Monday, May 6, 2013
People need to build their homes early in life
Dr. Jogun Onabanjo is the Chief Executive Officer of a real estate consulting firm, Onabanjo & Onabanjo & Co. He tells SIMON EJEMBI why people have challenges building their homes and how they can avoid pitfalls. Why people find it difficult to become homeowners
One of the reasons is the inability of our people to plan. Many people don’t plan at all; they find it difficult to even sit down and say, ‘Well, at the age of 30 or 40 I should have my own house. And because of that lack of planning, people get to realise that they need their own houses suddenly; sometimes in their advanced age. At that time, their fortune may have reduced – some have lost their jobs, some have lower incomes than they did before and then it becomes extremely difficult.
If people plan early in life (and say things like), ‘Five years after I start working I should buy my land’; and after so and so number of years I should put a foundation in place,’ by the time they are in their late 30s or 40s they should have built their own houses.
Another reason is lack of focus. Many people I know focus on other things when they are younger. Marriage is one of them; career advancement is another, so is pleasure. By the time they are about to retire – it happens to very often with people in government (civil servants) – then they start thinking, ‘Oh I don’t have a house of my own, what do I do? Then they start thinking that by the time they get their entitlement, their gratuity or pension, they will use that to build their own homes. But sometimes that is so difficult. If someone retiring at the age of 60 has six children, the focus is to send them to school so that they would get university education.
Another reason also may be that even when you are focused and you have a plan institutions are not really there for us. For example, we don’t really have a viable mortgage institution in Nigeria. We don’t really have a place where you can go and buy land. Land ownership is done individually; you go to the so called Omoniles and they are all scattered – it’s not easy. There’s no guidance, there is no support for anybody and these people are not really educated to even be able to provide important details about the land that they have. So, at the end of the day, when you get in contact with them and notice the way they relate to you, you will either be discouraged or afraid. And when you hear stories of people who bought land and were denied their land for years that, may affect you until you come across an institution that can help you acquire land. In the last 10 years such institutions have been springing up, but for many years they were no institutions that could help you to acquire land.
Another reason may be inadequate knowledge about professionals. If you are used to professionals like surveyors, architects, engineers, you will know that these people know about house ownership and house acquisitions. They can help you, but many people don’t consider these professionals to be important. Abroad, many people have family lawyers, family doctors, you can even have an architect, but here people look at them as if they want to collect their money. So, instead of meeting the professionals they go and meet quacks. A bricklayer who does not know his left from his right is bound to mislead you. If you meet a builder, for example, and tell him you want to build a house he will know how to advise you and where you will go to.
One other reason why people find it difficult to own houses is our lack of saving culture. Ninety eight per cent of people spend all their income. Our saving culture is not good enough. Housing is usually, maybe, in one’s lifetime the single biggest investment and when you don’t save how do you buy a house or build one?
The only way is either to borrow from the mortgage institution or to save. And if borrowing is difficult then the next option is to save.
Getting it right
The first step is early planning. In our society, when you start working, the next thing is usually marriage and after marriage, it is bringing up your children and when you start having children the next thing is their education. So, before you are even ready for your house you are already advanced in age. If you plan to own a house early enough, that plan will affect the number of children you are going to have, it will affect the type of wife you will marry. That means any other thing you want to do you will want it to fit into that plan of owning a house.
Another step is your ability to make use of professionals; have engineers, architects, and builders as friends. They are people who can direct us on the proper way to go about owning a house. If you have a builder as a childhood friend, you are more likely to build a house than somebody who does not have builders as friends.
I also think another step is the ability to document everything. For example, some people buy land and they don’t even have documents to show for it – there is no document, no deed of assignment, no deed of conveyance. It’s just a receipt and the receipt doesn’t show anything. I think if, for example, a lawyer had been involved, the lawyer would tell you, ‘Look for this land you’re buying, and make sure your have the deed of assignment.’
If you’re able to do these things – have a good plan early enough, make friends with professionals, and make sure you have adequate documentation for your investments – it will be difficult for people to defraud you and it will be easier for you to have your own home.
Raising funds to build a house
Nowadays, there are more mortgage institutions in our society; you have primary mortgage institutions, you have the commercial banks, you have the cooperatives societies, but the average man on the street does not know they exist. Apart from the personal savings, people need to know that these institutions are there right now, I know banks are also into mortgage. If people are more aware that these institutions exist, they will be in a better position to access funds. People should know that a newspaper is not meant provide only crime stories, but also information to help us be better in investments. So, people should really focus on information that will enhance their quality of life. Also, the Federal Government has started co-operative housing schemes, under which there are co-operatives that emphasise loans for people who want to build their homes and for people who want to buy houses. These co-operatives will give you loans worth up to 200 per cent of whatever you save. You can use it to buy a land or to build your foundation and so on.
People should embrace them and register with them. I know that as time goes on our mortgage institutions will be stronger and when they are stronger they’ll be able to make funds available to more people. For the time being the interest rates are still high, so that may also discourage people. But, by and large, in all advanced countries you are not able to buy land with passing through a mortgage institution.
People should also have records because when you want to access loans, you will be asked to give a history of your income. Many people have cars of their own, they have children that go to schools, but when you ask them to give a history of their income they are not able to do so because most of their incomes are informal; they are not recorded, they don’t give or collect receipt. So when the bank asks them to prove their income they are not able to do so and yet they’ve been surviving. Registering your business helps a lot in this regard.