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New Housing Affordability Initiative Unveiled by Ministry of Housing

 
In a determined effort to address Nigeria's pressing housing challenges, Ahmed Dangiwa, the Minister for Housing and Urban Development, has introduced an innovative initiative to enhance housing affordability. This initiative, known as cross-subsidy, is a vital policy tool employed by governments and urban planners to tackle housing affordability issues and promote inclusive urban development.
 
The core concept behind this approach is the redistribution of costs and benefits associated with housing development among different income groups. Minister Dangiwa stressed the need for such a measure, acknowledging that many public sector employees and other Nigerians struggle to secure a suitable mortgage with their current incomes. He explained, "Our approach will focus on establishing market-based prices for high-end developments, thus subsidizing housing costs for lower-income households." He further revealed that the ministry's vision for implementing cross-subsidy is rooted in a commitment to social equity and inclusive urban development. The ministry aims to strategically channel profits from high-end housing projects to foster a housing landscape where every citizen, regardless of their income level, can find a place to call home.

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Dangiwa emphasized that this approach transcends mere house construction; it's about nurturing communities where equal opportunities abound, and prosperity knows no boundaries. Expanding on the concept, the minister clarified that cross-subsidy involves housing projects designed to include a mix of units tailored to various income levels. In this initiative, market-rate units are priced higher to reflect actual construction costs and developer profit margins. Simultaneously, a percentage of units within the same project is allocated as affordable housing, with significantly lower prices than the market rate. The revenue generated from the market-rate units is then used to subsidize the construction and maintenance costs of the affordable units.

The goal is to enable lower-income families to access housing at a reduced cost and facilitate diverse income groups residing within the same community. This approach promotes social integration and helps prevent the formation of economically segregated neighborhoods. The Minister unveiled this initiative in Abuja while reviewing affordable housing options presented by the Ministry's Affordable Housing Building Design Committee. The committee was established during his first week in office to review project designs and ensure that the houses promoted by the ministry fall within the price ranges that low- and medium-income earners can afford.
 
Dangiwa has committed to redefine housing accessibility by integrating a range of low, medium, and high-end housing projects and ensuring inclusivity for Nigerians across all income brackets. The revised designs feature various cost-saving changes, including one-bedroom bungalows to reduce purchase costs and allow beneficiaries to expand to larger units as their incomes increase, optimized space management, smart roofing techniques, and basic interior finishes, among other enhancements.
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The Minister commended the design team for their creativity and emphasized the importance of embracing innovative concepts like cross-subsidies to counter challenges posed by inflation and the escalating costs of building materials, which have led to an increase in planned house prices. He stated, "To achieve our goals, we must think outside the box and embrace creative solutions. This is why we plan to develop a comprehensive framework for introducing cross-subsidies in projects delivered through Public Private Partnerships and the agencies under the ministry.
 
Source: BusinessDay

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