Property Title Acceptance: Addressing Concerns Among Banks In Nigeria

 In the bustling realm of Nigeria's real estate landscape, a formidable challenge looms large: the increasing reluctance of financial institutions, particularly commercial and mortgage banks, to accept property documents for loan transactions. This trend, reported by The Guardian, stems from mounting issues of land grabbing and demolitions, particularly in key urban centers like Abuja and Lagos, casting a shadow over the ongoing estate and private developments financed by these banks.

Recent demolitions orchestrated by Lagos agencies in prestigious locales such as Ikoyi, Banana Island, and Central Lagos, alongside interventions by the Federal Housing Authority in Festac Town, have fueled banks' apprehension toward accepting property documents as loan collateral. Compounding these concerns is the absence of a comprehensive mortgage foreclosure law safeguarding investments in the housing and mortgage sub-sector, with only a handful of states—Lagos, Kaduna, Nasarawa, and Ekiti—having enacted such legislation.

Nigeria's current ranking of 131 out of 190 economies globally in terms of ease of doing business, as per the World Bank's latest ratings, further accentuates the hurdles confronting the real estate sector. Against this backdrop, estate surveyors and valuers foresee banks imposing stricter measures to shield their loans.

Professor Austin Otegbelu, an esteemed specialist in Estate Management at the University of Lagos, laments the recent demolitions in Abuja and Lagos as regrettable developments that heighten the risks associated with real estate investments. He anticipates banks imposing more stringent conditions on loan applicants to mitigate the inherent risks of property investments.

Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Lagos branch, Gbenga Ismail, offers reassurance that legitimate titles will generally retain their acceptance as collateral for lending. However, he underscores the importance of caution in new developments, advocating for heightened vigilance from banks in light of recent regulatory interventions by state governments.

Chudi Ubosi, Chairman of the Association of Capital Market Valuers (ACMV), acknowledges the prudence exhibited by banks in tightening lending rules against real estate collateral. He emphasizes the imperative of thorough due diligence in transactions involving real estate collateral, highlighting instances where property owners employ delay tactics through litigation, causing frustrations.

Ubosi advocates for streamlined processes for obtaining approvals, reduction in approval costs, and increased accountability among all stakeholders in the development chain. He urges the government to expand infrastructure to spur development in emerging areas, thereby alleviating the strain on construction within urban centers.

Dr. Yemi Adelakun, the astute Managing Director and Chief Executive Officer of NISH Affordable Housing Ltd, echoes the calls for simplified procedures in obtaining land titles and building approvals. He underscores the necessity of robust monitoring and supervision of building developments to avert substantial losses, proposing the exploration of alternative penalties beyond demolition.

In conclusion, the challenges besieging Nigeria's real estate sector underscore the imperative for holistic reforms encompassing simplified approval processes, legal safeguards, and augmented infrastructure development. Such reforms are pivotal in fostering an enabling environment for property transactions and loans, vital for steering the real estate sector toward sustainable growth and resilience in the face of evolving challenges.