✕ CLOSE Online Special City News Entrepreneurship Environment Factcheck Everything Woman Home Front Islamic Forum Life Xtra Property Travel & Leisure Viewpoint Vox Pop Women In Business Art and Ideas Bookshelf Labour Law Letters
Click Here To Listen To Trust Radio Live

How Nigerians lose millions to fraudulent real estate developers

For many prospective home owners in Nigeria, their dreams of having a decent roof over their heads through real estate developers fade away into misery,…

For many prospective home owners in Nigeria, their dreams of having a decent roof over their heads through real estate developers fade away into misery, pain and disbelief.

Many victims are losing millions of their hard-earned savings to estate developers who collect millions of naira and offer poorly constructed homes, which in most cases, are valued less than the amount paid.

Daily Trust on Sunday investigation revealed that the situation has put many families in difficult financial crisis as they struggle through litigations to recover their money.

Salisu Mohammed Mustapha, who paid N26m for a house in Life Camp, Abuja, could not believe what he got. He explained to Daily Trust on Sunday what he went through when he moved into the house.

“After having an expert look at the property, we discovered the property had poor structural development. The walls of the house were cracking and falling down. The house was bound to collapse not long after we had moved in,” he said.

According to him, it took him knowing a few directors in the estate firm before they agreed to work on the building and fix the issue.

Despite that, for Salisu and family, they have lost confidence in the brand that was sold to them and have asked for a refund on the property.

Daily Trust on Sunday gathered that the high demand for shelter has given way to poor mass production of housing units with poor supervision of workers and structural progress as well as price inflation of properties.

Alhaji Mustapha told Daily Trust on Sunday why he thinks the problem is now rampant: “When developers receive their building contracts, they sometimes still outsource these contracts to other builders who end up getting labour at the cheapest rate. Even with that, these contractors do not take time to supervise the work that is being done. The workers are now left to build the property to the best of their knowledge and capability. In our situation, we couldn’t even supervise the ongoing construction of our property because with estates, buildings are not assigned to their owners till production of housing units are complete.”

An estate in Port Harcourt, Rivers State
An estate in Port Harcourt, Rivers State

Unlike Mustapha, other victims have sued a developer before an FCT High Court demanding a refund of their money.

Zainab Saidu and Linda Omosefe Arogundade in their separate applications against one of the estate developers through their counsel, David Ashaolu Esq, are seeking an order of court compelling the firm to refund their monies.

Mrs Saidu seeks court order for the refund of her N15.6m paid for a 3-bedroom apartment in the firm’s estate at Life Camp, Abuja, which was not provided.

Arogundade who paid N10.8m for a purported apartment in Life Camp, Abuja, in 2016, asked the court to compel the firm to pay 10 percent of the entire sum per annum from the date of judgment until the judgment is liquidated.

In the affidavit attached to the writ of summons, she avers that she purchased a 2-bedroom apartment in the estate out of trust that the firm delivers quality properties in Abuja which later turned out to be false representation.

“Pursuant to my interest, I was given Provisional Letter of Allocation on May 12, 2016, which contained the terms and conditions of the transaction,” she said.

According to her, the firm emailed her assuring her of accelerated completion of the apartment in the first quarter of 2019 with images of the progress of work.

“However, no property was delivered to me as promised by the first quarter of 2019. This had a negative effect on me as it rendered me homeless and forced me to get a new apartment.”

She said the developer eventually informed her on November 19, 2019 that they had diverted her money in providing infrastructure, including a 9km road, water and building about 1,200 units out of which they had already given some preferred customers.

An estate in Mararaba near Abuja
An estate in Mararaba near Abuja

In Kano, our reporter’s investigation also revealed that local developers popularly known as ‘Gina Sayar’ found usually in areas locally developed without authorities and experts’ involvement are building poor quality homes. It was discovered that houses are built on 20 by 25 meters, 30 by 25 meters among other measurements of similar range.

According to Malam Isa Garba, a retiree who had acquired one of such houses, he had never seen a place where homes are poorly built like those built by the operators of ‘Gina Sayar’.

“I bought a 3-bedroom local home built on 25 by 30-meter land at the cost of N2.3 million three years ago. However, barely 5 months after, I had to reconstruct virtually everything because the structure was completely poorly erected. These people are very good in covering their shady acts by surface beatification to attract customers,” he revealed.

Reacting to the development, the National President of the Real Estate Developer Association of Nigeria (REDAN), Aliyu Wammako, who acknowledged the problem, said the association was working with relevant agencies like the EFCC to deal with the menace.

He said there are so many ‘briefcase developers’ and the quack developers in the society can only be eliminated if all the developers come together as a body.

“If you make payment, you must have value for your money and we have now changed the circle. We brought on a mechanism that we call Anchor Developer Scheme and we check the activities of our members through this window and it is on the account of this that we now synergize our collaboration with SCUML which is an arm of EFCC. If you go to get a SCUML certificate now, if you don’t have a REDAN certificate you wouldn’t be able to get a SCUML certificate because there’s need for us to synergize as an industry to make sure that at least we maintain our dignity and integrity.

“There’s a bill which we have already sponsored in the National Assembly to be able to provide an establishment that checks the activities of these fraudulent developers in the society.

“If you deal with a registered member of REDAN, all we need from you is to keep your receipt and come to REDAN, we will definitely get the value for your money. That is why our synergy with EFCC, DSS and others is yielding results already because for so many people who were defrauded, we make sure that the developer is registered with REDAN before we take their case seriously,” he explained.

Alhaji Wammako advised property buyers thus:  “If you want to deal with anybody in the aspect of property business as a home seeker, we advice you to deal with a genuine registered member and you will get value for your money.”

On his part, the president of the Nigerian Institute of Building (NIB), Kunle Awobodu, said the institute has been really concerned about substandard construction of buildings because most of the estates developer relegate quality because of what he called “gains” where the attitude of profiteering seems to be superior to quality production.

“We should be mindful of the fact that estates buildings are of mass production and in nass production, there is tendency for quality or standard to be compromised. There’s need for serious quality control in anything that is mass produced.

“And what is the reason? They want to save cost so they buy inferior materials. The workmanship itself is usually of low standard because saving cost is always their priority. So, that is the major problem but not all developers do that. We have some notable developers who observe standard always but the majority always compromise.

The president of builders also said reasons why most of the buildings constructed by the developers are having serious issues is because the required professionals were never engaged.

He said the developers, in the document they submit to the authorities, would state that they would engage several professionals but when actual construction commences, they don’t engage such professionals as claimed in the submitted documents.

Until the authorities concerned sets up a monitoring mechanism to check the excesses of developers, many vulnerable Nigerians will continue to fall victims.

A client in a new estate in Mararaba, Nasarawa State, who craved anonymity, also bemoaned the exploitation of customers by property developers in the country through the use of sub-standard materials and advertising non-existent facilities.

“They will advertise that the estate would be fitted with good roads, electricity, water and security before you make your payment. As soon as you pay, you are on your own,” he said.

By Vincent A. Yusuf, John Chuks Azu, Rosemary Etim Bassey (Abuja) & Ibrahim Musa Giginyu (Kano)

VERIFIED: It is now possible to live in Nigeria and earn salary in US Dollars with premium domains, you can earn as much as $12,000 (₦18 Million).
Click here to start.