Alhaji Bashir Jimoh is one of the top experts in the property sector with like 20 years of experience. He was a banker before getting into real estate. He's really respected by his colleagues because of his knowledge. He's the Managing Director of Bashmoh Homes Ltd and has won several awards in Nigeria and abroad.
A few days ago, City People’s Isaac Abimbade spoke to him for an interview about President Tinubu's policies and their impact on the real estate sector. Below are excerpts.
How have President Tinubu's policies affected real estate in the past year or so?
I want look at this from the start of this administration and what the gov has done in the real estate industry. I’d say the government is involved in two main ways. First, there's direct provision of housing to address our housing deficit with renewable projects in various states. Second, it's about providing funding for housing acquisition. During this admin, different funds and social funds have been introduced. Now we have the NIRF that offers resources for people to buy homes. The National Housing Fund also raised their max loan from 20 million to 50 million. Plus, there's a federal staff loan program. So if you look at all this together, the government is working on both demand and supply, which, in my opinion, has really improved real estate delivery in Nigeria.
There are a few things the government has done, and I’m curious how some of you guys will tap into it since it seems like a lot of players don’t know about these things.
About what the government has done: I’ll use Abuja and Lagos as examples. They've made it easier to access registrable land in Abuja. The federal minister gave the REDAN Abuja branch some land to help reduce the hassle of finding land for housing. There’s also a unit for mass housing where real estate developers can approach those working with FCTA to get mass housing approvals. In Lagos, REDAN members are still working with the state government to get land allocated to them, which they'll hand over to their members. The last piece we got was from this Lagos state government - the Idera Housing Scheme.
This Idera Housing Scheme is on Lekki Expressway and was basically given to developers to make land acquisition easier and improve real estate delivery. I think because we work together as operators in the industry, we know each other and advise the government on ways to improve our relationship. One of our main contact points has been the real estate outlook organized by the SA to the Lagos state government, which is a yearly event. It's a chance for regulators, operators, and players in the industry to come together and find ways to improve housing delivery.
The mortgage system in Nigeria is one of the best ways to quickly get a home in a normal country. How do you think the government can improve it so more people can get into property?
This is one of the first things Tinubu's administration has done. I want to look at it from the angle of helping first-time homeowners. The gov has made a shift.
For the first time, there's a change from just salary earners to business owners. Now business owners can set aside some money for a mortgage fund each month. You can't just give someone on the street money for property.
You got to see how they'll pay it back. The way to check this is for the gov or the accountant to look at account performance stats. That’s why they let private companies contribute to the pension fund.
After 6 months of contributing, they can tap into the fund. I think the interest rates from gov loan institutions aren’t bad, mostly in the single digits.
Some are between 4% and 9%. If we can stick to that for mortgage loans, it’s not too bad. Plus, the gov has opened up the options. Now it’s open to both public and private sectors. More people, more resources, and way more capacity to help first-time homeowners.
The new tax, how’s it affecting the property sector? And what about first-time owners, how's it hitting them price-wise?
So, looking at it simply, the new property laws basically say the government is going take more from capital gains tax. If they’re taking more, it means your property's gotta appreciate a lot first, right? For property to go up in value, the gov needs to step up with stuff like roads, security, electricity, and all that infrastructure. That boosts your property's worth.
When you sell, the gov deducts what you bought it for from the new selling price. You're taxed on that difference, which is the capital gains tax. Plus, you gotta pay VAT when you register your property. If you just buy and sell without registering, you might not even have to deal with that.
But if you’re changing ownership, that’s when registration kicks in and VAT comes into play. We also have to account for withholding tax for the gov. Those are the three main tax things from the new law that hit real estate.
How's the tax law been affecting u? And what about other real estate folks?
For VAT, you must file reports every month. And you must've paid salary. But we were all kind of skeptical. Some people couldn't even tell the difference between revenue and profit. The law says any revenue in your account is assumed profit until proven otherwise. So for what u buy or sell, it needs to be receivable. Gotta have receipts to show the gov this is just revenue and these are the profits.
Also, the real estate industry has this special thing with refunds. U might sell a property and ask the customer to pay bit by bit over 12 months. But then, after 60 months, if they decide to stop paying, u gotta refund them. Sometimes it's 100%, sometimes less. But that's just how the industry is, and REDAN is talking to the tax office to get them to understand. We all know tax is super important for growth.
We in real estate support paying reasonable taxes. It helps protect our investments and boosts the economy!
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