The Imperative for Regulation in Nigeria’s Real Estate Sector: A Call for Structure and Accountability
Nigeria’s real estate sector, a critical driver of economic growth and development, finds itself grappling with a significant challenge: under-regulation. This lack of robust regulatory frameworks has created an environment ripe for exploitation, hindering the sector’s potential and leaving stakeholders frustrated. The 45th anniversary celebration of Jide Taiwo & Co, a prominent firm of Estate Surveyors and Valuers, provided a platform for industry experts to voice their concerns and advocate for much-needed reforms. The consensus among these professionals is clear: the absence of effective regulation is a major impediment to the sector’s progress.
A key concern highlighted by experts is the ease with which unqualified individuals can enter the real estate market. Moses Adeyemi, Managing Director of Jide Taiwo & Co, described the sector as an "open market" where "every Dick, Tom and Harry" can operate, including retirees and housewives venturing into agency roles. This unregulated entry point allows individuals without the necessary expertise or ethical standards to operate, posing significant risks to clients and undermining the credibility of the profession. While the valuation aspect of real estate is regulated by the Estate Surveyors and Valuers Registration Board of Nigeria, the broader market lacks sufficient oversight. This lack of accountability creates an environment where misconduct can thrive, leaving victims with little recourse.
The consequences of this under-regulation are far-reaching. Seyi Aluko, General Manager of Jide Taiwo & Co’s Abuja branch, pointed to the exploitation of this regulatory gap by developers who collect funds from investors without delivering on their promises. Projects are often abandoned midway or never completed, leaving investors in financial distress. Aluko emphasized that while he wouldn’t label the entire industry as fraudulent, the low standards and lack of accountability create a breeding ground for unethical practices. He stressed the need for legislators to address this issue by enacting laws that reflect the local context and promote responsible investment practices. This includes addressing issues such as the common practice of demanding two years’ rent upfront, a practice that burdens tenants and differs significantly from more developed markets where monthly or weekly payments are the norm.
The lack of tenant tracking systems further exacerbates the problem. Unlike more advanced countries where tenant behavior is documented and accessible, Nigeria lacks a mechanism to identify and flag defaulting tenants. This absence of accountability allows individuals to repeatedly default on rent obligations without facing consequences, creating significant challenges for landlords. Oladapo Olaiya, a Fellow of the Nigerian Institution of Estate Surveyors and Valuers, echoed these sentiments, stating that the current regulatory landscape resembles a "free-for-all," with "quacks gambling in real estate." This unchecked activity undermines the integrity of the profession and exposes clients to significant risks.
The call for regulation is not merely a plea for stricter rules; it’s a demand for structure, accountability, and consumer protection. A well-regulated real estate sector would not only protect investors and tenants but also foster greater confidence in the market, attracting both domestic and foreign investment. This, in turn, would stimulate economic growth and contribute to national development. The experiences of other countries demonstrate the benefits of a regulated real estate environment. In these markets, clear guidelines, transparent processes, and effective enforcement mechanisms protect consumers, promote fair competition, and ensure the long-term stability of the sector.
Nigeria must learn from these examples and prioritize the implementation of comprehensive regulatory frameworks. These frameworks should address key areas such as licensing requirements for real estate professionals, project approvals, consumer protection mechanisms, and dispute resolution processes. Furthermore, the regulatory bodies responsible for overseeing the sector must be empowered with the resources and authority necessary to effectively enforce these regulations. By implementing these crucial reforms, Nigeria can transform its real estate sector into a well-regulated, transparent, and thriving market that contributes meaningfully to the nation’s economic prosperity. The anniversary celebration of Jide Taiwo & Co served as a timely reminder of the urgent need for these changes, and the voices of experienced professionals like Adeyemi, Aluko, and Olaiya should serve as a call to action for policymakers and stakeholders alike.
