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Lagos moves to regulate estate agents’ fees

A housing estate
| credits: Segun Bakare

Members of the public who have been complaining about the activities of some dubious real estate agents now have cause to smile as the Lagos State Government has commenced moves to regulate estate agency practice.

The government is currently evaluating the contributions of various stakeholders, who have been proffering solutions to the menace of dubious characters parading themselves as estate agents, and the unregulated nature of the business.

Most participants at a forum convened by the Lagos State Real Estate Transaction Department complained about the lack of uniformity in the fees being charged by the agents.

For a participant, the experience was harrowing when he was trying to rent an apartment in a middle income area of the state. “The apartment cost N500,000 to rent, but the agent insisted on collecting N200,000 as agency fee, which I found ridiculous,” he said.

To streamline the fees and make members of the public aware of what the agents are legitimately entitled to, the LASRETRAD, a unit under the state’s Ministry of Housing, organised a workshop with the theme: ‘Real estate agency fees in Lagos State’.

The body was created to sensitise members of the public to the rules, risks and benefits of estate agency; keep a register of qualified estate agency practitioners who voluntarily registered with it; and ensure the protection of citizens from illegal trade practices.

It is also meant to create a forum for aggrieved members of the society to lodge complaints against unscrupulous agents; monitor compliance with the state’s tenancy law and other legislation on land transactions; and prosecute agents suspected of having violated the applicable laws.

In his opening remarks, the Permanent Secretary, Ministry of Housing, Mr. Tunji Odunlami, said the concerns of members of the public on the outrageous commissions being charged by estate agents had become a source of worry to the government and blamed the situation on the shortage of housing units, which had created a loophole that the agents were latching on to exploit accommodation seekers.

A former President, Nigerian Institution of Estate Surveyors and Valuers, Mr. Joe Idudu, in a paper entitled: “Estate agency: Have we lost it?’ said the way quacks were operating called for serious concern.

“They are proud, they are unfriendly, impolite and 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,” he said.

Estate agency, according to him, came into being through Decree 24 of 1975; and is an aspect of the estate surveying and valuation profession under the supervision and regulation of NIESV.

To practise as an estate agent, he said a person was expected to register with the Estate Surveyors and Valuers Registration Board of Nigeria, failing which such a practitioner would be deemed a quack.

Mr. Onyekachi Ubani of Ubani and Co., a firm of property consultants, said it was a good thing for the practise and agents’ fees to be regulated in order to eliminate the quackery and fraudsters in the industry.

He noted that there must be an industry standard on the maximum fees that can be charged by agents and who would pay such, adding that this must be well documented.

Ubani said, “I think that 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 transactions; suggest fees chargeable, then come and liaise with the government.

“But since they were unable to do that, the government is now calling them into a stakeholders’ meeting in order for them to agree. Such action by the Lagos State Government is highly commendable. At the end of it all, it will pay everyone that there is proper documentation and transparency in the entire industry. If we don’t do this; then, we are not doing this industry any good.”

The Special Adviser to the Governor on Housing, Mr. Jimoh Ajao, noted that the government had realised that estate agents were charging varying percentages as agency fees, some as ridiculous as 75 per cent of the rent for low-end properties.

This, he explained, influenced the decision to bring all stakeholders together to deliberate and agree on a fixed rate.

The Attorney-General and Commissioner for Justice in the state, Mr. Ade Ipaye, who was represented by the Senior Special Assistant to the Governor on Justice, Mr. Olanrewaju Akinsola, noted that agency fee was a contractual agreement, but negotiable.

He said agency fees in Nigeria were about the highest in the world.

According to him, the agency fee in Ghana is five per cent; Kenya, 1.25 per cent, and South Africa, between four and eight per cent, adding that that agency fees in these countries were either paid by the property owners or jointly shared by owner and the buyer/tenant.