‘Estate agency regulation will eliminate quacks’

Kola Akomolede


CHIEF KOLA AKOMOLEDE is the past president, International Real Estate Federation, (FIABCI) Nigeria. He was also a former secretary-general, Association of Housing Corporation of Nigeria. He spoke with VICTOR GBONEGUN on why the government should develop interest in housing matters and advocated the removal of Land Use Act from the constitution as well as on other issues.

Nigeria is bedeviled with issues relating to non-adherent to international best practices and quackery has remained a great challenge for professionals. How are you add ressing such loopholes in the sector?
Nigeria is a peculiar country and you will find out that what works in other countries might not work here. Our profession has been complaining about the issue of quackery, in-fact the Nigerian Institution of Estate Surveyors and Valuers (NIESV) set up a committee to look at the issue. I was the chairman and from our findings, we observed that there are too many quacks and that you can’t stop them from working. People will continue to patronise them for so many reasons.

So, we said let us organise them into an association called ‘National Association of Estate Agents’ so that we will have a forum to educate, train and make them comply to rules like it is the practice in United States of America, the United Kingdom and other nations. We actually drafted a bill, which we are trying to get to the national assembly for consideration but unfortunately many of them are also estate agents so it could be difficult. We are still working to ensure that there is decorum in the practice of the profession. Our profession believes that enactment of law that regulate estate agency, will eliminate quacks from the practice. When an estate surveyor defrauds people, you have an institution, which you can report to for disciplinary action but when it comes to quacks, the best you can do is to report to the police.

In some of your advocacies, you have been clamouring for the amendment of the Land Use Act. What do you think are the benefits and the critical challenges to have this done by the authorities?
Am happy you say this, my first article on that was in 1978. We spotted grey areas in the act and till today, there has been no effort to amend the decree, again, the people who are to amend it are not affected. Ministers, members of parliament who want lands, get it done easily and so they don’t see any problem in it. If you buy a property of N100million, that means you would spend another N10million to transfer ownership whereas abroad, it is a matter a peanut and not a percentage of the value of the land. It is even something you can do online whereas here, it is so cumbersome. This is part of the problem that the decree created. With the decree, state governments are now seen as the landlord, if you buy house and want to do anything on it, you need the consent of the landlord-the state government. We are advocating that the clause should be removed. Don’t abrogate the decree but remove it from the constitution and make it a separate law so that anytime there is a problem, it will be easy to amend.

It was the military council under Olusegun Obasanjo that added it to the constitution thus creating the problem of amending it. There are many issues associated with it such as the Certificate of Occupancy. We need to tinker with the law. During the recent constitutional review, they did even touch it and so we could see that it doesn’t matter to them.

I spotted ten issues about the Land use decree that make it a necessity to amend it. Part of the decree said all land in state belongs to the military government but we don’t have a military government anymore that means the law is dead from the opening sentence. The area of compensation is not equitable; the method of valuation prescribed there isn’t good for the public. The law also doesn’t provide for adequate compensation if your land is taken. There is also no compensation for bare land if taken except grant rent and this why banks don’t accept bare land as collateral for loans unless there is a building on it.
The law also said you can’t have more than a hectare of land in an area. With that it means all developers that have more than a hectare, is a violation of the law. These are things nobody has challenged.

The deficit in the housing sector is very huge, in-fact some experts say over 17million of homes are needed, yet authorities seem not to have strong will to address the shortfall. Why do you think achieving housing for all has become so difficult in Nigeria?
It became difficult since the time of the colonial master because they didn’t see housing as a priority. On the individual level after food and clothing, housing is the next basic necessity but on the government level, it’s not. They would rather give priority to road and road don’t go anywhere except to connect houses, offices or sporting activity. For several years, there was even no ministry for housing until professionals cried out and when it was created, they would give the ministry money to work. For several years it was the ministry of works and housing and the concentration is always on works but housing is just a small part of it. The colonial master got involved in housing as a result of the Buboneic plague’, which happened in 1960’s in central Lagos. This brought reclamation and redevelopment.

They needed to rehouse the people there and that is why they started Surulere housing estate and for the first time, government built houses for the people. Whereas in abroad and in their own countries, more than 50per cent of housing fir instance in Britain is built by council which is an equivalent of state government. When they were ruling us, the federal, state and local government never get involved in housing. They only got involved when they were providing housing for their own officials in Government Reserved Areas where the white will have a house with a very large compound and at the side of it, they will build a small boys quarter for the black man to live. Unfortunately when our own brothers took over from them, they continue with the trend.

Because the officials have houses, they don’t care about the generality of the people and even till today, the attitude has continued. Shehu Shagari, and Lateef Jakande era were the administration that took housing as a priority. In-fact, Shagari campaign slogan was ‘Food and Shelter’. Shagari built houses in all local governments of the federation; unfortunately, politics and corruption marred the project. At the state level Jakande built houses at prices the people could afford.Government getting out of participation in housing doesn’t work in the third world. If you take council housing out of the houses in London, the whole place will be empty.

