Millennials seem to dictate the real estate life style with their sophisticated taste. Their niche is keeping it small, stylish, functional and flexible. In this report, Okwy Iroegbu-Chikezie looks at how their home preference has dominated the real estate market

There was a time that large buildings with multiple rooms dominate the real estate sphere. Not minding that the owners may not make use of two or three rooms in a year. Economic factors, life style have changed all that. The Fintech generation prefers co-working office space, functional apartments, rather big sized homes without functionality. This was made more daring during the COVID- 19 pandemic when people worked from functional homes.

In a summit with the theme:  ‘How millennials redefined real estate  market’, organised to reconnect industry leaders and highlight opportunities in the real estate market among millennials.

A real estate firm, Bricks and Towers speaking through its   Chief  Executive Officer Operating, Leah Ademola, said  millennials who are between the ages of 25 and 40 years are the largest market; she explained that they are the younger generation that is making their first entry into property acquisition.

“The younger people, the smaller families, are venturing into things that are compact. What we do is take away the risk and make it easy for them to go through all the processes,” Ademola said.

She said developing inexpensive items by building on smaller plots of land and optimising what they can build on each plot of land is one way to make property ownership more accessible to the younger generation.

“We have different layouts. We have 2 bedrooms, one bedroom, studio apartments that young people can afford to buy. Because the millennials are just starting to build their investment portfolio, they don’t have a lot of money, you want to be able to take out small portions of your salaries,” she added

Chief Executive Officer of  XD properties , lfeoma Obed said her company’s role is to provide peace of mind, homes for clients, and service to the public as well as provide building construction service to developers.

“What we want to continue to do is to provide value to our clients and service to the public who are the end-users of everyday building and the product we build,” Obed said.

Citing Babatunde Fashola, Minister of Works and Housing, Obed said people in their mid to late 20s have a uniquely distinct taste. “Their homeownership dreams are very different and are different from the dreams of previous generations,”

Stating what the future holds, Obed emphasised the need for a radical shift  and  improvement in customer relationship management, flexible policy on housing, and institutional partnerships  among other solutions. According to her, the millennials are so impatient that they want almost all the services in one package.’” They are so impatient that they can fit into the traditional house types and sizes. Another of their characteristics is that they are always evolving, as  operators come up with new designs and multiple functions that will help make  their lifestyle easier.

Former UPDC Managing Director, Hakeem Oguniran who is also the Founder/CEO, Eximia Realty Company Ltd. could  not agree less with the millennials. He said before it became fashionable his firm already made the decision to build studio flats, 1 and 2 bedroom flats. He said that is where the market is as young people do not want to be burdened with big houses and turn around to look for a way out in maintenance or looking for a way to offload it when they want to move.

Another Developer Ezekiel Alfred contributing said the millennials also influence the colour and materials used in construction. “The good thing about them is that if they are impressed, they will tell their friends and you keep getting enquiries and closing deals. For any developer in the emerging markets, it is a good deal anytime, he added.

Many governors are looking for ways to improve their Internally Generated Revenue (IGR). Amongst them is the Ogun State Governor, Prince Dapo Abiodun, who on November 4, gave what he called an amnesty period for people who built without building permits to get same before December 31. He said the amnesty was to enable home owners to regularise their documentation, having earlier waived the payment of penal fees in demonstration of his mantra of “Building Our Future Together” in the state. He is not alone; for Lagos, Edo, FCT and others, the real estate sector is an avenue to generate huge IGR and should be exploited, experts say. OKWY IROEGBU­CHIKEZIE reports.

Amid the cash crunch bedeviling states, many governors are thinking out of the box on how to raise their internally generated revenue. To this end, most of them have beamed their searchlight on real estate. This has made some governors to institute measures to liberalise the process of getting Governor’s Consent, permits, and legalising land and property documents

In Lagos State, for instance, where land is seen as its oil, the Commissioner of Physical Planning and Urban Development has been empowered to approve certain categories of permits to make it easier to acquire titles. The state offers generous discounts to sway people to regularise their papers. It has also made the processes less cumbersome and reduced the time as one could easily get the papers within six months.

For Ogun State, the governor instituted the Property Registration Programme to enable property/ land owners to acquire titles tfor their assets. In a statement made available to The Nation, it enjoined residents to take advantage of the extended period to regularise their illegal developments.

