Introduction

In the face of rising construction costs and currency volatility, property joint venture (JV) development has emerged as a game-changing alternative to traditional real estate transactions in Lagos, Nigeria. Rather than relying solely on capital-intensive land acquisitions, forward-thinking developers are now entering strategic alliances with landowners and creating mutual value without upfront financial strain.

This article explores the mechanics of joint venture development, its advantages, potential pitfalls, and the critical role of professionals and government in driving its success.

What Is Property Joint Venture Development?

Property joint venture development is a collaborative real estate model where a landowner contributes land as equity, while a developer contributes the capital, technical expertise, and project execution. Profits from the completed project are then shared based on a pre-agreed ratio.

In Lagos, this model is becoming increasingly popular among real estate development companies, who now work closely with strategic brokers to:

• Identify and assess high-potential land parcels
• Validate ownership and land documentation
• Negotiate deal structures
• Prepare and review joint venture proposals
• Finalize legally binding JV agreements

Why Joint Venture Development Makes Business Sense

Joint ventures present a compelling value proposition for both parties:

For Landowners: No need to secure high-interest bank loans, property appreciates as it is developed, opportunity to earn passive income or hold equity in the finished development.

For Developers: Reduced upfront capital requirement, faster go-to-market timelines,shared project risks and costs, access to prime locations that may otherwise be unavailable.

In a market like Lagos, where demand for residential and mixed-use properties continues to grow, JV models provide a strategic pathway to deliver projects at scale while minimizing financial exposure.

The Importance of Professional Oversight

While joint venture development can be highly rewarding, it is not without risks. To ensure transparency, accountability, and fairness, both parties must engage the right professionals from the onset. A licensed estate valuer should provide an unbiased valuation of the land, serving as the basis for equitable equity sharing. An independent audit firm should review the financial and technical proposals to validate assumptions, cost structures, and projected returns.

Failure to involve professionals often leads to inflated valuations, lopsided agreements, and long-term disputes, all of which can derail even the most promising project and worsen Lagos’ already significant housing deficit.

When Done Right: A Profitable and Sustainable Model

A well-structured JV offers a low-risk, high-reward development model:

• Landowners leverage their asset without losing ownership.
• Developers focus resources on design, construction, and delivery.
• The city gains new residential and commercial stock,  boosting infrastructure and economic activity.

This model also fosters urban regeneration, particularly in high-demand areas with underutilized land parcels, and supports sustainable growth across Lagos’ dynamic property landscape.

The Government’s Role in Scaling Joint Ventures

No conversation around real estate innovation is complete without acknowledging the role of government. As Nigeria’s commercial capital, Lagos has made strides in urban renewal and infrastructure development. However, to fully harness the potential of joint venture developments, the Lagos State Government must take deliberate steps to establish clear regulatory frameworks for JV projects, incentivize public-private partnerships,launch collaborative housing initiatives with private developers.

Doing so will help unlock more investment, create housing at scale, and contribute to building a truly inclusive and resilient city.

Conclusion

Property joint venture development is not just a trend, it is  a smart, scalable strategy that aligns with the realities of modern real estate investment. For developers, landowners, and city planners alike, this model presents a powerful tool for bridging opportunity and delivery in Lagos’ evolving property market.

Whether you are a landowner seeking to maximize asset value or a developer looking for strategic expansion opportunities, the future of real estate in Lagos may very well lie in collaboration.

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What is Space Apportionment?

This term is used to describe the strategic allocation and organisation of spaces within a building. At the macro level, it takes into consideration the division of the building into the different rooms and sections, whilst the micro is more concerned with furniture placement and other fixtures and fittings. An effective use of space apportionment will ensure each specific area serves its intended purpose and has a seamless flow whilst concurrently contributing to the overall flow within the sructure

Importance of Space Apportionment

The manner in which elements at the macro and micro level are organized within the building could largely influence the overall aesthetic and ambiance within the space. A well thought out and proportioned space creates a sense of balance as it is simply more pleasant to look at and it contributes to a greater degree of comfort. Additionally, it is important to ensure that spaces within the structure are functional and efficient. Within a commercial building space, aspects such as workstations, meeting rooms, kitchens and bathroom areas need to be well thought out with the aim of maximizing productivity and satisfaction at the workplace. A residential building on the other hand, will require alternative considerations that have to be factored in and will instead place more emphasis on facilitating easy movement and interaction depending on the placement of the living room, kitchen and dining areas. 

