Nigeria's property market is an attractive investment destination for many, with an estimated yearly contribution of N20 trillion to the Gross Domestic Product (GDP), a population of 200 million and a housing demand-supply shortfall of over 20 million units. However, major cities like Lagos, Ogun, Abuja, Port Harcourt, Kano, Ibadan and others have been grappling with fraudsters in recent times, who have been causing problems for property developers, landlords, and potential tenants.
The surge in construction activities and huge demand for housing in these cities has led to an increase in property scams.
For instance, Lagos and Ogun States reportedly witness over 500,000 land scams each year. In Lagos, 50 fraud cases were adjourned for further mediation in 2021, while 40 were referred to appropriate agencies, and five cases are currently in courts in locations such as Ketu, Ajah, Ikorodu, Gbagada, and Yaba. In 2021, a real estate firm allegedly defrauded more than 500 people of ₦8 million each in the Abijo area of Lagos by selling them fake plots of land without titles.
Perpetrators of real estate scams often claim to be marketing consultants with a mandate to sell property in choice locations such as Banana Island, Ikoyi, Asokoro, and Lekki worth millions of naira. They also market non-existing or disputed properties through social media and hand out fake allocation letters to unsuspecting buyers. These scams not only affect the victims but also damage the reputation of the property market and discourage potential investors from participating in the industry.
According to The Guardian, Mrs Tope Adekunle, a Lagos resident, recently purchased a plot of land in Orile-Igbein, Ogun State for N850,000 in January 2021. When she visited the property in January 2023, she discovered that some area boys had driven her away from the site, claiming that it had been sold to another person. After the intervention of some highly placed individuals and friends, Adekunle was allocated another site in a distant location from the initial site.
In a similar incident, the Federal Capital Territory High Court convicted and sentenced Mercy Yusuf and her company, T.M Properties Limited, to 24 years in prison for fraudulently obtaining $298,000 and N40 million from a property firm under the false pretence that she was the beneficial owner of plot 1721 Jahi District Cadastral Zone B08, Abuja. There are many such cases in courts, with the police and the Economic Financial Crimes Commission (EFCC).
Although professional associations have tamed such incidents through their codes and conduct, as well as disciplinary committees, some members are recalcitrant. For instance, the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) tribunal recently suspended a valuer over alleged professional misconduct for allegedly collecting N3.5 million from a client for building construction that was never done. The client had reported the case to ESVARBON after several unsuccessful attempts to prevail on the suspect to either execute the project or refund the money paid.
Stakeholders say the non-regulation of the estate sector creates opportunities for fraudulent developers and other operatives to swindle unsuspecting members of the public. As a result, the Lagos State government established the Lagos State Real Estate Registration Agency (LASRERA), which monitors and collates databases of all practising real estate individuals or organizations to conform them to global standards. The Special Adviser to Lagos Governor on Housing, Mrs Toke Benson-Awoyinka, said the government's intervention in the real estate sector was to eliminate fraudulent practices by some unscrupulous persons due to the reported cases.
An estate surveyor and valuer, Mr Francis Okpaleke, said the menace of fraudulent practices has been a long-standing issue, and the intensity has increased in recent times across various sectors of the economy and the entire spectrum of the real estate market. The scams on 'letting and selling' fall under real estate agencies, and the frequency is due to the absence of regulation. Okpaleke noted that while there have been efforts by the Lagos government to regulate estate agencies, there is no clear national regulation. He also emphasized that there are people who practice estate agencies professionally, who are regulated like estate surveyors and valuers and lawyers.
The occurrence of scams within the regulated profession is minimal due to self-regulation. Any estate surveyor and valuer involved in scams can be reported to the professional body, which has the power to discipline those found guilty, including revoking their license. Such acts are considered misconduct and are subject to disciplinary measures by institutions like ESVARBON and the Nigerian Institution of Estate Surveyors and Valuers (NIESV).
However, the unregulated market is plagued by property scams perpetrated by quacks, although there are some bad eggs among professionals. When there is a disservice, there are sanctions, and no professional wants to be disciplined by the professional body. People have been disciplined in the past. Therefore, intending property buyers must follow due process, deal with professionals, carry out due diligence, and involve a lawyer to verify the title and conduct formal and informal searches before purchasing a property.
According to Mr Kayode Ogunji, the Chairman of NIESV's Faculty of Estate Agency and Marketing, the demand and supply imbalance is a major factor in the rising cases of property scams. Estate agency has become an all-comers affair, where anyone can erect a billboard, put a number on it, and advertise. Some developers collect money from 100 people but only have 20 to 30 accommodations. Most scammers advertise on social media and attract a lot of people. Therefore, people should always do background checks.
To curb the menace, the government must build more houses for the people like the former governor of Lagos State, Lateef Jakande, who reduced property scams drastically. The mortgage banks need to be revived, and people should be able to take mortgages at a single-digit interest rate. Also, people should patronize professionals.
The Real Estate Developers Association of Nigeria (REDAN) has made seals for every member of the association to use like lawyers, enabling them to award sanctions to registered members found culpable in any nefarious activity. The association has also streamlined its relationship with agencies such as the Economic and Financial Crimes Commission/SCUML, Independent Corrupt Practices and Other Related Offences Commission, Nigeria Financial and Intelligence Unit, and the State Security Service to stop illegal activity and sharp practices of some developers.
They have sponsored a bill in the National Assembly, which has been passed by the Senate for uniform regulation of the real estate sector to stop people who are not of proven integrity from participating in the business. Anyone who has been a victim of a REDAN member's nefarious activity can come to them with a receipt, and they assure them that they will get back their money. People involved in land grabbing and other nefarious activities are not their members, and anyone caught will be sanctioned, blacklisted, and their identity made public.