(2) of the NHF Act respectively mandates commercial banks to invest 10% of their loans and advances in the NHF while registered insurance companies invest a minimum of 20% of non-life funds and 40% of life funds in real property development of which not less than 50% shall be paid to the Fund through the Federal Mortgage Bank of Nigeria.

However, these provisions are not being enforced appropriately while necessary support for tapping into the capital market particularly for social housing is not adequate.

National Policy on Housing (2002):
The current policy framework for the Nigerian Housing Sector is the National Housing Policy (2002), which is the first of such to be approved after some 20-odd years.

In summary, the National Housing Policy (NHP) seeks to revitalise the housing sector to enable it serve as a catalyst for rapid and effective socio-economic development of Nigeria, with particular attention to the reduction of poverty and creation of job opportunities.
Some key priorities of the NHP relevant to our subject matter are:

To make housing finance available to all segments of the Nigerian population particularly the medium, low and the ‘no’ income earners;
To provide the legal and regulatory framework to attract private sector investors to develop affordable housing products for the target group mentioned above, to develop an effective land administration system to make land ownership available, secure, accessible and easily transferrable at affordable rate, to establish and develop title and mortgage insurance systems and institutions.

Land is central to property and security rights. As mentioned earlier, the Lands Use Act is widely acknowledged by stakeholders as perhaps the single biggest constrain to unlocking the Nigerian Housing Sector. Little wonder the NHP makes a clarion call for the amendment of the Land Use Act while stating its goal in Section 4.2 as “to make serviced land with secure tenure easily available, accessible, transferable and at affordable price for housing development.”

Further to that, the NHP identifies strategies for attaining this goal to include the excise of the Land Use Act from the Nigerian Constitution and amending it to:
Establish land registries at Local Government Areas to facilitate the registration of Customary Rights of Occupancy,
Issuance of Rights of Occupancy and consent for mortgages to be completed in not more than 30 days from application,
Regulate charges as well as time limit for grant of Consents on mortgages and assignments on land transactions,
Review of the composition of the Local Government Land Advisory Committees to include relevant professionals and other stakeholders,
Simplification and quickening of the process of payment of compensation not later than six (6) months from the day of acquisition,
Provision of guidelines for fixing ground rents and other land transaction charges by registered land professionals for compensation payments to reflect present day economic value of land, and
Provision of a review mechanism of the circumstances under which a certificate of occupancy can be revoked to reduce temptation to arbitrariness.
Obligation of government in providing and sustaining the right to adequate housing

The provision and sustenance of the right to adequate housing for the people in any country rests on Government and its obligations are:
Obligation to Respect Rights: This obligation requires Governments to refrain from interfering directly or indirectly with the enjoyment of the right to adequate housing. For example, government should refrain from carrying out forced evictions and demolishing homes, denying security of tenure to particular groups of people, imposing discriminatory practices that limit people’s access to and control over housing, land and property, and infringing on the right to privacy.

Obligation to Protect: The Government is required to protect the people by preventing third parties from interfering with the right to adequate housing. Government ensures that private actors such as landlords, property developers, land owners and corporations comply with Human Right standards and legislations related to the right to adequate housing. Furthermore, government is expected to regulate housing and rental markets in a way that promotes and protects the people’s right to property and security in terms of housing. Also, the State should ensure that banks and financial institutions extend housing finance without discrimination.

Obligation for fulfilment: The government obligation or role of fulfilment requires the adoption of suitable legislative, administrative, budgetary, judicial, promotional and other measures to fully realize the right to adequate housing. Government should adopt a national housing policy or plan that defines the objectives for the development of the nation’s housing sector, identify the resources available to meet these goals and specify the most cost-effective way of using the resources. Government must also provide physical infrastructure required for adequate housing to be actionable.
Recommendations and the way forward

There is a need to review the Land Use Act, to make it pro-active in the provision of land for housing development. One critical recommendation to easing and speeding up the grant of consent is for governors to delegate the power to appropriate officials (commissioners for Lands and Housing readily comes to mind) to reduce bureaucracy. The processes also need to be reviewed to align with international best practice with regards to cost of transactions, required number of processes and more effective timelines for process completion.
Taxes payable on property transactions must be harmonised with the reduction of the cost of title registration and stamp duty charges for affordability to investors and individuals acquiring a home.
To generate local employment and improve local content in housing delivery, it is critical to review current policies and practices against the importation of building materials.
Reduction of restrictions caused by traditional ownership which inhibit housing development and the upgrading of the status of Rights of Occupancy issued by local governments and improving their land registry systems for proper documentation and record keeping for properties located in rural areas. This will add to the land bank available for commercial activities when land in rural areas are recognised as viable and given the same economic status as those in urban areas.

It is pertinent to recommend that in the event that settlers are to be relocated or demolitions are to be carried out, viable alternatives must be necessarily provided for displaced persons.

The encouragement and increased advocacy for the recognition of property and security rights by non-governmental organisations, community-based groups and civil societies.

Strengthening of institutions that cater to citizenship resort and complaints such as the courts and Public Complaints Commission to safeguard the rights of citizens and balance the arbitrary powers of state governments in the determination of land use affecting citizens or settlers.
The sanctity of the rights of individuals to property and security of tenure remains sacrosanct and weighs heavily on Governments to safeguard. However, the empirical world demands that Governments must also provide a delicate balance between safeguarding these rights and protecting investments from undue losses and mitigating risks associated with housing development.

It is commonly perceived by investors that the legal and regulatory framework as well as the judicial interpretations sways heavily in the direction of renters and mortgagors vis-a-vis landlords and mortgagees. Coupled with the lack of foreclosure laws, this situation has limited potential investments due to perceived huge business risks associated with residential housing by investors.

Considering the importance of housing to personal and national life, the role of government in sustaining the property and security rights of her people cannot be under-estimated. The sustenance of property and security rights requires the existence of sound legal, socio-economic and political conditions in any country.

Land is germane to providing equal opportunity and therefore, the liberalisation of access to land is basic for all citizens especially as homeownership is a means for economic and financial empowerment of households.

It has been mentioned that the current policies and directions of property and security rights in the Nigerian Housing Sector have assumed legislative, political, fiscal and financial dimensions. The current National Policy on Housing encapsulates a feasible work plan for reviewing the land Use Act which is central to unlocking the potentials of the Nigerian Housing Sector. The Land Use Act at the national and sub-national levels of government, taxation, funding and affordability issues greatly weigh on property and security rights of the individual.

Therefore, the review of relevant legislations, and the creation of conducive operating conditions by government via the formulation and implementation of sustainable economic stabilization policies will engender a refined position for property and security rights in Nigerian Housing Sector.

. Kumo, managing director/chief executive of the Federal Mortgage Bank of Nigeria (FMBN) made this presentation at the Roundtable on Asset Registry and Housing Finance in Nigeria organised by the Nigerian Institute of Advanced Legal Studies.

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