Impact on Client Satisfaction

Throughout the design process, it is of vital importance to liaise with the client and refer to their specific needs, preferences and lifestyle. A personalized space apportionment will often ensure the design resonates with the client. In a case whereby the client has stated they operate an out of home cooking business, it will seem useful to apportion a larger area for the kitchen as it will likely be used to cook and store large quantities of food. However, if the client outlined their cooking business and when showed the final designs and met with a much smaller space apportioned for the kitchen, it will, in all likelihood, contribute to customer dissatisfaction.

Conclusion

Within the design process, there lies a great focus on the satisfaction of customers and an effective use of space apportionment remains a key factor in achieving this. Recognising the importance of space apportionment and adopting the following key steps will be key to achieving client satisfaction- which include 1) collecting information; 2) interpreting requirements; 3) considering spaces and spatial relationships; 4) creating the solution; and 5) reviewing and revising the space planning.

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One could easily understand the rationale behind viewing Nigeria, and Lagos in particular, as a location that simply oozes opportunities. The lavish and indulgent lifestyle experienced by the elite is indicative of what one stands to gain if those said opportunities are properly leveraged. Regarding the investment landscape, the volatile nature associated with sectors such as oil and gas or the equally intricate banking systems and their seemingly unfavorable rates could pose a more risky path to follow. However, there lies a significant investment opportunity amidst the rest; namely- Off-Plan Properties. When seeking to invest in property, it is imperative to consider a couple of key attributes which are a) high returns and b) capital growth, both of which are a staple associated with off-plan properties. 

Source: istock photos

What are Off-Plan Properties?

Off-plan properties are exactly as described on the tin as they refer to the purchase of a property before the completion or commencement of the project as there’s little or nothing concrete which can be viewed, ergo… “off-plan”. This mode of purchasing properties has been increasingly adopted for a variety of reasons, including the growing demand for housing and also to combat the housing shortage. However, this article aims to shed light on off-plan properties being viewed primarily through the lens of an investment vehicle. 

Benefits of Off-Plan Properties

Discounted Purchase Price: It is paramount to first highlight the most glaring benefit that lures prospects and that is the ability to purchase the property at a markedly lower price point than the market usually dictates in contrast to fully completed properties. Oftentimes, developers are keen to demonstrate a significant level of sales and demand before marketing the development, which in turn affords prospective buyers the luxury of purchasing properties below market value, as well as additional discounts for buyers seeking to buy multiple properties. 

Potential for Higher Return on Investment: The potential for higher returns on investments (ROI) has also proven to be significantly lucrative as these developments are often built in areas that are highly sought after and as a result, increase the potential for capital appreciation. Investors will therefore be afforded different options that could be explored depending on their investment strategy and situation. They could decide to adopt a short-term approach which would involve selling the property at a profit before and upon completion or a longer-term course of action involving tenanting the property to benefit from recurring rental income, as well as capital appreciation.

Incremental Payments: The specific terms and agreements of this are likely to vary amongst developers, however, buyers are frequently awarded the added benefit of spreading the cost of the property over a set period, thus avoiding a one-off, lump sum deposit. This degree of flexibility will likely free up funds for buyers to use elsewhere and simply enhance the level of appeal involved with the process.

Risks of Off-Plan Properties

The prospect of off-plan properties is generally littered with an array of potential benefits for individuals willing to invest in such projects; they are not, however, exempt from potential risks.

Delays: As one might expect when dealing with construction projects, delays are inevitable as a result of a myriad of factors. Gaining the requisite permits, inflation, economic recession, a shortage of materials or labour, poor weather, etc represent a few typical sources of these delays and ultimately might prove very costly for those investors who anticipated a quick turnaround of profit. 

Issues with Developers: It is extremely vital to ensure the developers can be trusted and ideally have a catalog projects with a notable reputation for delivering outstanding properties. This in turn will likely mitigate any potential issues which could be encountered whilst working with certain developers. 

Conclusion

Delay, as they say, is not denial and the aforementioned points highlight off-plan properties as a significant investment opportunity that could be leveraged to yield high returns. There are several considerations one must take into account when weighing up whether or not to invest in off-plan properties and precisely what they aim to achieve through their investments before making informed decisions. Ultimately, as off-plan properties continue to grow in popularity and margins of profitability, it is safe to say it has indeed established itself as a noteworthy investment vehicle. 

