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Everything you need to know is included in our Nigeria Property Pack
Nigeria is a top pick for foreigners who want to invest in real estate. It offers beautiful scenery, a rich history, and hospitable people.
Nevertheless, buying property in a foreign country can be a complex process, particularly with all the legalities and regulations involved.
Don't worry! This guide is here to make it easy for foreign buyers to comprehend how the property market works in Nigeria. We'll walk you through everything you need to know in an easy and straightforward manner.
Also, for a more in-depth analysis, you can check our property pack for Nigeria.Can you purchase and own a property in Nigeria as a foreigner?
It's important to understand that foreigners can indeed purchase real estate in Nigeria, but there are certain nuances to be aware of.
Unlike Nigerian citizens, foreigners cannot own land outright in Nigeria. Instead, they can obtain what is known as a 'leasehold'. This essentially means that you, as a foreigner, can lease the land for a long period, typically for 99 years.
During this leasehold period, you have the right to use the land as if you were the owner.
When it comes to the rights of foreigners compared to local citizens in owning property, the main difference lies in land ownership. Nigerian citizens can own land outright (freehold), but as a foreigner, you're limited to leasehold arrangements.
This leasehold is still a strong form of ownership; you can develop, sell, or rent the property on the land during the lease period.
Regarding rules that vary by the country of origin, Nigeria does not generally differentiate between foreign investors based on their country.
However, it's always advisable to check for any bilateral agreements or specific regulations between Nigeria and your home country that might affect property acquisition.
Residency in Nigeria is not a prerequisite for buying property. You can purchase real estate without residing in the country.
However, having a local presence or a trusted representative can make the process smoother, especially when it comes to handling paperwork and legal procedures.
Visas and permits are another important aspect. While you don’t need a specific visa or permit just to buy property, having a valid visa is necessary for entering and staying in the country for any related activities, like property viewing or signing documents.
If you plan to reside in Nigeria due to your property investment, you will need to apply for the appropriate residency visa.
Regarding government authorization, it's essential to go through the proper legal channels. This usually involves getting approval from the state government where the property is located. The process includes a thorough check to ensure the property is free from disputes and has a clear title.
Minimum investment requirements aren't generally stipulated for foreign buyers in Nigeria.
The investment value might influence the type of property and location you can afford. Premium areas, especially in major cities like Lagos and Abuja, tend to be more expensive.
Can you become a resident in Nigeria by purchasing and owning a property?
Nigeria did not have a specific residency-by-investment program tied to real estate purchases, like some other countries do.
This means that simply buying property in Nigeria does not automatically qualify a foreigner for residency.
However, there are other pathways to residency in Nigeria, primarily based on employment, family reunification, or long-term visas for specific purposes like business.
To become a resident under these categories, you typically need to have a valid reason for staying in Nigeria, such as employment with a local company, running a business, or being a dependent of a Nigerian citizen or a foreigner with legal residency.
If you're interested in obtaining residency in Nigeria through investment, it's more about investing in a business or an enterprise that contributes to the Nigerian economy, rather than just purchasing property.
This route usually involves a significant investment in a business and may come with specific requirements regarding the amount of investment, the type of business, and its impact on the local economy.
The exact steps and requirements for obtaining residency through investment can be complex and vary based on individual circumstances.
Typically, it involves applying for a suitable visa or permit, providing evidence of your investment, and meeting other criteria set by the Nigerian immigration authorities.
Regarding the duration of residency, it depends on the type of permit or visa you obtain. Some might offer temporary residency for a few years, while others could lead to permanent residency if certain conditions are met over time.
Permanent residency is a more extended and involved process, often requiring several years of continuous legal residence, adherence to local laws, and possibly other criteria like language proficiency or cultural integration.
As for citizenship, obtaining Nigerian citizenship through residency is a separate process.
It typically requires an extended period of continuous legal residence, a demonstration of integration into Nigerian society, and adherence to its laws and values. Property ownership alone would not directly lead to citizenship.