While some states can deploy certain strategies that convince the public to regularise their documents, others seem not to have an idea of what to do despite dwindling fortunes, to the extent that workers in such states are owed salaries running beyond 12 months, and pensioners even more. The only thing the helmsmen of such states do is to wait monthly to collect allocation from Abuja without thinking outside the box.

The scenario is that the federal, state and local governments, the authorities are unable to harness property tax to shore up their Internally Generated Revenues (IGR).

It is evident, however, that while many state governments have failed to adopt reform strategies to enjoy the full potential (fiscal and non-fiscal) of property tax for boosting IGR in the country, others have not taken the idea very seriously.

But some homeowners say there are too many taxes imposed by states on property. The taxes on properties include capital gains tax, land use charge, withholding tax, probate tax, consent tax, stamp duty, registration fee, ratification fees, regularisation fees and development charges.

According to them, the various taxes have made the acquisition of property very expensive, thereby reducing supply of housing and raising sale prices and rents.

Under the federal system, allocation of powers to tax is usually done in such a way that each level of government will have access to at least one broad-based inelastic tax handle for sustainable revenue.

Findings show that the constitutional framework for tenement has hindered some states’ attempt to redesign their property tax, coupled with lack of comprehensive law on property taxation and lack of jurisprudence. However, some experts don’t think so. They hinge it on lack of political will to drive the system.

In 2001, Lagos introduced various forms of property taxation including the Land Use Law, as a result of complaints by the public, real estate operators and professionals. It was later consolidated; part of the consideration for the charge are location of the property, purpose of the property and nature of the property. Retirees also pay certain level of taxes including the neighbourhood improvement charges and tenement rates laws.

The rates are as follows: owner-occupied residential property – 0.0394 per cent; industrial premises of manufacturing concerns – 0.132 per cent, residential property/private school (owner and third party) 0.132 per cent and residential property (without owner in residence) -0.394 per cent.

The Federal Capital Territory (FCT) has keyed into the property tax system. Owners of unoccupied houses now pay taxes. This FCT brand of property taxation has received accolades as operators believe that people who leave their mansions occupied for years no doubt may have used slush funds and should be made to pay.

The need for states to come up with taxes  was espoused by Chairman of the Independent Corrupt Practices and other related offences Commission (ICPC), Prof Bolaji Owasanoye,  a year ago when he revealed that the anti-graft agency recovered 301 houses from two civil servants in Abuja.

ICPC boss made the disclosure at the inauguration of the House of Representatives Ad-hoc Committee on Investigation of the Operations of Real Estate Developers last year.

He said while 241 buildings were retrieved from one of the suspects at different locations within the FCT, the remaining 60 were recovered on a large expanse of land at another location.

Owasanoye, who did not mention the names of the affected civil servants bemoaned the increasing rate at which corrupt public officers were using real estate investment as a vehicle for hiding ill-gotten wealth and money laundering in the country.

He, however, accused officials of the Federal Capital Development Authority (FCDA) as collaborators in the scam.

He said: “Public officers acquire estates in pseudonyms to conceal the illegal origin of funds. This is made possible by the absence of proper documentation, the registration of titles to land and estates in the country and the non-enforcement of beneficial ownership standards.

“A tour round Abuja, especially the metropolis and the Central Area, would show a lot of estates that are built up but empty. If they had been constructed with funds that were borrowed at market rates, I don’t think any investor would leave such properties empty.

“One way or the other they would put them to use. So it is suspected that some of those estates have been used to launder ill-gotten public funds.”

Owasanoye revealed that the agency recovered N53,968,158,974.64 after completing the task of the defunct Special Presidential Investigation Panel on recovery of public property of investigating some real estate developers who defaulted in remittance and payment of money due to the government.

He added that the agency had received a number of petitions from stakeholders in the real estate and housing sector, off-takers, prospective buyers and the general public regarding the behaviour and antics of real estate developers within and outside Abuja.

He said, “They border on forgery, the closing of land documents, double or multiple land allocations, allocation of land without the minister’s approval, revocation of land title without due process, non-delivery of projects, embezzlement of sourced capital, land racketeering, the use of land syndicates and speculators.”