Elevate your real estate experience with Demaxon Facilities. Our team of seasoned local experts leverages cutting-edge technology to ensure a seamless property journey, exceeding expectations for both mid-range and high-end buyers. Explore our curated portfolio of pre-vetted off-plan listings and embark on a stress-free acquisition and management process. Contact Demaxon Facilities today and unlock your property goals.

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The year is 2014. There is an air of excitement in seemingly every country worldwide due to the upcoming World Cup. The threat of a never-before-seen epidemic caused by Ebola was on the horizon – one which ultimately served as a precursor for the COVID-19 global pandemic (but let’s not delve into that shall we). By the end of the year, the Naira had also depreciated relative to the dollar and had reached its all-time lowest point at a rate of… N183 to $1. A decade on and the value of that same dollar seems borderline inconceivable as the Naira has become extremely volatile and will likely drop further amidst writing this, currently standing at N1769. This precipitous decline begets the same simple question from economists, politicians, and the general public alike… how?

Political and Economic Landscape

It can be argued that the political landscape has been characterized in the same fashion in which it began; with a large degree of uncertainty, instability, and scepticism. The President has had to contend with several major issues, starting from appeals against the legitimacy of the presidential elections, to dealing with those inherited problems from the previous regime including, but not limited to high unemployment, rapid inflation, etc. Some of these issues, however, have been exacerbated through outright abysmal decision-making and the implementation of ineffective reforms across the board, not least in the case of the revamp of Nigeria’s foreign exchange system.

The aforementioned ‘forex’ reforms, along with scrapping the fuel subsidy, in actuality, have had and continue to have unmitigated adverse effects on the economy. Petrol prices more than tripled, the value of the Naira has sunk into a chasm at a rate never witnessed before compared to the dollar, and inflation has risen to a three-decade high. All of which can be cited as cogent explanations behind the ever-worsening cost of living crisis. Additionally, the most up-to-date figures as of 2022 highlight the GDP per capita at $2,184 which, despite inflation, is below the average figure of $2,645 over the 10 years preceding it. One can therefore surmise that the harrowing economic landscape has created a precarious environment where its inhabitants are less equipped to afford basic needs. Likewise, organizations have reached a point where it almost feels obligatory to divest in assets and this is exemplified by the nation’s most recent foreign direct investment (FDI) value of -$186M, after posting a positive value of $3.3B just a year earlier. This 105% drop-off represents a figure so unfathomable, it seemingly can only be justified by a typographical error. It also marks the first time the FDI plummeted to a negative value since 1980.

Housing Market Dynamics

Despite the bleak state of the political and economic landscape, the real estate market within Nigeria remains somewhat promising as the industry has experienced steady growth year on year. The residential real estate market is estimated to reach a value of $1.93tr by the end of 2024 and further estimates suggest figures rising to $2.56tr by 2028. The robust demand for residential real estate in particular can largely be attributed to the ever-growing population, increasing urbanization, and a growing middle class. There is a notable discrepancy, however, which exists between buyers and sellers, as despite the strides taken to emphasize the development of houses within the luxury and mid-market segments, there remains a greater demand than supply. Additionally, the constant influx of people into urban areas enables further price rises, and in contrast, the alienating of the lower class due to less affordable housing.

Regarding real estate investment, there has been a noticeable trend toward purchasing properties with the primary intent of acquiring rental income and benefitting from capital appreciation. Apartments situated near commercial districts continue to remain increasingly popular with investors due to a myriad of factors, including enhanced security, access to greater amenities, reliable electricity and water supply, and the opportunity for higher rental yields. Foreign investment also plays a critical role in the dynamics of the real estate market as their focus on higher-end residential properties and office spaces offers the potential for higher returns. This ultimately creates a virtuous cycle as those investments enhance the desirability of the area, stimulate demand, and in turn drive up prices in those segments.

Conclusion

A social media user on X (formerly Twitter) described the situation within the country in a unique way only a Nigerian could by stating “At this rate, a dollar will get to 2025 before we do.” It encapsulates how dire the economic situation has become due to what can only be seen as gross mismanagement. Forecasting Nigeria’s political and economic stability could be seen as a mixed bag as on one hand, there remains significant potential for growth which is being driven by a large, youthful population and a diversifying economy. In contrast, the dependence on oil, political instability, and the omnipresent shadow of corruption always looming tends to dampen one’s sense of optimism. Similarly, within the realm of real estate, it continues to prove difficult to predict the future of the markets, however, it is advised to closely monitor areas such as housing finance reforms, land use regulations, and infrastructure investments. The advent of platforms such as real estate investment trusts (REITs) demonstrates a willingness to capitalize on the great potential within the housing market and offers a slight glimpse into the incalculable progress that could be achieved if the nation could indeed achieve political and economic stability.

