The introduction of 6% tenancy and lease agreement stamp duty in the country will cause more hardship for the Nigerian workers who form the majority of the tenant population.
This was contained in a statement from the President of the Nigeria Labour Congress (NLC), Mr Ayuba Wabba, and made available to NAN on Saturday.
It was also stated that introducing hikes in taxes and user access fees at a time when governments of other countries are offering palliatives to their citizens, does not portray the image of a government sensitive to the needs of its citizens.
Wabba urged the government to reverse the policy, as Nigerians are still struggling with the socio-economic pressure arising from COVID-19 fallouts.
“We call on the Federal Government and the Federal Inland Revenue Service to rescind this harsh fiscal measure as it is boldly insensitive to the material condition of Nigerians which has been compounded by the Covid-19.
“Nobody would want to be a tenant if they had alternative. This means that tenants which this new policy targets are some of the most vulnerable people in our society” he said.
He noted that accommodation is a fundamental right guaranteed by Nigeria’s constitution, and should not have a higher tax rate of 6% when sales tax is 1.5%.
Why this matters
Recent weeks have been ridden with several probes and scandals on misappropriation of public funds, and Wabba noted that these issues have further dampened the trust of the citizens in the government.
NLC noted in its statement that given the scandals, it does not make sense to ask Nigerians to make sacrifices when they are daily regaled with putrid stories of how public officials are accused of swallowing money in billions and making a comedy of ‘fainting’ afterward.
He added that the government should make more efforts towards reducing official graft and corruption, and in line with the principle of public taxation, have a tax policy where the rich subsidizes the poor.
Wabba noted that the principle of public taxation, especially progressive taxation all over the world is that the rich subsidizes for the poor, and that every tax policy that would be enforceable must create a safety net for the poor.
The federal government, through the Federal Inland Revenue Service (FIRS), introduced a new policy stipulating an additional 6% stamp duty fee for every tenancy and lease agreement in the country.
The implementation of this new policy implies that tenants will have to pay more to make up for the stamp duty charge.
“While we expect the reversal of the 6 per cent tenancy and lease stamp duty policy, we remind government that its highest responsibility is to ensure the security and welfare of every Nigerian,” Wabba said.
Where to buy Real Estate in Lagos in 2021
The spate of housing construction in several locations in Lagos is bringing hope of an imminent recovery in the sector in 2021.
The Nigerian economy slipped into recession in Q3 2020 as the impact of Covid-19 took its toll on several sectors including the real estate, which has been in a recession since the 3rd quarter of 2019, ballooning to 21.99% in the second quarter of 2020 before retreating to 13.4% in the third quarter.
However, reports across Lagos indicate real estate developers continued to build during the pandemic months of 2020 fuelled by increased demands in residential housing units.
Nairametrics research understands millions of dollars in diaspora inflows are being channelled into the sector. In the search for higher yields, Nigerians living abroad are taking out equity from their mortgages and then funnelling some of the proceeds into the country’s real estate market.
The spate of housing construction in several locations in Lagos is bringing hope of an imminent recovery in the sector in 2021. The development has enabled industry stakeholders to be optimistic that despite the second wave of the pandemic, the sector will yield returns to investors in 2021 for various reasons. Hence, they shared hotspot locations with Nairametrics across the nation’s commercial capital.
In separate interviews, they explained that discerning investors should buy real estates around Lekki axis, Banana Island, Ikoyi, Surulere, Ikeja GRA, Magodo, Gbagada areas of Lagos and border towns like Arepo, Magboro, Sango-Ota in Ogun State, amongst others.
Adedotun Bamigbola, Chairman, Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos chapter, told Nairametrics that though where to buy real estate largely depends on the status and purpose of the investors, some zones will yield more returns to the investors in 2021.
According to him, Lagos State is divided into 7 zones – Island 1 (Lagos Island, Old Ikoyi, S/West Ikoyi, Banana Island, Victoria Island); Island 2 (Lekki Phase 1, Ikate, Osapa, Agungi & Chevron); Island 3 (Ajah, Sangotedo, Awoyaya & Lakowe); Island 4 (Ogba, Ogudu, Magodo GRA 1 (Isheri) & Magodo GRA 2 (Shangisha); Mainland 1 (Surulere, Yaba, Ilupeju & Gbagada); Mainland 2 (Amuwo Odofin, Isolo, Festac, Apapa); and Mainland 3 (Ikeja GRA, Maryland, Ikeja & Alausa).
