In the current real estate landscape of Nigeria, property developers and potential homeowners are facing a daunting challenge as financial institutions, particularly commercial and mortgage banks, are increasingly rejecting property documents for loan transactions. The Guardian reports that this trend is attributed to the escalating issues of land grabbing and demolitions in key areas like Abuja and Lagos, impacting various ongoing estate and private developments financed by these banks.

 

Recent demolitions by Lagos agencies in prominent areas such as Ikoyi, Banana Island, and Central Lagos, coupled with the Federal Housing Authority's actions in Festac Town, have contributed to the growing reluctance of banks to accept property documents as collateral for loans. Additionally, the absence of a mortgage foreclosure law protecting investments in the housing and mortgage sub-sector has heightened the wariness among banks, with only four states—Lagos, Kaduna, Nasarawa, and Ekiti—having enacted such a law.

 

 

Nigeria's current ranking of 131 out of 190 economies globally in terms of ease of doing business, as per the World Bank's latest ratings, further underscores the challenges faced by the real estate sector. Amid these circumstances, estate surveyors and valuers anticipate stricter measures from banks to safeguard their loans.

 

Professor Austin Otegbelu, a specialist in Estate Management at the University of Lagos, expressed concern over the recent demolitions in Abuja and Lagos, labeling them as unfortunate developments that add extra risk to real estate investments. He anticipates that banks may introduce more stringent conditions for customers seeking loans to mitigate risks associated with property investments.

 

Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Lagos branch, Gbenga Ismail, reassures that legitimate titles will generally remain acceptable collateral for lending. However, he emphasizes the importance of caution in new developments, suggesting that banks should be more vigilant in light of recent corrective measures taken by state governments.

 

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Chudi Ubosi, Chairman of the Association of Capital Market Valuers (ACMV), acknowledges the justified caution exhibited by banks in tightening rules for lending against real estate. He points out the need for extensive due diligence by banks in transactions involving real estate collateral, emphasizing the frustrating experiences where property owners employ delay tactics through litigation.

 

Ubosi advocates for simplified processes for obtaining approvals, reduction in approval costs, and accountability for all stakeholders involved in the development chain. He urges the government to expand infrastructure to encourage development in new areas, reducing the concentration of construction within city limits.

 

Dr. Yemi Adelakun, the Managing Director and Chief Executive Officer of NISH Affordable Housing Ltd, echoes the call for eased processes in obtaining land titles and building approvals. He emphasizes the importance of monitoring and supervision of building developments to prevent significant losses and suggests exploring alternative penalties beyond demolition.

 

In conclusion, the challenges faced by the real estate sector in Nigeria underscore the need for comprehensive reforms, including simplified approval processes, legal safeguards, and increased infrastructure development, to foster a conducive environment for property transactions and loans.

 

Source: TheGuardianNG