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It is often cited that in order to wholly understand a subject, it is imperative to analyse its origins. Starting in 1837, the world was introduced to the novel concept of modular housing which entails the components of a building being constructed off-site before being transported to the building site for final assembly. It will however take decades before the idea gained worldwide traction, and it seemingly arrived more out of necessity than anything else as the Second World War, along with its untold devastation, also created a housing crisis which required quick and efficient solutions. Fast-forward to modern times and modular housing has increasingly been embraced within several countries and has rid itself of the ‘second-rate’ tag it once held.

Benefits of Modular Construction

As is the case with most things in modern society, people are often averse to change. The idea of switching from a trusted, familiar and reliable source to what could be deemed as an unknown alternative, usually breeds uncertainty. However, some of the benefits of modular construction are fairly evident as it eliminates potential delays building sites frequently encounter from Mother Nature as 60-90% of the construction is carried out in a factory. Additionally, easier construction management, improved safety and security for workers, reduced construction time, cheaper costs,  a more efficient and  sustainable eco-design are aspects which further enhance the appeal of modular homes.

Sustainability of Modular Housing

As the ever-present issue of homelessness continues to plague countries worldwide, it is easy to surmise that no country stands to benefit more than Nigeria does with the widespread adoption and implementation of modular housing seeing as the country has the highest homeless population in the world with a figure exceeding 24 million. As cities within the country continue to grow and develop, there becomes an increased demand for varied services including housing, infrastructure, healthcare, education etc. Modular construction therefore poses a viable solution to several issues the country faces as it addresses the triple bottom line sustainability categories, namely: Environmental, Economic & Social.

• Environmental: Modular construction in Nigeria could reduce up to 52% of construction waste due to strict manufacturing guidelines during production within factories. Likewise, there is a significant reduction in the usage of water, as well as a lower carbon footprint due to the fewer lorry deliveries to and from the construction site.
  
• Economic: There are massive cost-saving benefits associated with this construction method as they require fewer raw materials, take less time to construct and have a reduced demand for labour. As a result, these modular homes cost less on average than the traditional brick-and-mortar houses. This increased affordability could be crucial as it seeks to be more inclusive by providing those within the marginalised sectors of society a greater opportunity to find housing.
  
• Social: The issue of homelessness is the primary social concern being addressed through the utilisation of modular housing as it provides greater opportunities for more people to find homes due to the reduced financial requirements. The government could also leverage the benefits brought about through this method of construction by creating communities consisting of several modular homes in order to provide a stepping stone for people to improve their living conditions. This will follow suit from several other countries including India, Canada, US and UK whose governments have adapted modular housing to tackle homelessness in their respective countries.

Drawbacks of Modular Construction

Despite all the benefits discussed, there remains a significant degree of scepticism around the idea of modular homes, especially within a developing country such as Nigeria. Drawbacks include limited customization options, additional separate costs including the likes of utilities, landscaping etc, and lastly, the public perception that modular housing is less desirable and are of a lower quality.  

Conclusion

No one is under any illusions regarding the difficulty associated with what could be perceived as a seismic change in construction methods within Nigeria. However, it is evident that by leveraging the significant opportunity modular housing presents, it can indeed prove to be a win-win solution.

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In Nigeria, there is a devious issue jeopardizing how people get homes—tenancy fraud. It is more than just breaking rules; it messes with fair housing for individuals and entities who need it. This article dives into the tricky world of tenancy fraud, sharing real stories and numbers to show just how big a problem it is and why we all need to pay attention.

Types of Tenancy Fraud

1. Unlawful Subletting

In urban areas like Lagos and Abuja, cases of unlawful subletting have been documented, where tenants rent out their properties without official consent, exacerbating housing shortages.

2. False Succession

Reports highlight instances where individuals without rightful entitlement attempt to succeed a tenancy following the death of a resident, leading to legal disputes and housing complications.

3. False Right To Buy/Right To Acquire

Studies indicate a concerning trend of tenants providing false information in applications for Right to Buy or Right to Acquire, contributing to a loss of public housing stock.