The first issue is government not taking housing very seriously, the second is finance, there is no mortgage system that can enable the public to buy house, the cost of acquiring land is so much and even documentation is a lot of problem. It takes years to get your consent to transfer title on land and you have to pay between 10 to 15per cent of the cost of land. Cost of construction is so high especially with high exchange rates and with all this problems; you can see that the common man can’t have a house.
We are not saying build houses for the people free, money given to the ministry of housing can be recover because if you build houses, you will sell it and the money will come back.

Despite the significant contribution of the industry to the nation’s Gross Domestic Product (GDP), the real estate sector has experience downturn in last three and half years. What is responsible for this and how can the industry be improved?
The recession experienced in Nigeria also affected the property market. For the property market we say demand and supply of property is inelastic, that is an economic theory. What it means is that housing doesn’t react to demand and supply immediately like other products.
The demand and supply of housing is not something you can do immediately, it takes time. Therefore, you cannot increase the supply of housing like other products. When there is a recession and even a recovery, it takes longer time for the housing industry to recover from the recession. The housing market also enjoys what I would call an artificial pricing during the regime before 2015 when there was what some people called ‘free money’, which enable people to spend money on housing anyhow. The demand was high and prices went up unreasonably but now the situation is normalizing. Prices of property are now settling down to their real value. It will take time for things to stable and if at the end we are able to normalize the situation, it will be good for the country.

If the economy can settle and there is less corruption for people to pay the real value for property either as rent or purchase of house. Government should take enough interest in housing like they are focusing on health, education and transport. It is only food that is more important than housing. People in government who steal money after buying cars, the next thing they buy is housing. Create a robust mortgage system where people can have access to taking a loan to buy or build house. That will improve the housing situation in the country.

According to experts, high mortgage regime has impeded accessibility to homeownership. What is the way forward?
In Nigeria if you get an interest rate of 15per cent, you are lucky, it’s between 18, 20 and above percent, that is no mortgage. The problem is that if you collect money from depositors and you don’t pay them high interest rate, then you will have no more money to give out. A solution to this was devised by introducing the National Housing fund but unfortunately, it is not been implemented. The ideas was that depositors will get loan at 3per cent and the money would be given to primary mortgage banks at 4per cent and then they can lend it out at five or 6per cent to have something similar to what operates abroad.

The alternative is for government to vote in money every year like N100billion for housing mortgage and if government does that for ten years, they won’t need to put in more money because as people are collecting and paying back, it keeps increasing. When funds are available to mortgage companies at low interest rate, then, they would be able to give it out at low interest rate. Any interest that is above 9per cent is not good for housing.

The International Real Estate Federation, (FIABCI) as the most prestigious real estate organisation in the world has been in existence for a while, what contributions has the association made toward the development of real estate industry in Nigeria and Africa?
The impact may not be too felt in Africa but our participation is limited. Right now we have chapters in Nigeria, Egypt, South Africa and so we are very small compared to Europe or Asia. FIABCI organises, conferences, lectures, and symposiums on topical issues in the global housing every year. During the conferences, we invite experts all over the world to talk to us about housing for members to learn. In one of our conferences, the minister of housing in Singapore gave us a lecture where he revealed that in Singapore, 95per cent of the population are owner-occupiers in that country.

Which is a great record, he educated us on how they did it. We have also organised seminar where we discussed international FIABCI members enlightened us on the issue of ease of doing business from their country’s perspective and how we can adapt it to our own country. FIABCI is like a think-Tank for housing and built environment all over the world and United Nations recognizes FIABCI as an association. The UN does invite FIABCI whenever there is going to be a talk on the issue of housing. It is also a networking forum. We hope that when we improve on issues of our international image and security, we would be able to invite international members to come and invest in Nigeria.

The influence of technology has become a global phenomenal in virtually all aspects of life. With your international exposures, are you satisfied with the degree of adoption of such innovation in Nigerian housing industry and what recommendations would you be giving to operators in the sector?
Technology has helped us so much in this profession. Today, I can sit in my office and let/sell a house without even meeting the person buying or renting. You post a house, the buyer looks at it by technology/telephone. You can send letter offer by e-mail unlike before when you have to be somewhere physically by travelling down. Transactions are done faster now. The use of social media has also aid the profession especially posting of property. Though it has its negative impact.

In construction, technology has also helped, now construction doesn’t require the molding of blocks and other impact. Unfortunately, we are not yet there, there are so many systems that are happening in different part of the world. We have what we call system building where we can build houses in two weeks. It involves too much machinery however if we use it here, the houses may become too expensive. I believe that we will get there with time. Operators in the sector need to embrace technology more. We need to get to a level where we can search for property without necessarily going to government’s office. Authorities should let technology help in property title registration.

In this article:
Kola Akomolede
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