Tunde Macaulay

The Managing Director of Refin Homes Limited, Tunde Macaulay, is a real estate expert with over 21 years’ cognate experience in finance and real estate. He tells Daniel Ekugo why housing-for-all in Nigeria remains a big issue and the role of stakeholders, policies and innovation in solving the challenge.

You have been a major player in the real estate sector for over two decades. What is your assessment of the industry?

In my 21 years of dealing with people in the finance and setting up a mortgage subsidiary of a commercial bank, I have come to realise that even to date, a lot of people see owning a home as a daunting task. Some people still believe that they can only own a house towards the end of their working life chiefly because of finance and capital investment involved. Yet, the mortgage system that could have been the saving option is not helping the issue especially for the middle and low income earners as it was very difficult for them to get qualified because of the high interest rates.

Today, we are looking at a mortgage of maybe an average 10 years at 28 per cent whereas in other climes, mortgages are accessible at a single digit for as long as 30 years. The issue of quality is also another factor of concern. While all these challenges exists, I will like to state that the industry has evolved to overcome these traditional drawbacks as government and private investors launch new initiatives to make ownership flexible for all.

Despite efforts by the government and private investors, Nigeria remains the lowest in Africa in terms of home ownership at 25 per cent, with the sector performance in the first quarter at its worst in over five years. What’s your thought on that?

Let me first of all state here that housing deficit in Nigeria is beyond 17 million as it stands today. The United Nations arrived at this figure sometime ago but since then, the population has continued to grow with a lot of rural urban migration. This simply means that the deficit has also grown. To bridge this gap, Nigeria needs to produce one million housing units per annum. Although we are talking of 740,000, this is indeed far behind the reality. While the real estate has emerged lately with more investors exploring the market as well as government interventions in the sector, it is quite worrisome that home ownership in the country is still very low

Quite a lot of factors such as foreign exchange, lack of access to land and institutional bottle necks amongst others could have contributed to the situation but majorly, I will like to say that high concentration on the high end of the market has continued to mar the joint effort of stakeholders. Majority of those affected by this deficit are the middle and low income earners, yet, not too many players are looking at this market. Once efforts are directed to the middle and low income earners including getting necessary support from government, we will then see the expected changes.

But lately, a lot of developers and real estate consultants are moving to the low-end market.

Most of the homes out there are not affordable or within the reach of the larger segment of the populace which are the middle and low income earners and access to funds for these categories of people is pretty difficult. Another issue is that as much as developers and agents are now trying to save the situation with cheap landed properties, the issue of lack of trust and confidence is a challenge. A lot of people are afraid of taking advantages of this offer either because of past ill experience or experiences of others. This factor alone continues to abort development in the sector.

As an investor in this division, what strategies are you deploying to address these challenges you have identified?

Having understood the nitty-gritty of the business and the gaps, there is no better way for us to confront these issues than bringing innovation to the sector. For us, we try to change the usual story and the landscape, using our background to restore integrity in the sector, manage cost, ease accessibility and conditions of funding with an assurance of quality and safety as we are ISO certified.

How realistic are these strategies, especially in terms of accessibility to funds?

Like I said earlier, majority of the people affected by deficit are the middle and low income earners who are constrained by finance and this is where our strength lies. We have come up with products and solutions both in the home and land ownership categories whereby buyers can take possession of a property even before making full payment, albeit, we hold the documents until full payment is made. For instance, one of our products, ‘Own a Home Scheme’ enables our clients select a house of choice and spread the payment over 36 months and move into the house even before making total payment, while we handover the house documents are handed over after full payment has been made. We have also established a partnership with mortgage banks for access to the National Housing Fund, NHF, such that for anyone that buys into any of our schemes, we apply for fund on his/her behalf and by the time the fund comes say around month 24; we add it to whatever contribution the customer has made and hand over the house to the customer while he pays the balance within a specified period. Most people are not even aware that they can get NHF funds to the tune of N15 million for as low as six per cent. There is no other mortgage that is as low as this in this environment.

We also have an arrangement where subscribers can pay half of the amount of a property and take possession while they spread the balance over a specified period and for those who have land but don’t have the where withal to build, we also come to the aid of such people by assisting to build on their land on agreed conditions. We are saying with as low as N9 million, you can own a quality and bespoke house in a choice area in Lagos and pay with convenience. This is our own quota of simplifying home ownership for Nigerians. In our drive to change the building landscape in the country, we have come up with lighter conditions that have taken care of the issue of trust, access to funds, affordability and quality. This model however does not come without its challenges but we believe we will outgrow them as more people embrace this.

What challenges do you face?

A major challenge thwarting development in this regard is the issue of integration. By this, I mean getting people to embrace this innovation is pretty difficult. Quite a lot of people out there are used to the traditional way of building and would not want to embrace the direct delivery of home to end users from manufacturers, thus limiting the role of the middle men.

Others are what we are already familiar with like the issue of documentation and delay in approval processes. This is why for us, we don’t compromise quality to gain public confidence in the shortest time. We have an academy where we recruit professionals to train artisans working on our projects, we are driving at professionalism and no less.

In bridging the deficit gap, how many housing units can your company provide on a yearly basis?

Since we are relatively new in the market, we are looking at 250 units for now and as we grow, we improve on our delivery.

Where and how do you think the government can support an housing innovation like this to address homelessness?

The government can come in by making human and financial resources available to investors. It has to be diligent in policy formulation by adopting strategies that have practical applications in the immediate environment. Of most important is coming up with friendly policies for local manufacturers of building materials and offering tax rebates for importers who then can sell at a more competitive price to builders. This can make building cheaper and more attractive. In addition to harmonising taxes, the government can also take a cue from Singapore where housing comes at a subsidised rate, leaving home ownership at almost 90 per cent. The government can make a portion of the pension funds available to mortgage institutions for onlending to their customers at lower rates and longer tenors. Above all, there is room for innovation which will definitely cut down cost and increase access to home ownership.