4. Key Selling

Investigations in cities such as Port Harcourt have uncovered cases of key selling, where residents compromise property security for financial gain, facilitating unauthorized access.

5. Unlawful Assignment

The practice of unlawful assignment has been observed in major cities, with residents allowing others to live in their homes without official permission, contributing to housing imbalances.

6. Obtaining Housing by Deception

Instances of obtaining housing through deception have been reported, revealing the vulnerability of the application process to fraudulent activities.

Detecting Tenancy Fraud

Regular background checks to be taken to address tenancy fraud in Nigeria:

1. Regular Tenancy Checks

Housing authorities, such as the Federal Housing Authority (FHA), conduct regular checks to ensure compliance with tenancy agreements, minimizing the prevalence of unlawful subletting.

2. Collaboration with Landlords and Statutory Agencies

The collaboration between housing agencies and statutory bodies, such as the Economic and Financial Crimes Commission (EFCC), has resulted in improved fraud detection and enforcement efforts.

3. Investigating Reports

Cases reported to agencies like the Independent Corrupt Practices and Other Related Offences Commission (ICPC) are thoroughly investigated, leading to legal actions against perpetrators.

Conclusion

As Nigeria grapples with the complexities of its housing landscape, addressing tenancy fraud requires a multifaceted approach. The integration of robust detection mechanisms, collaboration between stakeholders, and stringent enforcement of housing regulations will be crucial in ensuring fair access to housing for those in genuine need.

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The Soaring Demand for Housing

With more and more Nigerians flocking to cities in search of job opportunities and improved quality of life, the demand for housing is skyrocketing. This surge in demand is especially pronounced in major urban centers like Lagos, Abuja, Rivers, and Kano. As the urban population swells, the need for housing that is both affordable and accessible becomes increasingly urgent.

Meeting the Housing Demand

To address this burgeoning demand, significant investments in housing construction are imperative. Nigeria’s real estate sector will need to embark on ambitious projects to construct new housing units. Simultaneously, there is a growing need for the renovation and maintenance of existing housing stock to keep pace with urbanization.

Diverse Housing Needs

Nigeria’s urban landscape is diverse, and so are the housing needs of its people. The majority of the urban population falls into the low- and middle-income brackets, signaling a high demand for affordable housing. Additionally, as many newcomers may not have the financial resources to buy homes immediately, the rental housing market is set to thrive. Beyond these mainstream needs, there will also be a demand for specialized housing, including housing for the elderly, individuals with disabilities, and students.

Infrastructure Challenges

The rapid influx of urban residents will exert immense pressure on existing infrastructure. Roads, bridges, power plants, and water treatment facilities will all face increased demand. It is imperative to enhance and expand these critical infrastructure components to support the burgeoning urban population effectively.

Urban Planning for Sustainability

To ensure Nigeria’s cities remain livable and sustainable, robust urban planning is essential. This encompasses planning for new housing developments, efficient transportation systems, and other vital infrastructure. Collaborative efforts between the government and urban planners will be pivotal in shaping the future of Nigerian cities.

Government Action

To navigate the challenges posed by rapid urbanization, the Nigerian government must take proactive measures:

1. Investment in Housing: Collaborate with the private sector to fund and oversee the construction of new housing units, particularly focusing on affordable and rental housing.

2. Subsidies: Offer subsidies to low-income earners, which can take the form of down payment assistance, mortgage payment support, or rent subsidies.

3. Land Tenure Reform: Streamline the land tenure system to simplify land acquisition processes for developers.

4. Infrastructure Investment: Allocate resources to improve critical infrastructure to sustain urban growth.

5. Sustainable Urban Planning: Work alongside urban planners and stakeholders to create sustainable, vibrant urban areas.

Conclusion

In conclusion, Nigeria’s rapid urbanization presents both significant challenges and exciting opportunities for the real estate sector. By addressing these challenges head-on and capitalizing on the prospects it offers, the Nigerian government and real estate industry can ensure that housing needs are met for the growing urban population. With strategic planning, investment, and collaboration, Nigeria can embrace urbanization as a force for positive change and economic growth in the decades to come.

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Maintenance problems are not always clear and never easy. It explains why developed countries are always seeking out ways to improve the mechanism of maintenance across the board. However, for developing countries, it is still generally a struggle to sustain an acceptable level of maintenance despite huge expenditures on infrastructure.

