The Actual Landlords

  • By Chidera Mbonu
  • May 21, 2024

The Powers That Be

The sphere of real estate investment in Nigeria is big enough for you to constantly look over your shoulders or have a mini heart attack whenever a bulldozer is within the proximity of your real estate investment. This is due to the insecurity posed by the actual landlords on your real estate investment.

This power was given to the government by the provision of the land use act of the federation of Nigeria which states:

“An Act to vest all land compromised in the territory of each State (except land vested in the Federal government or its agencies) solely on the Governor of the State , who would hold such land in trust for the people and would henceforth be responsible for allocation of land in all urban areas to individuals resident in the State and to organizations for residential, agriculture, commercial and other purposes while similar powers will with respect to non urban areas are  conferred on Local Governments.”

The Act is aimed to streamline land administration and prevent disputes arising from customary land ownership practices which grants the government significant control over land allocation, potentially leading to easier access to land for development projects.

Loopholes In The Land Use Act And Their Impact On Real Estate Investment In Nigeria

The Land Use Act of 1978, while intended to streamline land management, has some significant loopholes that create uncertainty and challenges for real estate investors in Nigeria.

Here’s how these issues play out;

Loopholes and Investment Risks
  • Bureaucratic Hurdles: The complex process of obtaining land use rights can be time-consuming and expensive. This discourages investors who need clear timelines and predictable costs.
  • Discretionary Allocation: Unclear allocation procedures and the potential for favoritism can make it difficult for investors to secure land they need for development projects. This lack of transparency discourages investment as the process becomes unpredictable.
  • Unclear Compensation: Vague provisions on compensation for revoked land create uncertainty about potential losses. Investors might hesitate if the risk of inadequate compensation is high.
  • Disenfranchisement of Rural Communities: Restrictions on customary land rights can limit access to land in areas with development potential. This can hinder investment in rural areas.

Impact On Investment
  • Reduced Investment: The aforementioned issues can lead to a decrease in real estate investment, especially from foreign investors who may be more risk-averse.
  • Higher Investment Costs: The time and resources spent navigating bureaucratic hurdles can increase the overall cost of real estate development.
  • Focus on Specific Areas: Investors might concentrate their efforts on areas with less ambiguity in land ownership and allocation, limiting development in other areas.
  • Stalled Projects: Disputes arising from unclear ownership or inadequate compensation can stall development projects, leading to financial losses for investors.

Overall, the loopholes in the Land Use Act creates an environment of uncertainty and inefficiency that discourages real estate investment in Nigeria. This hinders economic growth and development.

Potential Solutions and a Brighter Future

Efforts to amend the Land Use Act to address these loopholes could significantly improve the investment climate. Here are some potential solutions:

  • Clearer Guidelines: Establishing transparent procedures for land allocation, compensation, and dispute resolution.
  • Increased Efficiency: Streamlining the land administration process to reduce bureaucratic delays.
  • Strengthening Property Rights: Providing investors with more secure property rights will incentivize investment.
  • Public Participation: Including local communities in land-use decisions can help build trust and address concerns.

By addressing these issues, Nigeria can create a more attractive environment for real estate investment, leading to increased development, job creation, and economic growth.

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