Do you desire to buy a house? Owning a home is a significant milestone in many Nigerians’ lives, often seen as a symbol of success and stability. However, the journey to homeownership in Nigeria can be complex and challenging. If you’re contemplating buying your own house, here are five crucial factors to consider in the Nigerian context.

1. Location, Location, Location

The importance of location cannot be overstated when it comes to property investment in Nigeria. Consider the following aspects:

A) Accessibility: How close is the property to your workplace, good schools, markets, and healthcare facilities? In cities like Lagos or Abuja, proximity to major roads or public transportation routes can significantly impact your daily life and the property’s value.

B) Security: Research the safety record of the area. Some neighbourhoods in Nigerian cities are known for better security than others. Consider gated communities or estates that offer additional security measures.

C) Infrastructure: Assess the quality of basic amenities in the area. Are there good roads? Is there a reliable water supply? How about power supply – is the area on a relatively stable grid, or will you need to heavily rely on generators?

D) Future Development: Look into the government’s development plans for the area. Upcoming infrastructure projects like the Lekki Free Trade Zone in Lagos can significantly boost property values in surrounding areas.

E) Flooding Risk: With climate change increasing the frequency of extreme weather events, consider the area’s susceptibility to flooding, especially in coastal cities like Lagos or Port Harcourt.

2. Understand the True Cost of Homeownership

The purchase price is just the beginning. Factor in these additional costs:

A) Legal Fees: Hiring a reputable lawyer is crucial to ensure proper documentation and avoid future legal issues. Legal fees typically range from 5-10% of the property value.

B) Land Use Charge: This annual tax varies by state and is based on the property’s assessed value.

C) Survey Plan and Title Documents: These are essential for proving ownership and can be quite costly, especially in states like Lagos.

D) Renovation and Furnishing: Unless you’re buying a fully furnished property, budget for these expenses.

E) Ongoing Maintenance: This includes routine repairs, possible estate fees if in a gated community, and the cost of running generators due to erratic power supply.

3. Financing Options and Mortgage Considerations

Most Nigerians can’t afford to buy a house outright, so understanding your financing options is crucial:

A) Mortgages: While the mortgage market in Nigeria is still developing, banks like First Bank, GTBank, and Stanbic IBTC offer mortgage products. However, interest rates can be high, often ranging from 15-25% per annum.

B) National Housing Fund (NHF): This government scheme, managed by the Federal Mortgage Bank of Nigeria, offers lower interest rates but has strict eligibility criteria.

C) Developer Financing: Some property developers offer instalment payment plans, which can be more flexible than traditional mortgages.

D) Cooperative Societies: Many Nigerians join cooperative societies that offer loans for housing at more favorable terms than commercial banks.

E) Diaspora Mortgages: If you’re a Nigerian living abroad, some banks offer special mortgage products for diaspora customers.

Remember to factor in the economic volatility in Nigeria. Consider how potential changes in exchange rates or inflation might affect your ability to repay a long-term mortgage.

4. Legal Due Diligence

The complexity of land ownership in Nigeria necessitates thorough legal checks:

A) Verify Ownership: Ensure the seller has the right to sell the property. In Nigeria, it’s not uncommon for multiple parties to claim ownership of the same land.

B) Check for Encumbrances: Ensure there are no outstanding mortgages, liens, or other claims on the property.

C) Obtain Proper Documentation: Crucial documents include the Certificate of Occupancy (C of O), Deed of Assignment, and Governor’s Consent for the transfer of ownership.

D) Use a Trustworthy Lawyer: Given the prevalence of land fraud in Nigeria, working with a reputable real estate lawyer is non-negotiable.

E) Verify Approvals: If buying property in an estate or a recently developed area, verify that all necessary approvals have been obtained from relevant authorities.

5. Long-term Value and Resale Potential

While you may be buying for personal use, it’s wise to consider the property’s long-term value:

A) Appreciation Potential: Research historical price trends in the area. Some areas, like Lekki in Lagos, have seen significant appreciation over the years.

B) Infrastructure Development: Upcoming government projects can boost property values. For instance, areas around the new Dangote Refinery in Lagos are expected to see increased demand.

C) Economic Factors: Consider how economic changes might affect the area’s desirability. For example, the growth of tech hubs in areas like Yaba in Lagos has driven up property values.

D) Building Quality: Poor construction is a common issue in Nigeria. If possible, get a professional assessment of the building’s quality and potential long-term maintenance issues.

E) Flexibility of the Property: Consider how easily the property could be adapted for different uses in the future, which could increase its resale value.

Concluding thoughts

Buying a house in Nigeria is a significant decision that requires careful consideration and planning. By thoroughly researching these five areas – location, true costs, financing options, legal aspects, and long-term value – you can make a more informed decision and potentially avoid common pitfalls in the Nigerian real estate market.

Remember, while homeownership can be a great investment and source of stability, it’s not the right choice for everyone at every stage of life. Carefully assess your personal and financial situation before making this significant commitment. With the right approach and due diligence, you can navigate the complexities of the Nigerian property market and find a home that meets your needs and sets you up for future financial success.

Bravewood is licensed by the Central Bank of Nigeria to provide investments with low risk and high returns for Nigerian professionals.