The government of Lagos State has started moves to regulate the practice of estate agency to protect tenants and prospective tenants. But how far can this effort pay off? Muyiwa Lucas reports.
They all defiled the downpour last Thursday. And by 11 a.m, the Adeyemi-Bero Auditorium at the Alausa Secretariat, Ikeja was filled, spilling over to where canopies had been provided outside. It was not a political rally but an event organised to seek and end to the unregulated and unprofessional state of affairs in the estate agency sub-sector.
To the ordinary man on the street of Lagos, estate agents pose the biggest challenge to their ability to rent a decent accommodation. This is because of the outrageous agency fees they are charged for their services. A participant told this reporter of his experience. “The apartment cost N500, 000, but the agent insisted on collecting N200, 000 as agency fee, which I find ridiculous,” he lamented.
It is for this reason and more that the state government organised a workshop with the theme: “Real Estate Agency Fees in Lagos State” under the auspices of the Lagos State Real Estate Transaction Department (LASRETRAD), a unit in the Ministry of Housing. The functions of this body include sensitising the public about estate agency and attendant rules, risks and benefits; keeping a register of egistered qualified estate agency practitioners; protecting citizens from illegal operators; creating a forum for affected members of the society to lodge complaints against unscrupulous agents; monitoring compliance with the state tenancy law and other legislations on land transaction; and prosecuting agents who violated the laws.
The Permanent Secretary, Ministry of Housing, Mr. Tunji Odunlami, set the tone of the day when he said public concerns on the outrageous commission being charged by estate agents had become worrisome. He blamed the situation on the shortage of housing units, which has created an opportunity that agents latch on to exploit would-be tenants.
Similarly, the Special Adviser to the governor on Housing, Jimoh Ajao, noted that the government realised that estate agents charged varying percentages as agency fees, some as ridiculous as 75 per cent of rent for low-end properties. This, he explained, influenced the decision to bring all stakeholders together to deliberate and agree on a fixed rate.
He said LASRETRAD would tackle quackery in the industry.
In his paper titled: ‘Agency fees and its Related Issues’, the Attorney-General of Lagos State, Mr. Ade Ipaye, represented by the Senior Special Adviser to the governor on Justice, Mr. Olanrewaju Akinsola, noted that agency fee is a contractual agreement which is subject to negotiation.
Drawing a comparison between Nigeria and other countries, he said Nigeria’s agency fees are the highest. For instance, in Ghana, agency fee is five per cent; in Kenya it is 1.25 per cent and in South Africa, it ranges from four to eight per cent. He said agency fees in these countries are either paid by property owners or shared by owner and buyer/tenant. but in Nigeria, estate agency fees range from 10 per cent to as high as 75 per cent.
Though a communique is yet to be released on the forum, Ajao told The Nation that all the participants have agreed that they have set a standard for them to operate. Ubani Onyekachi, of Ubani and Co, property consultants, agreed that is “very good we regulate our fees and even the practice generally to eliminate the quacks and fraudsters in the industry”.
He regretted that a lot of quacks have invaded the industry and given it a bad name. For him, there must be an industry standard which must be in black and white. He, however, said there must be a way for a tenant and the agent on how much to be paid as agency fee. This, he said, must be left open so that both parties can agree on what to take. However, he explained, in the absence of such an agreement, there must be an industry standard which must not be exceeded. This, he reckoned, makes for transparency, efficiency and regularity.
“I think what the state government is doing is what the agents should have done internally, by organising themselves and have themselves recognised and give some measure of transparency in their transaction and then suggest fees chargeable, then come and liaise with the government. But since they were unable to do that, the government is calling them into a stakeholders’meeting for them to agree. Such action by the Lagos State government is highly commendable. At the end of it all, it will pay everyone – tenants, landlords, and practitioners in the industry that there is a proper documentation and transparency in the entire industry. If we don’t do this then we are not doing this industry any good,” Ubani said.
The Chief Operating Officer, Property Communications, Boye Ajayi, said the sector had been in a chaotic situation in the sense that most citizens don’t even know what to pay as estate agents charge indiscriminately. He said for someone to rent a room apartment, such a person must be economically handicapped, asking: why would an estate agent charge such a person huge amount as agency fee?
“It is unimaginable for an agent to charge agency fees of same amount as the rent. The government is only trying to sanitise the industry. By doing this, these nefarious activities will come to an end. There must be a regulated fee so that somebody who wants to buy or rent a house will know what he has to pay,” Ajayi said.
Ajayi is right about estate agents nefarious activities. It would be recalled that last year, an estate agent, Michael Olabameji was sentenced to 15 years’ imprisonment by an Ikeja High Court for defrauding 100 accommodation seekers of N29.8 million.
In the verdict, Justice Adeniyi Onigbanjo observed that the convict inflicted untold hardships on the victims, depriving them of their money under the pretence of getting accommodation for them.
The LASRETRAD initiative is coming on the heels of an earlier move by the Nigerian Institution of Estate Surveyors and Valuers (NIESV) to regulate the sub sector of the industry. At its 20th yearly John Ekpenyong Memorial Lecture in Lagos last March, with the theme: ‘Estate agency: Have we lost it? Mr. O. J. A. Idudu, a while presenting his paper, observed that the way quacks operate in the estate agency sub-sector of the industry called for serious concern.
“They are proud; they are unfriendly, impolite, insulting because they believe we are in competition. They are not trained, not disciplined and some of them can be fraudulent, but the estate agent who is regulated by NIESV cannot do that,” Idudu said.
Estate agency, Idudu continued, came into being through Decree 24 of 1975; and is an aspect of the profession under the supervision and regulation of NIESV. Therefore, he said, to practise as an estate agent, such a person is expected to register with the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON), or he is treated as a practitioner is portrayed as a quack. But that is at the federal level, since the body is being regulated by the Federal Ministry of Lands and Housing.
Laudable as this initiative is, it still appears to be a long walk to actualisation considering the pockets of discontents expressed at the workshop. This is a challenge for LASRETRAD, an expert said.
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