In a prior interview an Estate Surveyor & Valuer, Sola Enitan, said for any country to grow economically, the fight against corruption and money laundering must be thorough; adding that money laundering’s effect on a nation’s economy was enormous.

He maintained that corruption was endemic in Nigeria, noting that over 80 per cent of all proceeds of corruption find their way into real estate, properties or building of assets.  He said it was evident in high brow areas of Lagos and Abuja where massive buildings remained unoccupied for years.

He said: “A high share of the population and businesses harbour un-official income. There is also the existence of a black market in the foreign exchange market, as if it has been legalized.  Corruption among state executives, law enforcement and judicial officers is rampant. Poor control of financial instruments such as shares and bonds, insufficient requirements for transparency of financial transactions and ownership of assets encourage money laundering.”

Enitan regretted that corrupt people found the sector a sure bet to hide their ill-gotten wealth. He pleaded with anti-graft agencies to apply the laws when there is an infraction.

Others in the sector believe that governments should explore indigenous property tax systems that combine cost effectiveness, transparency and peculiarity of the local market for improved revenue generation.

Another Estate Surveyor and lawyer, Offiong Samuel Ukpong, said property taxation included tenement rate, capital gain, capital transfer, withholding taxes, etc.

He said: “These taxes when and if properly managed can be a veritable means of boasting the IGR of any state if they look inward. These are real estate based taxes but its administration is left for persons with limited knowledge in their composition, functioning and operations. For instance tenement rate is a local government based tax and meant for refuse collection and street lighting, but like in Lagos State, it is lumped up with neighborhood charge and one other and levied as Land Use Charge.”

Ukpong said instead of basing the charge on annual income of the property, they now based same on capital value.

“If these taxes are well managed they have several advantages. Apart from income redistribution, they provide funds for infrastructure development and funds for environmental management like waste disposal, drainage cleaning, street lighting and other responsibilities assigned to the local government by the constitution. Unfortunately in Nigeria, no one is ready to do the right thing,” he stated.

Vice Chairman, Nigeria Institution of Estate Surveyors & Valuers, Lagos Branch, Gbenga  Ismail, said property tax is primarily a local tax and should not form part of central state revenue but local government’s revenue.

He said: “It is a total distortion of state fiscal budgetary projection and part of the issues creating revenue crisis for states. The centralisation of property tax at state Level is distorting the philosophy of property taxation. Reform must ensure local governments control tax raised within their councils.”

Ismail sai Property Tax helps local government manage infrastructure services within their locality; it helps provide the utility package that comes with community and neighbourhood development. It is this tax that provides hospital (primary) schools, Waste management etc” he stated.

He argued on the need for states to generate jobs to earn tax from the productive residents that live within them and also participate in more joint  ventures to promote commerce that would employ more people.’

Crowd funding is a unique opportunity for Nigerians to own houses, an expert Christy Kanu, has said.

The expert spoke stated the launch of Paradise Investment Network Cooperative (PINCOOP).

She said the initiative was designed to give equal opportunities to Nigerians to invest in the real estate sector.

She stated that the cooperative was borne out of her inability to invest in developed properties at choice areas, which is also impossible for low-income earners.

She said through her firm, the opportunities are opened for Nigerians to become real estate investors and own properties of their choice.

“Some years ago, I was keen on investing in real estate market in Lagos, but it became difficult because properties are extremely expensive in choice areas. I was only left with properties outskirt of the city. It’s like a situation whereby the rich get richer and the poor gets just the crumbs, because I had my money and I went into the real estate market and I found out that I couldn’t invest in some developed property in prime locations,” explained Kanu.

According to her, the scheme was designed to give equal opportunities to crowd funder such as those who are members of  cooperative societies to invest their savings in the real estate sector.

She said though the cost of properties in prime locations across Nigeria is high due to inflation and rising cost of building materials, it is not enough reasons to deprive low-income earners the opportunity of house ownership.

She said with as little as N50,000, low-income earners like the market women and street vendors could key into the PINCOOP, to invest and co-own properties in prime locations through membership or referral.

“What we are fostering is to ensure that everybody will partake in this real estate co-ownership platform,” she said.

“I want a situation where the rich and the poor benefit based on their share in a property without only the rich getting richer while the poor gets the crumbs.

“With as low as N50, 000, low-income earners like the market traders and artisans could become proud property owners in Lagos and beyond. This is why PINCOOP is basically disrupting the real estate marketplace so that everybody will get a share of interest regardless of income level,’’ she added.

