Real Estate in Nigeria has come a long way from the 70s before the Land Use Decree was enacted, to today in which technology has impacted greatly on how business is done, and barriers of entry have been dropped to the barest minimum.
Although there are government regulations made to guide operations, numerous factors still affect how property business is done, that have no recourse to the law in the least.
This article seeks to look at some of those facts that differentiate procedure – what is in the law and textbooks – and practice – what obtains in the everyday reality.
- The Certificate of Occupancy is believed to be the most superior form of title document in Nigeria. This is what we were taught in school. But with the numerous issues that arise over this all so revered title document, much is left to be desired.
Because of quality of research we do before our clients procure property, we have encountered Cs of O that have litigation, that is court disputes, on them. We have also encountered situations where there were claims of double issuance of the Certificate of Occupancy. We have even seen cases where Omo Onile (customary land owners) have validly challenged a government issued C of O successfully, and gotten compensation.
While the C of O is a veritable title document, it is not absolute and even the courts have said it is not conclusive as to the title it purports to carry. The meaning of this is quite simple. Verify every C o O presented to you during a purchase from the government.
- The Land Use Act is said to govern land and property transactions within Nigeria. However, each state has its own regulations that guide real estate practices within its boarders. Some states have as many as 2 different bodies, recognized by law, that regulate the use and occupation of land in different regions.
Abuja, the Federal Capital Territory, for example has 2 bodies that cover different regions where property transactions are concerned. Ogun State also has 1 ministry of Lands and Titles, and 2 other agencies which cover different areas of the state land mass as concerning title. Lagos on the other hand, as with many other states, has only one recognised ministry handling titles within the state.
The implication of this is that it is risky to buy property within a terrain in which you don’t have the basic knowledge of what obtains. You may think Lagos State will work like your home state when, in fact, the reverse might be the case. So, all those who want to buy real estate in Lagos State, being the fastest growing city in West Africa, should bear this in mind.
- Trillions of Naira worth of transactions are concluded each year in Nigeria. Of this number however, a large percent happen to bring zero return on investment. The truth is that while money changes hands on the hour, the actual passing of property and title is not so swift and sometimes never happens.
This said situation is not caused by fraudulent agents, omo onile and developers alone. The truth is that many entrepreneurs venture into real estate without as much as a basic understanding of the operational dynamics. And this makes them loose out on the long run. The only thing is that the loss is largely borne by you, the innocent investor.
Many property sellers for example do not know what kinds of government approvals and documentation a house should possess to make a good sale. They just acquire land, build and sell. Many do not understand how to interact with Omo Onile successfully. Research has shown us that while a lot of omo onile are fraudulent, many still hold true to traditional values and many have education that helps them take informed decisions in property transactions.
A basic knowledge of the dynamics of real estate business in different regions, will improve the outcome of property deals all over the country.
- The more exposure a field of endeavour gets, the more complex its operations become. This is exactly the case with real estate in Nigeria and indeed any country. There is this age long real estate investment principle of acquiring property in under-developed areas and leaving it to appreciate before reselling. Today it is called the ‘buy and wait’ principle. This business model has made many rich and is at the same time impoverishing many in the Nigeria of today.
Over the years, this simple secret of the rich has been made known to all and sundry. Hence, traditional land owners have come to see it as a scheme to deprive them of the future revenue of their land by acquiring it now to hold.
Furthermore, there are many unconnected entities these days who just find vacant land and sell to unsuspecting investors. This is the bedrock of many failed investments in recent times
The implication of this is simple; you cannot, as in the 70s and 80s, buy bare land now and leave it without regular visits and oversight activities on it as that could signal the loss of your hard earned money.
Hence, we usually advise our clients that if you want to adopt the buy and wait investment method, you must make regular visits to your property, at least once every six months.
These facts are some of the basic knowledge you need to have so that your investments into real estate business will be scam free and you can get great returns on your investments.
Have you gotten value from this? Please send us a mail at
bimpe@adebimpeshowunmi.com
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