National Housing Fund Act, Cap. N45, LFN, 2004

January 16, 2017 | 0

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An Act to provide for the establishment of the National Housing Fund and for matters connected therewith.

1.        Establishment of the National Housing Fund

(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.

2.        Aims and objectives of the Fund

The aims and objectives of the Fund shall be to—

(a)      facilitate the mobilisation 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

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

3.        Resources of the Fund

The resources of the Fund shall consist of the following, that is—

(a)      contributions by Nigerians in both the public and private sectors;

(b)      investment in the Fund by commercial and merchant banks;

(c)       investment in the Fund by insurance companies  registered under the Insurance Act;

(d)      financial contributions by the Federal Government for long-term housing loans.

4.        Contribution by Nigerian workers

(1)      A Nigerian worker earning an income of N3,000 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.

5.        Contribution by banks, etc.

(1)      Every commercial or merchant bank shall invest in the Fund 10 per cent of its loans and advances at an interest rate of 1 per cent above the interest rate payable on current accounts by banks.

(2)      Every registered insurance company shall invest a minimum of 20 per cent of its non-life funds and 40 per cent of its life funds in real property development of which not less than 50 per cent shall be paid into the Fund through the Federal Mortgage Bank of Nigeria (in this Act referred to as “the bank”) at an interest rate not exceeding 4 per cent.

(3)      Nothing contained in the Insurance Act or relating to investment of insurance companies in real property shall affect the provisions of this Act.

6.        Contributions by the Federal Government

(1)      The Federal Government shall make adequate financial contributions to the Fund for the purpose of granting of long-term loans and advances for housing development in Nigeria.

(2)      The Federal Government may also make available such other sums either in naira or foreign currency to the Fund as it may deem necessary.

7.        Management of the Fund, etc.

(1)      The Fund shall be managed and administered by the bank.

(2)      The bank shall ensure that—

(a)      the proceeds from the Fund are utilised to finance the housing sector of the economy through wholesale mortgage lending to primary mortgage institutions;

(b)      the aims, objectives and functions of the Fund are effectively carried out by the bank and mortgage institutions.

8.        Utilisation of loan by mortgage institutions

A mortgage institution registered under the Mortgage Institutions Act (in this Act referred to as “mortgage institution”) shall utilise the proceeds from the Fund to finance mortgage lending in accordance with the provisions of this Act and the Mortgage Institutions Act.

9.        Deductions by employers from monthly salary of workers

(1)      An employer who has in its employment an employee earning a basic salary of N3,000 and above per annum shall deduct 2.5 per cent of the monthly salary of that employee as the employees contribution to the Fund.

(2)      The amount deducted pursuant to subsection (1) of this section shall be remitted to the bank within one month of the making of the deduction.

10.      Participation in the Fund by self-employed persons

All self-employed persons shall deduct from their monthly incomes the amount stipulated in section 4 (1) of this Act and shall within one month remit same to the bank.

11.      Duty of the Central Bank of Nigeria to collect contribution from banks

(1)      The Central Bank of Nigeria shall collect from commercial and merchant banks at the end of every year and not later than one month  thereafter, the percentage of their contribution to the Fund as specified in section 5 (1) of this Act.

(2)      The Central Bank of Nigeria shall within two months of making the collection under subsection (1) of this Act pay the money to the bank for investment in the Fund.

12.      Determination of amount due from insurance companies

(1)      The Bank shall, at the end of every year after careful examination of the audited annual accounts of each insurance company, determine the amount due from the insurance company and shall issue a demand notice of the amount due from the insurance company for purposes of investment in the Fund.

(2)      The insurance company shall on the receipt of a demand notice from the bank pay the amount within one month of the demand into the Fund.

(3)      Failure by any insurance company to pay to the bank any amount due under subsection (2) of this section shall be regarded as a contravention of this Act and shall constitute one of the grounds for which the Commissioner for Insurance may cancel the registration of an insurance company in default.

13.      Bank to pay money received into the Fund

All monies received by the bank under this Act shall be credited to the Fund immediately on receipt.

14.      Beneficiaries under the Fund

(1)      A mortgage institution duly licensed under the Mortgage Institutions Act shall qualify for loans from the Fund, on such terms and conditions as the Minister may, from time to time, by regulations published in the Gazette, specify.

(2)      Any loan obtained by a mortgage institution under subsection (1) of this section shall be made available to contributors wishing to build, purchase or renovate houses.

(3)      The Minister may by regulations published in the Gazette specify the manner in which and the conditions and terms of repayment of any loan obtained pursuant to subsection (2) of this section.

15.      Security for Fund facilities

(1)      Any loan obtained from a mortgage institution shall be secured by a first mortgage.

(2)      Any loan granted by the bank to a mortgage institution shall be secured by a block of existing mortgages under cover of Sales and Administration Agreement to be executed between the bank and the mortgage institution.

(3)      The Sales and Administration Agreement referred to in subsection (2) of this section shall be registrable in the Land Registry along with the Deed of Assignment of Mortgages to which the Agreement relates.

16.      Interest rate

(1)      The loans made by the bank shall be at interest rates slightly lower than the prevailing commercial rates in Nigeria.

(2)      The interest rate for each loan shall be fixed for the duration of the loan.

(3)      The bank shall charge a mortgage institution not more than one percentage point above its borrowing rate.

(4)      Mortgage institutions shall be allowed a minimum spread of four percentage points above the rate charged by the bank.

17.      Refund to a contributor after retirement from office, etc.

Any contributor who has not obtained a housing loan from the bank and has—

(a)      attained the age of 60 years; or

(b)      retired from his employment and becomes incapable of continuing the contribution to the Fund as specified in this Act, shall be eligible to a refund of his contribution within three months of the application at the rate of interest prescribed by the Minister.


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