She hinted that PINCOOP would launch various real estate products for co-ownership, including properties that would bring high yields to the co-owners or co-investors. “Most properties in Nigeria have a 99-year lifeline, so you earn rental income for life,’’ she added.

The National Pension Commission (PenCom) recently approved the implementation of the guidelines of accessing Retirement Savings Account (RSA) for residential mortgage in line with Section 89(2) of the Pension Reform Act 2014, which allows RSA holders to use a portion of their balance for paying for residential mortgage. This is victory for professionals in the built environment who have been canvassing that the huge funds be ploughed into the housing sector to make home ownership easier. OKWY IROEGBU­-CHIKEZIE reports.

Victory has come the way of professionals in the built environment who, in the last 15 years, have been pushing for pension funds to be ploughed into the housing sector to enable Nigerians own decent accommodation.

According to the National Pension Comision (PenCom), the guidelines cover pension contributors in employment either as salaried or  self-employed.

To qualify however, beneficiaries must have a letter for the property signed by the owner and verified by the mortgage lender.

It said: “The RSA of the applicant shall have employer and employee’s mandatory contributions for a cumulative minimum period of 60 months (five years). A contributor under the Micro Pension Plan (MPP) is also eligible, provided he/she has made contributions for at least 60 months (five years) prior to the date of his/application.  RSA holders who have less than three years to retire are not eligible while married couples, who are RSA holders, are eligible to make a joint application, subject to individually satisfying the eligibility requirements.’’

The document further stated to  qualify as a mortgage lender, the company must be licensed by the Central Bank of Nigeria (CBN), comply with the Contributory Pension Scheme (CPS) and have valid Pension Clearance Certificate (PCC).

Former Director-General, Lagos Chamber of Commerce & Industry (LCCI), Dr Muda Yusuf,  told The Nation that the decision of the PenCom to allow those on the pension scheme to withdraw 25 per cent from their RSA for mortgage  or building  houses was commendable.

He said the policy would impact significantly on the housing sector and finance.

Yusuf, the founder, Centre For The Promotion of Private Enterprise (CPPE), said: “It’s practically impossible to have a mortgage finance scheme in an economy where the interest rate is above 20 per cent. Any mortgage contracted under that kind of interest rate regime is like committing suicide because, at the end of the day, the owner who took the loan, would forfeit the property.

“Funding the housing sector has been a very big problem over the years. l am positive that this particular policy will release lots of funds into the housing sector. It’s also good for employees because of the rate of inflation.”

According to him, if the pension contributors can get part of their money and invest they would gain in terms of the asset in which they have invested in and many of them need to have their houses before they get to  60 or retire from service.

Muda said under the old system, until a contributor turns 60 or retire,  he could not own a house because that is when they are supposed to access their mortgage, but in the new  system, even at a much younger age, people will have their houses or homes.

The former LCCI boss further stated that professionals in the real estate and construction sector would leverage this development to increase and improve housing supply.

President, Nigeria Institute of Quantity Surveyors (NIQS), Olayemi Shonubi said the new policy would not only deepened the mortgage sector, which has hitherto been moribund, but also lead to increase in the housing stock.

He said with the RSA funds, some prospective subscribers would get funds to finance the purchase of their desired homes while those who have mortgages would pay according to the length of time they have or at least reduce the repayment period.

“The policy will, hopefully, help stem the corrupt practices by public officers, particularly those in the junior and middle cadre, as there is security of an abode after retirement  unlike what is obtainable where the fear of how to finance their retirement homes has driven many of them into embarking on corrupt practices.”

Shonubi said the policy would also be a win-win situation for developers, as there would be an increase in the number of subscribers for their development with the availability of funds from  their RSAs, which means that more houses would  be built.

He said, invariably, the multiplier effects would result into real estate sector contributing higher to the Gross Domestic Product (GDP) of the economy and, possibly, the reduction in unemployment.

Furthermore, the NIQS chief said the construction sector would create millions of jobs and wealth in the middle and lower cadres.

An estate surveyor and valuer, Offiong Samuel Ukpong, said the pension fund and other interventions had grown so big that some individuals in those organisations pilfer them.

