The growing tendency of real estate developers to breach contracts between them and subscribers to their housing schemes is thwarting the home ownership dreams of teeming Nigerians and undermining public confidence in the system, industry watchers say.
They further add that the development is discouraging investment in real estate.
Also, they say, Nigeria’s ten percent home ownership level for a population of 170 million is grossly inadequate for a country adjudged the largest economy in Africa.
According to the observers, attempts by individuals to improve this situation have in recent times been frustrated by some developers who renege on their promises to house buyers, kill the buyers’ home ownership dreams and distort their investment decisions through arbitrary price increases.
Recently, subscribers to a moderate estate linked to an insurance firm and located in a prime neighbourhood on the Lagos mainland, cried foul over the action of the estate developer, who without prior discussion or consultation, raised the unit cost of the houses they had subscribed to, by almost 25 percent of the original value.
The subscribers, in a statement issued by their lawyer, Wale Adesokan of Adesokun & Co Chambers, made available to BusinessDay, lamented that contrary to the promise of delivering the estate in 2012, work was yet to be concluded up till now. They added that many delivery dates had been touted after the first one failed, but all to no avail.
In reaction to the developer’s explanation that the delay was caused by unfavourable environmental factors, and that the cost variation was as a result of rising cost of construction and the quality of the houses they were going to deliver, the subscribers stressed that the price increase wouldn’t have been necessary if the estate had been delivered on the originally scheduled date. “Subscribers consider this price increase unacceptable, because contract had been entered into between the parties for the sale of those houses at a given price and they have been performing their own side of the bargain.
“Many of them have made family and career decisions tied to the use and occupation of the houses as from January 2013. These plans are now being put in jeopardy by the price review”, the statement emphasised.
An official of the development company has said however, that they were not driven by profit motive in embarking on the project but were committed to assisting fellow Nigerians gain access to affordable houses. They added that they were doing all they could to ensure that subscribers would move into the estate before Christmas.
In the same vein, a group of subscribers who said they represented the interest of over 3,000 other subscribers to Mainland Park Estate located along the Lagos Ibadan Expressway, being developed by an Ogun State-based property development company, told journalists in Lagos that a few years ago, the company advertised plots of land in the estate for sale.
Bamidele Alabi, spokesperson for the group, recalled that the developer promised to deliver (plots of land) to all subscribers upon completion of payment, which they agreed to collect instalmentally.
The subscribers said they were worried that the developer after several years, and despite collecting different sums of money, ranging from N350,000 to N1,000,000 per plot, began to ask for further payments ranging from N200,000 to N1,200,000 which they described as ‘Development Levy’.
According to the subscribers, the company insisted on collecting these monies on the same plots which had been paid for, even when no subscriber among those who had completed payment had been physically allocated their land.
Another set of subscribers to Teju Royal Garden, an estate along the Lagos-Badagry Expressway, told BusinessDay recently, that they were fast exhausting their patience with the developer who had shifted the estate’s delivery date more than five times.
The 850-unit low cost housing estate comprises one-bedroom, two-bedroom, three-bedroom semi-detached and three-bedroom detached bungalows, selling for between N2.5 million and N7.5 million.
A subscriber who identified himself simply as John, told this reporter that the endless shifting of delivery dates had exposed him to the discomfort of paying house rents, long after he had expected to be a home owner.
Another subscriber who did not want to be named, said though he was buying for investment purposes, the uncertainty surrounding the delivery of the estate was making him regret the decision to invest in the estate.
Anthony Osae-Brown, a banker, had in a chat with BusinessDay described the action of these estate developers as frustrating, recalling that he had to get his money back from developers who had deceived him into believing that they were developing houses for sale.
“Three times I had subscribed to estates and three times I had collected my money back from them. What these people do amounts to fraud because they would collect money from subscribers, use the money to start the project, delay the development and when the value appreciates, they will increase the prices and ask the subscribers to either pay the new price, or wait to collect whatever they had paid before.
This is not only frustrating, but also discouraging investment in real estate, and can only happen in this country”, he lamented, noting that if it were in a country with better judicial system, the developers wouldn’t indulge in such acts and go scot free.
Source: Chuka Uroko