In today’s global economic climate, facilities managers have to constantly justify their spending as senior management attempts to cut costs, which indeed is a struggle in the real estate sector. 

The starting point to developing any plan of action for maintenance that will be fit for purpose is to understand the need for maintenance. It is, therefore, crucial for facility managers to familiarize themselves with basic elements of an infrastructure or facility and its components, and how they behave individually and collectively with other materials to cause specific maintenance problems to occur.

Having understood the behavior and properties of materials, the next step is to evaluate the extent of possible deterioration and determine whether to abandon, replace or repair the particular materials in question.

Maintenance is required for many reasons; one reason is to extend the life of the facility and its support system. Another reason is to ensure the facility and its users are free from health and safety issues likely to result in damage or injury.

Therefore, maintenance is a necessary aspect in the day-to-day life of a building or infrastructure, this can be essentially classified into three stages:

1) Planning and design stage:

This stage provides an opportunity to save a lot of money by planning and designing the building or infrastructure to be maintenance efficient. Considerations relative to the scope of maintenance should always be present in the design process. The yearly cost associated with the maintenance of facilities due to improper design and planning is phenomenal.

2) Construction stage:

The meticulous process and additional expenditure of designing maintenance-efficient buildings or infrastructure are of no value if the materials and equipment are not assembled and installed properly. For this reason, the construction stage must be performed with the highest quality of workmanship to create a facility requiring the minimum level of maintenance.

As soon as construction begins, every pipeline, valve, floor tile, and electrical outlet should continually be observed as construction progresses to ensure proper location and the highest quality of material. The best quality control and inspection process should be implemented to monitor construction progress.

3) Maintenance stage:

This is the maintenance of the infrastructure i.e. buildings, properties, etc. This covers every aspect of the building or infrastructure including items that are, for instance, auxiliary to the building such as sidewalks and landscaping, the structural elements supporting the building, and other equipment which allow the building to be functional.

It is common practice to implement only the maintenance stage, making facility management unnecessarily expensive. Incorporating the planning and design, and construction stages will surely make a difference in the life of the facility.

The common belief is that the maintenance culture in our country could largely improve if stakeholders in the facility management sector strive to make it happen.

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One major aspect  in Real Estate acquisition and leasing is the proof of funds letter; this is a document that proves that a home buyer has enough liquid cash to purchase a home. Due diligence on the part of the home sellers is the desire to see such paperwork, this assures concerned parties that a home buyer is ready to make an offer and committed to such purchase.

What Is Proof of Funds?

Proof of funds can simply be described as a document provided to ascertain that a person has sufficient money on hand to cover specific expenses. Proof of funds can come from several sources, which includes bank statements or a proof of funds letter. 

There are a few scenarios where the person may be asked to provide proof of funds, but this is mostly common in real estate transactions. For example, in real estate, a seller may ask the buyer to  provide proof of funds to show that they can cover the costs of purchasing a home.

Why is a Proof of Funds Letter required for property acquisition ?

The point of a POF letter is to show that you are making a legitimate offer as a buyer. In an instance where there are multiple persons making offers, having a Proof of Funds letter, may put you at an advantage over others. 

 Sellers prefer to see POF letters alongside the offers made by prospective buyers, this is to ensure legitimacy and to prevent situations where they miss out on serious/legitimate offers, while waiting on a high-ball offer from someone who can’t actually deliver.

Who needs a proof of funds letter?

Technically all prospective buyers need to provide a proof of funds letter. In an instance where an individual is getting a mortgage to finance their  home purchase, they’ll still require enough money for down payment, ideally 30% of the price of the house and closing costs.

Lenders on the other hand would delve deep into your finances to ensure you have the necessary cash on hand to close the deal, in this case, home sellers would also want to see that you have these funds set aside. This is  why the provision of  a POF letter, as well as pre-approval letter  from your lenders confirming that they’re willing to loan you the rest of the money you need for the purchase. 

Home buyers who don’t need to take out a mortgage because they’re buying the house in cash aren’t entirely off the hook either. They would  also be expected to provide a proof of funds for a cash offer—for a much larger amount.

What counts as proof of funds in real estate?

A proof of funds letter can be obtained from the institution where your money is being held, typically a bank. It can also come from another type of asset, such as an open credit line or money market account where funds can be accessed quickly. 

