Abuja – November 17, 2023 – Viewpoint Housing News.
The Federal Ministry of Housing and Urban Development has announced intentions to implement a new programme known as cross subsidies in housing projects, which would ensure inclusiveness and affordability of houses in the nation, this comes after evaluating prior attempts to reduce deficits in the housing sector.
The approach involves a mix of units in improvements to accommodate different income brackets, with market-rate apartments having a higher price tag that frequently reflects the true cost of construction as well as developer profit margins. A specific portion of the apartments in the same project are designated as affordable housing. These housing units are rented or sold for far less than the going cost. The expenditures of building and maintaining affordable houses are subsidized by the revenues from the market-rate units. Lower-income households may now afford homes thanks to this subsidy.
This was one of the recommendations made by the ministry’s Affordable Housing Building Design Committee, which was set up by Ahmed Dangiwa, the Minister of Housing and Urban Development, during his first week in office. The committee’s job was to review project designs and make sure that the ministry’s promoted homes are within affordable price ranges for low- and middle-class individuals.
The revised proposals incorporated an array of cost-cutting measures, such as one-bedroom bungalows and reduced acquisition costs, giving recipients the flexibility to grow into two or three bedrooms as their income rises. Among many other things, it covers fundamental interior finishing, intelligent roofing techniques, and optimal space management. By including a variety of low-, medium-, and high-end housing developments, the new plan aims to redefine housing accessibility and provide inclusion for Nigerians across all economic categories.
The design team’s innovation was praised by the minister last week as he went over the committee’s recommendations for affordable homes. Along with this, he stressed the need to adopt novel ideas such as cross-subsidies in order to combat the problems caused by inflation and the skyrocketing costs of construction materials, which have caused projected home prices to rise.
“So far, the Affordable Housing Design Team has done an impressive job of bringing down the cost of the dwellings we intend to promote, benefiting all Nigerians in the process. Even with the improvements, the savings from the updated designs have nearly been completely erased by the rising cost of construction materials.
“We need to think creatively and unconventionally if we are to accomplish our aims. For this reason, in collaboration with ministries and public-private partnerships, we intend to develop a thorough framework for implementing cross-subsidies in projects,” stated Dangiwa.
Redistributing the costs and benefits of housing development across different income groups is one of the key policy tools that governments and urban planners use to address housing affordability issues and promote inclusive urban development, he said.
“The truth about the affordable housing discussion is that a large number of Nigerians employed in the public sector, even government officials, are not even able to use their income to buy a good mortgage.
By encouraging market-based pricing for upscale projects to those who can afford them, we want to decrease the cost of housing for lower-class people.
“Our goal is to guarantee that every Nigerian has access to excellent and reasonably priced homes, not profit. By implementing cross-subsidy, we hope to establish a model for a peaceful society in which everyone benefits from progress. For our folks, we are making the dream of inexpensive housing a reality,” Dangiwa remarked.