AFFORDABLE HOUSING FOR NIGERIANS ON LOW INCOME SOCIAL INTERVENTION - - PowerPoint PPT Presentation

AFFORDABLE HOUSING FOR NIGERIANS ON LOW INCOME – SOCIAL INTERVENTION

A PRESENTATION TO THE REDAN 2019 BUILDING EXPO

FEMI ADEWOLE

FAMILY HOMES FUNDS LTD

• The Excluded 90%;
• FHFL’s Focus Market Segment;
• Our Products
• Facilitating the Supply of New Housing for People on Low

Income

• Enhancing Access to Home Finance
• Partnering for Success

Key Themes

THE EXCLUDED MANY

73% 91%

Our Obje jectives

To work with partners to create:

• 500,000 homes which are affordable to

Nigerians earning less than N100k (US$300) per month;

• 1,500,000 jobs.

Strategy Framework

1500000 JOBS 500000 HOMES

AFFORDABLE HOUSING FUND HELP TO BUY FUND RENTAL HSG FUND LAND DEV. FUND

SUSTAINABLE IMPACT

FINANCIALLY VIABLE WELL GOVERNED PEOPLE RELATIONSHIPS

Construction Finance Facility

Home Loans Assistance Social Housing Land Development OUR RESULTS WHAT WE AIM TO DO TO ACHIEVE THEM CORE VALUES

We will promote an alliance with partners (Universities, PMB, NMRC, FMBN, REDAN, Coops etc) to establish a Housing Finance Innovation

• Lab. We must find a HOME GROWN SOLUTION!

expanding access to home financing for people on low income.

HELP TO O W N RENTAL HOUSING FUND

HELP TO O W N

1 % 4 % 5 % HTO provides a deferred payment loan to eligible buyers on concessionary terms to help enhance affordability. Eligible Buyers are required to contribute up to 10% of the purchase price. The completion cost (90%) is funded by a conventional 50% mortgage from the existing mortgage lenders on commercial terms and 40% loan from FHF. The FHF loan requires no repayments in the first 5 years. After the first 5 years, the borrower commences repayment on the FHF loan with a starting interest rate

• f 3.5% per annum in the sixth year which increases in steps to just over 13% per annum by year 15. In order to own

the home outright, both loans have to be fully repaid by the end of year 20. FHF Contribution Mortgage Bank Contribution

Buyers Equity

Potential Impact and Targets

• Significant enhancement of affordability (up to 30%) for people on

low income with a spin off effect of stimulating supply of new

• homes. For instance a N5m
• Complements existing home financing options (NHF, Commercial

Mortgages). It can also provide a bridge for the NHF.

• We expect to write about 3000 loans in 2019 (pilot phase) growing

up to 25000 by 2021.

• Significant numbers of new urban dwellers are likely to be renters. It provides an accessible first

step into housing for most people. However most of the rented housing can be expensive, poor quality unregulated and insecure;

• FHFL seeks to harness the significant potential rental housing has to deepen housing finance

and offer large numbers of Nigerians on low income a first step on the ladder towards home

• wnership.
• We believe that effectively executed, this intervention has the most transformational effect on

the housing market in the medium term. It has the potential to unleash supply and grow the housing developer market including new Technology.

• HOW IT WILL WORK

Developer ASSET MGT CO ESTATE MGT ORGANISATION FHFL RENTAL HSG FUND CAPITAL MARKET Construction Finance

Construction Finance repayed from proceeds

• f sale to AMCO

Long term lending to AMCO repayed from rental revenue. Second stage possibility for Capital Market

• perations to raise capital on the back of

established rental stream Units rented to individuals with an

• ption to buy

Service Agreement with an Estate Management Organisation Bulk Pre-Purchase Agreement between developer and AMCO offering secured exit.

• KEY ISSUES TO BE ADDRESSED
• Development of key Institutions with credibility in the market,

particularly Housing Management Organisations to secure revenue;

• Landlord and Tenant Regulations. Some States now have this

(e.g. Kaduna) but needs to be more widespread;

• Possibility of Tax Breaks and other concessions to boost yield;

It need not be, if we…….

• Give a bit more attention to developing housing solutions targeted at up to 90m Nigerians living
• n less that US$1/day. This population (equivalent to the whole of West Africa) is too large to

ignore;

• Recognise that the cost of investing in housing that is affordable to ALL sections of the population

is MUCH lower than the cost of NOT investing or half hearted approaches;

• Build Institutions that provide a sustainable base for housing delivery. REDAN can have a

significant role to play here;

• Work Together…….