Foreign investment is always courted in the business world. Companies desire outside capital to fund and back projects or services that will be provided within the country. Foreign investors too, are always looking for different avenues to diversify their investments and gain returns.
Real estate is no different. With all the massive luxury projects that are popping up across the country, outside money and or developers are actively sought after. Outsiders with deep pockets are happy to dump their money in developments because they typically make out well.
Who Owns the Land?
Foreigners are not permitted to own land in Nigeria. This sounds harsh. But the reality is that no person (even Nigerian citizens) can “own” land in Nigeria. Sounds crazy right? Yes, we think so too. Nigeria does not operate a”freehold” system- where ownership of land and structures upon it is owned by a person(s) in perpetuity. Freehold systems are common in most parts of the world.
Nigeria operates a “leasehold” system, where the government owns the land and leases it back to individuals for a period of 99 years. Land ownership does not exist in Nigeria.
Land Use Act of 1978
In 1978 the land use act effectively reverted all land back to the government. State governments have control over all urban land within the state and non-urban or rural land is controlled by the local government where it is found.
The governments strategy was intended to streamline the administration of land with the hopes of making access and use easier to manage and convey to citizens. It was supposed to stop land speculators from grabbing large areas of land to hold and wait for prices to rise. It was also supposed to assist local farmers to have access to farmable land.
How is Land “Owned”?
Since we can not technically own land, title and ownership is conveyed via a certificate of occupancy. This certificate gives you effective ownership of the land or building that you occupy. If you don’t have this certificate you have no land ownership.
That is why it is so important to understand how the land purchasing process works. There is a lot of red-tape when buying property in Nigeria. You must be wary of fraud and others that may attempt to deceive you. Just remember no (C of O) certificate of occupancy – no ownership.
The property must be properly registered with the government before any (C of O) will be granted. Don’t worry in a later post we will go through the purchasing process, step by step.
What About my Land in the Village?
I am sorry to tell you that your beautiful property in your village does not belong to you or your family. This is a tough pill to swallow. Historically land and land rights in local areas were handled by families who had total control and discretion. When disputes occurred, traditional rulers or elders were consulted to help resolve them.
The local government area (LGA) has full control and discretion over all land within its boundaries. The good thing is that these LGAs are not very interested in taking land away – unless there are valuable resources on them.
It is estimated that only 3% of all land in Nigeria is properly registered with the government. This makes it extremely hard to enforce land policies and disputes. It also is ripe for fraud. “Omo Onile” is another issue that makes it very difficult to purchase land. Omo Onile are land grabbers or groups of people that claim land that you may have legally bought, and they try to extort you for money or they may get violent.
That is why it is important to have all your legal documents in order so in the event that you need to go to court, you are in a good position.
Is the Land Act Here to Stay?
We believe that the Land Act of 1978 is too restrictive and essentially cripples the real estate sector in Nigeria. While a few regimes have tried to deal with it and have it amended, it has not been successful since it requires cooperation from different parts of the government – which does not happen in Nigeria.
Without true land ownership in Nigeria, it makes it difficult for investors and Nigerian citizens to feel secure when purchasing land and property. Because we all know at any given time, land ownership and rights can be revoked by the government.
On a positive note, the government is far to “busy” and not particularly interested in taking back land unless there is good reason. So therefore the vast majority of Nigerians go about their days buying and selling land and not even realizing that ownership of that land is a mere illusion.