He hailed the government’s policy on pension fund, adding that mortgages would be one of the avenues to reduce this excessive money in the till.

He said: “When I was the chairman of Lagos State Branch of Nigeria Institution of Estate Surveyors & Valuers (NIESV), we organised a workshop, where various questions were asked about the Pension Fund Administrators. We asked why contributors could not access a percentage of their investment for their use. We also wondered why loans could not be given while people were still strong and able to own houses and several other questions that remained unanswered.”

He argued that though the PenCom policy is not completely satisfactory, it’s a good starting point.

He advised that the process of accessing mortgages should not be cumbersome and frustrating.

Former President, Nigeria Institute of Building (NIOB), Kunle Awobodu, hailed the new policy, stating that it woud deepen mortgage finance. ‘’It also means that our advocacy of over 15 years had reached some receptive ears,’’ he stated.

He said his colleagues had, for years, canvassed that the huge pension fund be ploughed into the  sector and that they were relieved that the government had, at last, listened.

‘This single policy will increase the housing stock and enable Nigerians to access mortgages. It means that any average worker can have hope of owning a house or an apartment by accessing his or her mortgage. The system of ‘cash and carry’ will gradually fizzle out as a lot of cash will be freed for people to take of other needs while having a decent accommodation that they will live in and pay gradually.

“This singular act will also curb corruption because part of the reason  many are corrupt is because they are burdened daily on how they will survive after retirement if they don’t have houses of their own. Thankfully, now that they are sure that they will have a roof over their heads through the mortgage system, they will not be looking for ways to corruptly enrich themselves to build houses as they know they can own homes through the mortgage system”.

He hailed the government for the mortgage policy, which he claimed that professionals in the sector have canvassed for several years by making it happen.

He lamented that the situation is that many people attempt to build houses for themselves but in several occasion are not able to complete it in their life time.

“People are forced to build incrementally over the years living the building to inclement weather conditions because of fund paucity. They do the foundation in a year, the next year they add blocks and so on and so forth. The mortgage system will allow people live in decent homes unlike where people build for instance three bedrooms flat for as long 10 years and still continue to pay their landlords until they finish their own. Gratefully, it will change with this simple action,’’ he stated.

He commended former Lagos State Governor Babatunde Fashola, introduced the ‘rent­to­ own’ housing scheme known as HOMS in the state that enabled first-time home owners to have access to decent homes through mortgage.

He called on the government to sustain the programme to ensure more people have access to mortgage and own their homes.

Awobodu canvassed the need for a policy to ensure the mortgage system is not hijacked or truncated by fund diversion.

A group, Building Collapse Prevention Guild (BCPG), has underscored the importance of appropriate determination of the height of a building.

The Lagos BCPG Chairman, Mrs. Adekemi Okusaga, said in a statement that professionals were expected to conduct a post-mortem analysis or investigation after every collapse.

Mrs. Okusaga said knowing the actual number of storeys would prove if the building exceeded or complied with approved building plan or the height restrictions in the model city plan of that area or density regulation.

According to her, the number of storeys is a critical variable in the structural calculation and analysis of loadings on the foundation of the collapsed building.

She said: “There is a significant difference in the sizes, types and details of the foundations expected to carry a seven-storey building and those of nine-storey building, with varying degrees of soil bearing capacity. In building lexicology, the meaning and use of storey is constant and the same across the world. However, conflict exists in the Britanica and American use of ‘FLOOR’ in the counting of a building height. Ground floor in Britain means first floor in America.”

She decried the  various  classifications of the collapsed building at Oniru Estate, Victoria Island, Lagos, where some wrongly classified it as  seven-storey instead of  nine-storey.

According to her, there is no ambiguity in the global use of storey. Ambiguity only exists in the counting or numbering of floors in different parts of the world.

“There are two major floor numbering methods in the world. The English or European method that counts the ground floor as zero and the American method that labels the ground floor as the first level. In that case, first floor in European method means second floor (level) in American method. Most countries in Asia, Latin America and Africa adopt either of these two methods of floor numbering.

“It is important to overcome this Nigerian error, the distortion of storey that has long been confusing even the Nigerian construction practitioners. Dictionaries and building control regulations have a consensus on this. The use of storey will serve as a more concise and appropriate word to distinguish different heights of buildings for effective communication of building height specifications,” she stated.