REDAN, FMBN LAUNCH NEW ESTATE DEVELOPMENT POLICY.

The Real Estate Developers Association of Nigeria, in collaboration with the Federal Mortgage Bank of Nigeria, has announced plans to introduce a new estate development policy to guide the activities of operators in the built environment.

The National President/Chairman of Council, REDAN, Chief Olabode Afolayan, revealed this during a press conference in Abuja, on Friday, where he also addressed issues concerning the granting of loans to estate developers in the country by the FMBN.

He said, “Together with the FMBN, we are working on a new estate development policy. This policy will significantly address all forms of crisis that we have experienced in the past. With the new management of the bank, we are working together to come up with this policy, and it will check estate development loan crisis.

“In fact, what we are working on will not allow a developer to go and take a facility to build 1,500 units of houses any longer. If you want to build 1,000 or 500 units of houses, we will ask you to break it down into modular units like 100 or maximum 200, depending on your capacity.”

Afolayan said the policy would help curtail all forms of financial crisis being experienced by developers, stressing that it would check unnecessary level of indebtedness to mortgage institutions by operators.

He said, “If at all we run into crisis, it will never amount to several billions any longer. If you complete your 100 units of houses in six months, you can come back and we will give you money to build more; meaning you can have it in phases.

“Henceforth, we will ensure that before we give you document to go to FMBN to obtain a loan, you will enter into a technical management agreement with REDAN. This agreement will empower REDAN to go to your site to ensure that you meet with all the necessary terms and conditions, and you are building houses in line with what is acceptable in the industry without compromising standard and quality.”

The REDAN president also explained that real estate developers in the country were not having bad debts with FMBN. He stated that reports claiming that developers were indebted to the bank lacked basic information on the transactions between operators in the sector and the financial institution.

A national daily (not The PUNCH) had reported that the FMBN was finding it tough recovering the N11.24bn estate development loan from developers due to alleged fraud and insider abuses by personnel of the bank.

Reacting to the report, Afolayan said, “If you look at the publication, the amount stated there was for 2009 and it stands at 2009. Even then, we went ahead to let people know that it is not an issue of debt, but just an incomplete transaction package.

“However, we all know that there is no where you would create credit without having an outstanding. But the good thing is that we, on daily basis together with FMBN, ensured that we discharged our responsibilities in the best way we can. And wherever there are issues, we never allowed them to get to that level any longer, having learnt from the past.

“So, for today, we don’t call it debt. We have good transaction and not bad debt. If FMBN refuses to create credit, there will be fewer houses. And what is the money meant for? The money is meant to create credit for constructing houses. So, what we have is good transaction, with FMBN and periodically, together with the mortgage bank, we try to hold stakeholders, meeting to appraise activities.”

Asked to state the precise amount that estate developers owed the mortgage institution, Afolayan said, “We have good credit transaction with the FMBN.”

To prevent a repeat of what happened in 2009, he explained that the association, during a recent meeting, agreed to improve the financial status of its members. This, according to him, will enable members to clear whatever facility they collected from the mortgage bank as at when due.

Afolayan said, “REDAN needs to increase capacity among its members. Because when people do not have the capacity to do certain things and they go into it, the end result is always crisis.

“Also, REDAN needs to classify members. Let us know where you belong. We will not allow you to take N10 when you don’t have the capacity to even accomplish a loan of N5.”

Source: THE PUNCH