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Why operators violate real estate regulations

Why operators violate real estate regulations

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The regulatory bodies in real estate include but are not restricted to the following; Estate Surveyors and Valuers Registration Board of Nigeria(ESVARBON), which is the regulatory body for controlling and setting standards for real estate and valuation practice. The profession came into limelight when in 1969, a group of qualified chartered (General  Practice) surveyors formed what is known as the Nigeria Institution of Estate Surveyors and Valuers  (NIESV), as a non-profit voluntary professional organisation to cater for the interests of the real estate profession in the country.

But despite these encouraging figures and trends, the Nigeria real estate industry is still burdened by several issues that are hindering its growth and these issues have not been addressed to give boost to the sector. According to the World Bank’s ease of doing business report for 2013, Nigeria is among the worst globally, when it comes to registering property. It ranks 182 out of 185.  The process of registration of property can last as long as six months to two years, taking an average of 12 procedures, and costing about 20.8 per cent of the value of the property. The lackadaisical attitude to work is the major cause of undue delay at the land registry. Oftentimes, a developer’s application would pass from office to office over several weeks and by the time the necessary approval is obtained, he may have lost his source of funding or incurred huge interest on loan obtained for development. Hopefully, the new comprehensive Second Lagos State Development Plan (LSDP), adopted in 2013, aims to streamline the regulatory environment and improve incentives for private investment and business; for example, land registration initiatives, the creation of GIS maps and the piloting of an e-approval system for development permit. Building a house in Nigeria is not only frightening, it is also very expensive. A three-bedroom house, for example, will cost about US$50,000, compared to US$36,000 in South Africa and US$26,000 in India. The cost of construction is high for three reasons: high costs of building materials, high skilled labour costs, and costs associated with poor roads and sewage systems.

Experts  have posited that about 75 per cent of houses in Nigeria’s urban areas are built with concrete. Cement prices in Nigeria are about 30-40 per cent higher than in neighbouring countries and world market prices. The lack of public infrastructure adds as much as 30 per cent to the total costs of the development. Nigeria has been fortunate not to experience natural disasters such as earthquakes, tsunami, or tornadoes. Yet, despite the absence of disasters, the incidences  of  building collapse continues to rise because many of the buildings are not done by competent professionals . Since we don’t have natural disasters to bring down our buildings, we simply created our own through  negligence. Privately owned buildings both commercial and residential account for the highest number of collapsed buildings in Nigeria. From 2010 to 2016, a total of 3,1222 persons have died as a result of over 137 building collapse. This figure does not usually include those who die long afterwards as a result of injuries sustained and are usually not accounted for.

The Lagos State Property Protection Law of 2016 has been there but it seems the aim of that law is not achieved because the menace for which the law was promulgated in the first place has continued to stare us on the face. This law ought to be a statutory response to the menace of the omo-onile (land grabbers) in Lagos State. It majorly prohibits four conducts in relation to land in Lagos State: (i) forceful entry to landed properties; (ii) illegal occupation of landed properties; (iii) violent in relation to landed properties; and (iv) fraudulent conducts in relation to landed properties. But today, land grabbers have continued to exploit citizens. Some parts of the law have retrospective effects. For example, people that have forcefully obtained the land of other people had only three (3) months grace from the commencement of the law to vacate the land, otherwise they will be deemed to have committed an offence punishable by ten (10) years imprisonment.

Bribery and corruption have a negative effect on the Nigerian real estate sector. This has had a far-reaching effect on anything done in Nigeria. There are instances where developers who have not satisfied the preconditions for allocation of land are granted allocation while those who are qualified are denied. Real estate investors are subjected to multiple taxations, the taxes and levies paid by them include development levy, income tax, building plan approval levy, property tax, land use tax, and we also have cases whereby real estate investors are expected to pay renovation tax whenever they want to renovate their properties. The exchange rate in the country and ban on importation and exportation of anything through the land boarders is also a big problem because not everybody can afford importation through air or sea. This generated increase in cost of doing business and living. As a result of the high costs of doing business, property developers to remain profitable will have to pass on these additional costs incurred to the market. According to industry experts, the estimated rise in the costs of housing is 25 per cent  – 35 per cent.

You The Urban and Regional Planning and Development Law of Lagos 2010 has been there but has also become a toothless bulldog. It has been seen by some people to be subjective in action and this has discouraged a lot of people who had wanted to access the provisions of the law for redress. This law should provide for the administration of physical planning, urban development, urban regeneration and building control in Lagos state and for all connected purposes. Failure to obtain requisite permit before development or failure to comply with approved standard may lead to issuance of (i) Contravention Notice; (ii) Stop Work Order; (iii) Quit Notice; (iv) Seal-up Notice; (v) Regularisation Notice; and (vi) Demolition Notice.

The law also has criminal sanctions which may be payment of fines of up to N500,000 or one month community services, or both. The law has been relaxed because a lot of people build without recourse to stated designs yet authorities will see it and keep quiet. But ordinarily, it should assign the overall administration and responsibilities of planning and development in Lagos State in the hands of Lagos State Ministry of Urban and Regional Planning. These administration and responsibilities are to be carried out through three agencies in the Ministry: (i) Lagos State Planning Permit Authority (PPA); (ii) Lagos State Building Control Agency (BCA); and (iii) Lagos State Urban Renewal Agency (URA).

 

 

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