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Published On: Tue, Jul 29th, 2014

What you need to know about National Housing Fund Act

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This is another important statutory law governing and guiding land and landed property transactions in Nigeria in the form of either home ownership or development by anybody who aspires to own a dwelling house of their own.

Section 1 of the National Housing Fund act states that-

(1) There is hereby established a fund to be known as the National Housing Fund (in this Act referred to as “the Fund”).

(2) All contributions and other monies required or prescribed by this Act shall be paid into the Fund

Section 2 explained the aims and objectives of the Fund shall be to-

(a) facilitate the mobilization of the Fund for the provision of houses for Nigerians at affordable prices;

(b) ensure the constant supply of loans to Nigerians for the purpose of building, purchasing and improvement of residential houses;

(c) provide incentives for the capital market to invest in property development;

(d) encourage the development of specific programmes that would ensure effective financing of housing development, in particular low cost housing for low income workers;

(e) provide proper policy control over the allocation of resources and funds between the housing sector and other sectors of the Nigerian economy; and

(j) provide long-term loans to mortgage institutions for on-lending to contributions to the Fund.

To qualify for this fund, any aspiring home owner must have been a contributor to the National Housing Fund Scheme from his/her paid employment. Such contribution must have been for a period not less than 6 months with satisfactory evidence of steady flow of income from their employment in order to guarantee loan repayment.

The National Housing Fund Act also stipulate the conditions for contributing into the fund by Nigerian workers as well as the interest rate payable on such contribution made

Section 4 states that-

 (1) A Nigerian worker earning an income of N3,OOO and above per annum in both the public and the private sectors of the economy shall contribute 2.5 per cent of his basic monthly salary to the Fund.

(2) An interest rate of 4 per cent shall be payable on contributions made under subsection (1) of this section.

The act also refers to a contributor to be a worker from whose basic salary or income deductions are made and paid into the Fund in accordance with the provisions of the Act. While a “worker” means an employee to whom salaries are paid and include a self-employed person who derives income from his/her employment.

A contributor to the National Housing Fund scheme is entitled to a maximum loan advancement of fifteen million naira (N15,000,000) or as may be determined by the primary mortgage institution in the country. An individual borrower cannot be granted loan advancement in excess of 90% of the total cost or value of the property to be mortgaged.

 The interest rate for each loan advancement as stipulated in the Act is not more than 6% per annum with a repayment period of not more than 25-30 years.

Relevant sections in the act governing land and property transaction/ownership in Nigeria are: 1, 2, 3, 4, 9, 10, 14, 16, 17, 20, 21 and 22

All these fifteen (15) statutory laws that I have written about are very important to be taken cognizance of by all those aspiring to embark on any form of land and/or landed property transactions either in the form of mortgage, lease, assignment/conveyance, alienation, transfer and ownership as they will help guide through a smooth completion of any of those land and property transactions

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