In the course of the 2000s there were high levels of construction in Lagos and Abuja, and a considerable growth in the supply of expatriate housing. In 2008, house prices, land and rental values appreciated by as much as 100-300% in some cases (Oxford Business Group). As of January 2012, Nigeria continues to enjoy a housing boom. According to the Global Property Guide, Lagos possesses some of the most highly-priced real estate in Africa, at approximately US$1,000 to US$1,200 per square metre (sq. m) in 2012. Rental yields for apartments in Ikoyi and Victoria Island in Lagos are approximately 3% to 5.3%. Abuja’s yields are generally greater than in Lagos because of lower supply.
The Real Estate Developers Association of Nigeria (REDAN) is the main agency of the organised private sector, recognised by the federal government and the Federal Mortgage Bank of Nigeria (FMBN). Membership, which is only open to corporate entities, stands at more than 1,500.
Examples of real estate companies in Nigeria include Primewaterview Limited, Jide Taiwo & Co and Knight Frank Nigeria.
In general, the Nigerian legal system with regards to mortgages and property follows the English common law system. However, land ownership is an exception. Different laws apply to land transactions in the various states, and there is a separate land registry in each state.
Private land ownership is technically impossible in Nigeria. In accordance with the Land Use Act of 1978, all land is owned by the state. However, subject to giving advance notice to the government, foreigners and foreign companies are free to buy leasehold property for a maximum period of 99 years. Multinational corporations generally rent housing from Nigerian property management companies.
When purchasing real estate in Nigeria, a ‘consent fee’ is incurred, that can vary from about 8% to 20%. The logic is that since the state government is the owner of the land in question, change in ownership or assignment should have the governor’s acquiescence. A Capital Gains Tax, assessed by the Ministry of Finance, is levied at 10% of the difference between the sale price and the original acquisition tax. There are no inheritance taxes in Nigeria. The total transaction cost varies from around 17.75% to 33.5%.
Nigeria is considered to be a strongly pro-landlord rental market. Rent controls in Nigeria are seldom implemented. Rents are paid, in advance, for two to three years. By law, only the court can order the eviction of tenants. For non-residents, gross rental income received from the leasing out of real property is taxed at a final withholding rate of 10%.
It is the informal sector which covers most of Nigeria’s population and housing. These people have few if any links with formal financial institutions. Housing in this sector of the economy is generally constructed by the owners.
Most Nigerians do not have straightforward access to mortgages, partly for individual economic reasons and partly for underdevelopment of the relevant infrastructure. The Federal Mortgage Bank of Nigeria (FMBN) was established by the federal government in order to boost mortgage provision and home ownership for Nigerians.