Thinking of buying real estate in Nigeria?
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Market data
You can find fresh and updated data in our pack of documents related to the real estate market in Nigeria.
By examining the the the GDP per capita indicator, we can deduct that Nigerian people have become -2.5%poorer throughout the past 5 years.
If the population becomes poorer, there may be a decrease in demand for real estate, potentially causing prices to decline in the future.
If we check the data displayed on Numbeo, we see that residential real estate in Nigeria offer gross rental yields between 14.3% and 17.0%.
These exceptional rental yields indicate a strong demand for rental properties, suggesting a stable and thriving rental market for foreign investors.
To know more, you can also read our dedicated article: is it a good time to buy a property in Nigeria?
The expat life
Living as an expat in Nigeria can be an exciting experience.
The country is full of culture, history, and vibrant cities. There are many opportunities to explore and experience the different aspects of Nigerian life. The country is also home to a large number of expats, making it easy to make friends and find support.
The cost of living in Nigeria is relatively low, making it an attractive destination for expats. The economy is also growing, with new businesses, jobs, and opportunities opening up. This is great news for expats looking for work.
However, there are some challenges to living in Nigeria as an expat. The infrastructure in the country is not as developed as in other countries, and there are still some issues with corruption. Additionally, the security situation in some parts of the country can be dangerous. It is important for expats to take precautions and be aware of their surroundings.
Overall, living as an expat in Nigeria can be a rewarding experience. It is a great place to explore and experience the culture and history of the country. With the right precautions and research, expats can have a safe and enjoyable stay in Nigeria.
What are the best places to invest in real estate in Nigeria?
This table summarizes some of the best places to buy a property in Nigeria.
| City / Region | Population | Average Price per sqm (NGN) | Strengths |
|---|---|---|---|
| Lagos | ≈ 14 million | 200,000 - 500,000 | Commercial capital, business opportunities, vibrant nightlife |
| Abuja | ≈ 3 million | 150,000 - 400,000 | National capital, political center, planned city |
| Port Harcourt | ≈ 1.8 million | 120,000 - 300,000 | Oil and gas hub, major port, cultural diversity |
| Ibadan | ≈ 3 million | 80,000 - 200,000 | Historical city, academic institutions, lower cost of living |
| Enugu | ≈ 750,000 | 100,000 - 250,000 | Coal city, cultural heritage, pleasant climate |
| Calabar | ≈ 400,000 | 100,000 - 250,000 | Tourist destination, natural beauty, festivals |
| Kano | ≈ 3 million | 80,000 - 200,000 | Historical center, trade hub, cultural traditions |
Want to explore this further?
Do you need a lawyer to buy real estate in Nigeria?
When purchasing a property in Nigeria, engaging a local lawyer can be essential to navigate the legal requirements and ensure a successful transaction.
One crucial document they can assist with is the Deed of Assignment, a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.
The Nigerian lawyer can also help with conducting a Property Title Search to verify the property's ownership status and identify any potential legal issues or encumbrances.
Moreover, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registry or relevant authorities.
They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Stamp Duties, are paid correctly and in compliance with Nigerian laws and regulations.
What are the risks when purchasing a property in Nigeria?
We've got an article dedicated to the risks associated with purchasing property in Nigeria.
1. Unclear title deeds. In Nigeria, obtaining a valid and clear title deed on a property is a challenging process due to the complexity of the land registry system and lack of transparency.
This can lead to a situation where the buyer may not be able to prove valid ownership of the property or may be subject to disputes with other parties who claim ownership of the property.2. Property crimes. Nigeria is known for having a high rate of property-related crimes such as burglary, squatting, and land grabbing. This can leave the buyer in a vulnerable position if they are unaware of the risks associated with buying a property in Nigeria.
3. Poor infrastructure. Many parts of Nigeria lack basic infrastructure such as roads, electricity, and water. This can make it difficult for the buyer to access their property or to use it for its intended purpose.
