In Nigeria, the issue of untitled lands has reached alarming proportions, with operators in the built environment estimating that the nation loses about N36 trillion annually due to the lack of formal property titles. The high costs associated with land registration vary across different locations; however, it’s generally pegged around N1 million per plot. This estimation serves as a benchmark for understanding the revenue loss linked to the vast majority of households without legal recognition. According to the Financial Secretary of the Nigerian Institution of Estate Surveyors and Valuers, Ayodele Odeleye, only about 10 percent of Nigeria’s estimated 40 million households possess formal property titles. This statistic reveals a staggering 90 percent of households operating in the informal housing sector, which results in substantial tax revenue loss for the Nigerian government.
The Nigerian Bureau of Statistics and the Centre for Affordable Housing Finance in Africa estimate that with over 36 million households lacking formal property titles, the government potential revenue loss can reach an estimated N36 trillion annually. Odeleye explains that the potential income from formally titled properties includes an array of taxes and fees such as property taxes, registration fees, income tax, and building permits. Assuming the government could collect an average of N1 million annually from each formally titled household, the fiscal implications of the untitled housing sector become clear. However, it is important to note that this figure remains a rough estimate, as variations in taxes and fees from one location to another may affect the actual revenue losses.
Local variations in land registration costs compound the challenges faced by prospective property owners in Nigeria. A Land Bureau official in Lagos observed that registration fees differ significantly depending on the local government area, citing Epe as an example where such fees could total as high as N4.5 million for individuals not in public service. Real estate developer Dr. Kolade Adepoju provided insights from his recent project, indicating that the cost of documentation for 10 hectares of land at Ibeju Lekki amounted to around N600 million, translating to N4-5 million per plot. This variation in registration costs highlights the disparities across different regions and the impact of such fees on the informal housing market.
The CEO of Fame Oyster & Co., Olufemi Oyedele, further elaborated on the evolving landscape of land registration costs in Lagos. He noted that the cost of registering a plot in Ikeja stands at approximately N3.5 million, a staggering increase from the N20,000 registration fee in 1991. The dramatic rise in land prices, building costs, and rent necessitates a review of land registration fees, which should ideally not exceed 2.5 percent of land value in accordance with global best practices. Several alternative income-generation avenues exist beyond land registration, including ground rents, tenement rates, and various taxes such as inheritance and capital gains taxes. In light of the high costs, prospective property owners are encouraged to engage with their state governors to seek adjustments to exorbitant registration rates.
Legal practitioners in various parts of Nigeria echo the concerns regarding registration costs, with some affirming that land values significantly influence the expenses involved in formalizing property titles. For instance, in Ogun State, areas such as Ota now see land prices soaring to N20 million or more. Practitioners like Tejideen Oluwadare and Hassan Yakubu emphasize that the total cost of achieving a perfected title, including necessary surveys and fees, can easily surpass N5 million. The bureaucratic bottlenecks and delays inherent in the process necessitate additional funds for public relations and expedited service, further inflating the costs associated with land registration.
Efforts are underway to address the prevalent issue of unregistered and untitled lands in Nigeria. In September, a partnership was established between the Ministry of Housing and Urban Development and the World Bank Group, aimed at resolving the challenge that affects 90 percent of the country’s land ownership. This collaboration represents a crucial step toward formalizing land titles and integrating the informal housing market into the regulatory framework, which, if successful, could significantly reduce the substantial revenue loss that Nigeria currently faces and promote a more orderly and accountable built environment. Overall, tackling the barriers to land registration and providing affordable solutions is essential for reversing the trend of untitled lands and fostering economic growth.
