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Land Use Act, problem for REIT’s development in Nigeria
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Experts in the real estate investments have identified the bottleneck bureaucracy associated with getting governor’s consent for land use as a problem militating against the development of real estate in Nigeria.
At the Goldman Assets Management limited seminar on Real Estate Investment Trust in Lagos, Timi Austen Peters, managing partner Austen Peters and Co, said the process of getting governor’s consent for a certificate of occupancy has posed great challenges for operators in the real estate sector.
“Obtaining governor’s consent is not an easy task in most part of the country. Also worthy of note is the high property charges on transfer, mortgage, and release of property by most states. Proper assignment of assets from issuer to SPV gives rise to stamp duties, which is another layer of costs,” he said.
He noted that in creating a new pool of real estate assets preparatory to establishing a REIT, one faces the problem of ascertaining title and encumbrances.
According to him, the fact that it takes long process to get the certificate of occupancy through governor’s consent subjects the scheme to corruptible practices, saying that prior to the 2007 amendment to the Investment and Security Act (ISA) there was no proper framework for REIT in Nigeria.
Peters said the applicable legal provisions under the ISA 1999 were for investment trusts and trusts for sale (S147 (1) and (2). “These provisions did not meet with international best practices identified for REITs.
At present, part X11 of the Investment and Securities Act (ISA) No 29 of 2007 treats REITs as a type of collective investment scheme,” he said.
He said rules 252 to 281 of the 2007 amendments to the rules and regulations deal with REITs specifically and contain the requirements for registration, for and contents of the REIT prospectus, underwriting, investment outlets, rating, valuation reports, insurance and borrowing and the trust deed.
He noted that the ability of a REIT to pass 90 percent of its earnings to the investors was a key characteristic that is common to REITS in other countries adding that ISA and the rules have been able to deal with the issue.
Another participant at the seminar, Toyin Sani who came from UBA Trustees, while delivering paper on the role of Trustees to Real Estate Investments, said that the aim of trustees is to protect the interest of unit holders.
According to her, unit holders should enjoy the same profits that accrue to the owners because that is the beauty that gives them the enthusiasm to sustain in the business.
At the Goldman Assets Management limited seminar on Real Estate Investment Trust in Lagos, Timi Austen Peters, managing partner Austen Peters and Co, said the process of getting governor’s consent for a certificate of occupancy has posed great challenges for operators in the real estate sector.
“Obtaining governor’s consent is not an easy task in most part of the country. Also worthy of note is the high property charges on transfer, mortgage, and release of property by most states. Proper assignment of assets from issuer to SPV gives rise to stamp duties, which is another layer of costs,” he said.
He noted that in creating a new pool of real estate assets preparatory to establishing a REIT, one faces the problem of ascertaining title and encumbrances.
According to him, the fact that it takes long process to get the certificate of occupancy through governor’s consent subjects the scheme to corruptible practices, saying that prior to the 2007 amendment to the Investment and Security Act (ISA) there was no proper framework for REIT in Nigeria.
Peters said the applicable legal provisions under the ISA 1999 were for investment trusts and trusts for sale (S147 (1) and (2). “These provisions did not meet with international best practices identified for REITs.
At present, part X11 of the Investment and Securities Act (ISA) No 29 of 2007 treats REITs as a type of collective investment scheme,” he said.
He said rules 252 to 281 of the 2007 amendments to the rules and regulations deal with REITs specifically and contain the requirements for registration, for and contents of the REIT prospectus, underwriting, investment outlets, rating, valuation reports, insurance and borrowing and the trust deed.
He noted that the ability of a REIT to pass 90 percent of its earnings to the investors was a key characteristic that is common to REITS in other countries adding that ISA and the rules have been able to deal with the issue.
Another participant at the seminar, Toyin Sani who came from UBA Trustees, while delivering paper on the role of Trustees to Real Estate Investments, said that the aim of trustees is to protect the interest of unit holders.
According to her, unit holders should enjoy the same profits that accrue to the owners because that is the beauty that gives them the enthusiasm to sustain in the business.
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