Mr Bamigbola said,
“Island 1 zone recorded the highest land prices, which is expected to be repeated in 2021, followed by Mainland 3. This is a reflection of the deepened level of commercialization in these 2 zones.
“The growing development in nascent Island 2 areas is also reflected in its high price of land averaging N112,021/sq.
“Per house types, Island 1 zone has the highest values (rental & sale) for both 3-bedroom and 4-bedroom houses. The same also goes for office space rental values.”
He said a great number of people are moving towards Lekki axis due to the prospects they see in the area. Some of the prospects are based on believes that “Island is the commercial capital of the state,” with attractions like the Deep-Sea port, Dangote refinery, and the proposed Airport, amongst others.
Mr Bamigbola added,
“Chevron showed the highest yield of 6.87% on investment and is expected to do more in 2021, next was Agungi (6.31%), while Osapa came in third with 6.06%.
“The lowest yield was seen in Ogudu – 3.10%, next being Magodo (Shangisha) – 3.19% and third being Magodo (Isheri) – 3.20%.
“The median yield in Lagos state from this consensus analysis is 4.32% and it is obtainable in Yaba.”
Another member of NIESV, Lola Afolabi, agreed with Bamigbola, as she projected that land and house prices in Lekki Ikate, Chevron axis, Sangotedo and Lakowe are likely to keep increasing as the area welcomes more developments like Lagos Free Trade Zone, 4th Mainland Bridge and new city – Alaro City, which are all expected to come on stream in a few years. upon completion, will further trigger the rise in property values in the zones.
“The high rental costs of Grade A office buildings located in Banana Island, Ikoyi and Victoria Island have contributed to this.
“The presence of supporting infrastructure has contributed to the capital value increase in Mainland, especially in Ogudu and Magodo Shangisha areas, but this has not met corresponding rental valuation resulting in lower yields.
“Ikeja GRA and its surrounding areas like Maryland, Mende, Shonibare estate remains the most expensive locations on the mainland part of Lagos state.
“This is expected to continue as more residential and commercial development come up in these neighbourhoods, particularly Ikeja GRA, in few years’ time.”
Debo Adejana, another realtor, advised that this is the time to invest in real estate with the number of growth poles in the Ibeju Lekki axis of Lagos. He said,
“There are an estimated 50,000 new jobs over the next decade. Investing in real estate now is the right investment move anybody can undertake, especially along the Ibeju Lekki axis.”
What you should know
Despite the optimism expressed by the realtors, a number of them argued that the office market segment of the sector may suffer certain setbacks due to the pandemic.
According to Martin Uche, a Real Estate Analyst, the remote work policies by some corporate bodies, especially the multinational firms, will affect the Lagos A-Grade office market – not now, but during the next round of renewals.
According to him, the international corporates in the financial, technology, and management consulting sectors, who account for up to 70% of prime office tenants in Lagos, are increasingly adopting remote work options, and this will impact the Lagos A-Grade office market during the next round of renewals.
“Though many offices are starting to open up, the enforcement of varying levels of lockdown as a result of the coronavirus, forced corporates to temporarily close their offices in the first half of the year or introduce new work policies to sustain business operations during the period.”
In response, most companies allowed staff to work remotely during the lockdown period. Though it was a means of keeping businesses running in the heat of the pandemic, it is clear that many international corporates will not be returning to the status quo.
Instead, they are considering a number of options centred around downsizing the space they currently occupy, as many have realized that they can operate without the entire team in the same brick and mortar space.
FG moves to construct 300,000 housing units for low-income earners
The Federal Government is set to construct 300,000 homes across the country for low-income earners.
Federal Government has disclosed that it is set to construct 300,000 homes across Nigeria for low-income earners under its National Social Housing Programme (NSHP).
This disclosure was made by the Government in a tweet which was made public via the official Twitter handle of the Federal Government of Nigeria.
The government disclosed that low-income earners can become homeowners easily under the new NSHP initiative, which seeks to deliver affordable housing pegged at 300,000 units and millions of jobs for Nigerians.