It’s important to highlight that having a lot of money in mutual funds and stocks can not count as proof of funds, since the  money can’t easily be withdrawn and such amount varies based on day to day market conditions. Per adventure it’s needed for down payment, it is advisable to schedule a plan to transfer the money sooner rather than later into an account that’ll count as proof of funds.

What a proof of funds letter should include:

Essentially, a proof of funds letter includes the account holder’s name and current balance of available funds—all on bank letterhead and signed by a bank official. However, in many cases, a recent bank statement from a checking or savings account where the money is being held can also serve as proof of funds, so it’s worth checking if that alone will suffice.

To protect your privacy, sensitive information  on the statement can be redacted efore providing the statement to a seller. The most important thing is that the account is yours and the money that is contained in it. 

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Real Estate Investment decisions in Nigeria largely depend on a variety of factors that may influence the standard of living and current financial pocket. The main reason that guides the decision to purchase a property involves having a permanent place to call “home”.

In seeking opportunities to help contributors get more value from their contribution ahead of their retirement, the Pension commission partnered with financial institutions such as Stanbic IBTC Bank to make funds available to verified contributors to buy homes while using part of their RSA balance as equity contribution.

Before PenCom states that the maximum amount to be withdrawn is 25% of the total mandatory RSA balance as of the date of application, it is important to note that this is irrespective of the value of equity contribution required by the mortgage lender.

In a situation where 25% of a contributor’s RSA balance is not sufficient for payment as equity contribution, the RSA holders may utilize the contingency portion of their voluntary contributions if it’s available. 

If such a  person had accessed part of the funds before either leaving paid employment, suddenly losing their job, or before retirement age, he will still get a lump sum at retirement. Such an individual can still get part of the funds for a mortgage after meeting specific conditions stated in the guidelines, but he must sign a consent form to access it.

This consent form states that you are indemnifying the PFA and that you understand the terms clearly.  So that at the point of the final retirement, if such benefits are lower compared to one’s colleagues, such a person would not complain.

Leveraging mortgage pension scheme to own a house: 

Application procedure

According to the guidelines, the applicant must obtain a property offer letter from the property owner or approved agent and approach a mortgage lender. He must fill out an application for a mortgage, which must be provided by the mortgage lender, and should attach the property offer letter. Also, the mortgage lender will review the application form and verify the genuineness of the property offer and will do due diligence to ensure that the property has a valuation report. Upon confirmation of the property offer letter, the applicant will approach his Pension Fund Administrator and request his RSA statement to access the 25% of his RSA balance for payment of equity contribution.

Also, in a joint application, each party must apply to their respective PFAs with copies of the verified property offer letter. The PFA must issue a duly endorsed RSA statement to the applicant, which the applicant must forward to his mortgage lender. Similarly, the PFA must update records on applications for equity contributions for residential mortgages upon issuing the RSA statement to the RSA holder.

Approved mortgage lender

The Central Bank of Nigeria’s list of primary mortgage lenders showed that 34 operators had operating licenses as of the end of June 2021.

However, PenCom, under its mortgage guidelines, had stated that the names of mortgage lenders that met the eligibility criteria of its guidelines would be published on the commission’s website on a bi-annual basis or when any new license was issued by the CBN.

PenCom stated that it would liaise with the CBN on an annual basis to determine the mortgage lenders meeting the stipulated minimum requirements of the guidelines and other conditions as might be specified by the CBN regularly.

It stated that the mortgage lender must be licensed by the CBN to provide residential mortgages and must have met the minimum capital requirement as prescribed by the CBN from time to time.

The mortgage lender must have a valid pension clearance certificate issued by PenCom in line with the PRA, 2014, which mandates it to have pension and group life insurance for its workers.

Exemptions

Those exempted from the initiative, according to the guidelines are RSA holders that have less than three years to retire; exempted persons under the PRA 2014, and RSA holders who do not have both employer and employee mandatory contributions for a cumulative minimum period of 60 months.

The equity contribution is also not for refinancing an existing mortgage, outright purchase of property, and purchase of land, and the property must be for residential purposes only. 

Other criteria

The RSA holder must have an offer letter for the property duly signed by the property owner and verified by the mortgage lender. The RSA of the applicant must have both employer and employee’s mandatory contributions for a cumulative minimum period of 60 months before the application for the RSA holder to access his RSA balance for equity contribution for a residential mortgage.

Also, married couples who are RSA holders can be eligible to make a joint application, subject to individually satisfying the eligibility requirements.

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