4. Political instability. Nigeria is known for having a volatile political environment, which can lead to sudden changes in government policies that can have a direct impact on the property market. This can have a negative impact on the value of the property and make it difficult for the buyer to resell the property in the future.
Everything you need to know is included in our Nigeria Property Pack
What are the documents needed for a real estate transaction in Nigeria?
When buying a property in Nigeria, the following documents are typically required:
1. A valid means of identification, such as a driver’s license, national ID card or international passport.
2. A valid Certificate of Occupancy (C of O) or a valid Governor’s Consent.
3. An authenticated survey plan of the property.
4. A deed of Assignment or Agreement of Sale.
5. A deed of Mortgage or other security documents, if applicable.
6. Evidence of payment of Stamp Duty.
7. A Letter of Allocation or Deed of Lease, if applicable.
8. A valid Certificate of Occupancy or Governor’s Consent in the case of a leasehold property.
We review each of these documents and tell you how to use them in our property pack for Nigeria.
What strategies should you employ for successful negotiations with Nigerians?
When buying a property in Nigeria, here is what you can do to improve the negotiation phase:
- Embrace the concept of "Naija Time" by being patient and flexible with the negotiation process, as Nigerians often have a more relaxed approach to time management.
- Respect the importance of hierarchy and age in Nigerian culture. Show deference and respect to elders or individuals in positions of authority, as it is a significant cultural value.
- Be prepared for negotiations to include lively and passionate discussions, as Nigerians tend to express their opinions and emotions openly.
- Show appreciation for Nigerian cuisine and hospitality by accepting offers of food and drink during negotiations. Sharing a meal can create a sense of camaraderie and build trust.
- Demonstrate a genuine interest in the local community and projects that benefit society. Discussing social initiatives or community development projects can help establish a positive negotiation environment.
Do banks offer loans to foreigners in Nigeria?
Foreigners can get property loans in Nigeria, but the process and requirements depend on the lender and loan terms.
To obtain a property loan in Nigeria as a foreigner, you'll usually need a valid residence permit, proof of income or employment, and meet the specific criteria established by the lending institutions.
Some banks in Nigeria that can grant mortgages to foreigners include Guaranty Trust Bank (GTBank), Zenith Bank, and First Bank of Nigeria.
However, it's useful to know that mortgage rates in Nigeria for a 20-year term range between 16% and 20%, which can make it difficult for borrowers to access affordable funds. As a foreigner, you should consider other financing options for a smoother borrowing experience.
What are the taxes related to a property transaction in Nigeria?
Here is a breakdown of taxes related to a property transaction in Nigeria.
| Tax | Description | Calculation | Who pays |
|---|---|---|---|
| Stamp Duty | Tax on documents executed for the transfer of property | 1.5% of the property value or consideration, whichever is higher | Buyer |
| Value Added Tax (VAT) | A consumption tax on goods and services, including some real estate transactions | 7.5% of the property value or consideration | Buyer |
| Capital Gains Tax | Tax on the profit earned from the sale of a property | 10% of the net gain (difference between sale and cost prices) | Seller |
For a deeper dive into the calculation, refer to:
- the Nigerian Stamp Duty Office's website
What fees are involved in a property transaction in Nigeria?
Below is a simple breakdown of fees for a property transaction in Nigeria.
| Fee | Description | Calculation | Who pays |
|---|---|---|---|
| Registration Fee | Fee for registering the property transfer | 3% of the assessed value of the property | Buyer |
| Real Estate Agent Fee | Fee charged by real estate agents for their services | Between 2% and 5.5% depending on the property sale price (split between buyer and seller) | Seller and Buyer |
| Consent Fee | Fee paid to obtain the necessary consent from the state government for the transfer of property | 8% of the assessed value of the property | Buyer |
| Legal Fee | Fees charged by lawyers for handling the transfer process | 7.5% of the property value for the buyer and 5% for the seller | Seller and Buyer |
-Buying property as a foreigner in South Africa: the guide
Buying real estate in Nigeria can be risky
An increasing number of foreign investors are showing interest in Nigeria. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.