- The National Social Housing Programme (NSHP) is the housing component of the President Muhammadu Buhari Economic Sustainability Plan to deliver affordable housing and millions of jobs for Nigerians.
- Under this programme, 300,000 homes will be constructed in all states of the federation including the Federal Capital Territory (FCT), with the Family Homes Funds (FHF) as the lead developer, however other Nigerian partnerships and collaborations are welcomed to facilitate the construction of these homes.
The National Social Housing Programme (NSHP) will allow individuals in the low-income bracket to afford a house with as low as ₦2,000,000 only. According to the Government some of the offers which would be made available for aspiring homeowners throughout Nigeria are:
- 2-Rooms (1 Bedroom House) for ₦2,000,000.
- 3-Rooms (2 Bedroom House) for ₦2,750,000.
- 4-Rooms (3 Bedroom House) for ₦3,500,000.
Why this matters
FG stated that this initiative is highly imperative, given the cost of housing in sub-Saharan Africa, which is relatively high. Hence, it is often a luxury to own a home despite the basic nature of shelter needs.
The situation, however, for low-income earners is bad as they have competing needs such as food and clothing to consider before making any investments in house ownership.
The government in this regard has decided to intervene through the provision of a Mass Housing Programme of 300,000 homes across Nigeria for low-income earners.
The Social Housing Programme is expected to play a huge role in reducing the socioeconomic challenges that emerge from the development of slum settlements.
This takes avid steps towards making the Sustainable Development Goal (SDGs 11) a reality, as it the NSHP aimed at making cities and human settlements inclusive, safe, resilient and sustainable.
What you should know
- Nairametrics reported three months ago that the Central Bank of Nigeria (CBN) had approved the sum of N200 billion as mortgage finance facility to the Family Homes Fund Limited (FHFL) and targeted at low-income earners.
- This fund was approved to fast track the construction of 300,000 homes in the 36 states of the federation and the Federal Capital Territory and to create up to 1.5 million jobs in 5 years.
- According to The Punch, the Managing Director, Federal Housing Authority (FHA), Senator Gbenga Ashafa, on October 20th 2020, signed a Memorandum of Understanding on behalf of the government with Family Homes Funds Limited for the construction and delivery of 1,000 homes, being phase one of the 300,000-units social housing projects.
- He told journalists in Abuja that some FHA directors on Monday visited the site where the first 1,000 houses would be built in Bwari, a satellite town in Abuja. He added that full construction would start in November.
Lagos Government set to commission 252 affordable public housing units in Badagry
Lagos State Government has concluded plans to commission its affordable Public Housing Scheme in Idale, Badagry.
Lagos State Commissioner for Housing, Mr. Moruf Akinderu-Fatai, disclosed that the Lagos State Government has concluded plans to commission its Affordable Public Housing Scheme in Idale, Badagry, on Friday.
This disclosure was made by the Commissioner during a media chat in Alausa in Ikeja.
Mr. Akinderu-Fatai, during the media chat in Alausa, stated that the housing scheme constructed by the State Government in collaboration with Echostone Development Nigeria Limited, has 252 units of two-bedroom bungalows on an expanse of 12.5 hectares in Idale, Badagry, as part of efforts towards reducing the Housing deficit across the State.
What they are saying
Akinderu–Fatai while speaking at the media chat with newsmen averred the unique nature of the scheme, as it is the first green estate to be owned by the State Government, he said:
- “The Estate, which is one of the several initiatives of the Ministry of Housing, was borne out of a Joint Venture with Echostone Development Nigeria Limited based on an innovative building technology that supports housing production within optimal time at reduced cost.”
- “The Lagos State Affordable Public Housing Scheme in Idale is an eco-friendly housing scheme as each house comes with two trees and a garden. Also, the homes are easy to maintain because the design supports energy efficiency in terms of power and water usage.”
- “The Estate also comes with state-of-the-art infrastructure such as water treatment plant, central sewage treatment plant, streetlights, spaces for community activities, road network and drainage, as well as perimeter fence. The commissioning of the Idale Housing Project will be performed on Friday, 11th December 2020 by the Governor of Lagos State, Mr. Babajide Olusola Sanwo-Olu.”