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Business News of Sunday, 26 March 2023


Tackling menace of fake estate developers, fraudsters

The photo used to illustrate the story The photo used to illustrate the story

DAMILOLA AINA writes on the increasing rate of land and housing scams in the country, the modus operandi used by illegal developers and ways to end the menace.

A 35-year-old businesswoman, Esther Yohanna, needs a new apartment. She got in touch with an agent who promptly “showed her the way”. It turned out to be the way of deceit.

The variant of accommodation she needs costs a whopping N10.2 m. For ease of payment, she parted with N1.25m as part payment. Unknown to her, the agent she has been dealing with is one of those phoney elements whose activities have portrayed the nation in a bad light for years.

The agent suddenly became unreachable, leaving Esther with little alternative but to hope for some kind of luck. This was when her path crossed with our correspondent, who wasted no time in telling her that the said agent was not only fake but crafty. The said apartment was non-existent, our correspondent told her, even as he admonished her to carry out background checks on listed property before making payments.

She said, “At the beginning of this year, I needed an apartment for myself. I met an agent who took me around houses. Everything was looking real until I paid N1.25m representing 10 per cent of the required amount of N10.2m as a down payment.

“Suddenly, I could not reach the agent as his numbers were not reachable and he was no longer the occupant of the small office he used as address. It pained me but thank God I didn’t give the whole amount because I would not have been able to forgive myself.”

The experience of Esther amongst other Nigerians is a common occurrence in major cities in the country, not excluding Abuja, the nation’s capital. Activities of phoney agents have been on the rise in recent times due largely to unemployment. They (fake agents) target unsuspecting ‘clients’, some of whom are new to the Federal Capital Territory. These agents give enticing incentives which are difficult to resist.

From the promise of basic amenities such as a swimming pool, free WIFI and agency payment of as little as three per cent to uninterrupted power supply amongst others, they lure unsuspecting victims to part with their hard-earned money for non-existent residential property.

The story is told of how a job seeker paid the sum of N800,000 which he won in a lottery in 2013 for a fake two-bedroom apartment in the Wuse 2 district of Abuja. The payment made the young man to discover belatedly the ‘friends’ he had been dealing with were hustlers who had no business as estate agents.

Stories like this abound in Abuja’s city centre and surrounding suburbs as housing is a basic need for every man, including street beggars. The bliss of having a secure place to rest one’s head at dusk is underestimated until one needs shelter.

In Nigeria, the lack of an affordable home has been a recurring issue in the country, growing from bad to worse on yearly basis. The problem is exacerbated by the rapid expansion of the population, which is growing at a rate of about 2.6% per year.

With rents hitting the rooftop, the dream of an average Nigerian is to one day become a house owner and escape the unending stranglehold of shylock landlords.

As every Nigerian adult earning a decent income wants to be a homeowner, this means more business for property developers who are in the unending business of solving housing deficits.

Consequently, this translates to multi-dollar investments, even as financial experts project the industry as one of the safest ways to get value for money. The general rule of thumb here is that while the dynamic nature of human existence can quickly change, real estate is one exception to this rule as it is not vulnerable to being outmoded, nor can it be phased out.

Sunday PUNCH observes that while property investors are seeking to end housing challenges in the country, illegal developers are coming up with innovative ways to swindle gullible and unsuspecting customers.

In 2022, a whopping 200 cases of housing fraud involving prospective tenants, landlords and agents were recorded between January and August in Lagos State.

As a matter of fact, the frequent occurrence of these scams propelled the state government to offer pointers towards what could constitute a red flag for prospective tenants, advising them to beware of quacks and fake professionals in the state’s rental market who claim to be landlords and genuine estate agents.

The Special Adviser to Lagos State Governor on Housing, Toke Benson-Awoyinka, at a stakeholders’ forum for lawyers in real estate practice stated that the inability of the developer to show proper practice licence or documentation to back up claims, insistence on having payments routed through personal bank accounts are some of the modes of operation of fake developers.

She said, “In Lagos, these fake developers have different modus operandi, which makes it somewhat difficult to tell if one is dealing with a legitimate agent or a charlatan. Nonetheless, there are a few indicators that could serve as hints to a prospective tenant that he/she is dealing with a fraudulent individual.

“Some of these pointers may include the inability of the developer to show proper practice licence or documentation to back up his claims, insistence on having payments routed through personal bank accounts and the inability of the developer to answer certain fundamental questions about the property, among others.”

Speaking exclusively with Sunday PUNCH, the Executive Secretary, Association of Housing Corporations of Nigeria, Toye Eniola, explained that a background check of enlisted property, asking important questions about the real owner would save anyone the heartbreak of wasted funds.

He added that the laziness of intending buyers to seek proper consultations with regulatory bodies has made it easier for scammers to perfect the art.

He said, “Scammers are everywhere. And what will mitigate this problem is for potential buyers to conduct background checks on the property. You have to engage in an official search concerning the property; that is what will determine whether the property is genuine.

“Ask for the Certificate of Occupancy; it is important also to confirm if it is genuine because there are also fake Certificates of Occupancy. Unfortunately, most Nigerians don’t want to go through this ‘stress’ of necessary checks. They just want to make payment and pack in.

“After this, make sure you meet the real owner of a property. You need to check all of these and be sure to know the person who is claiming to be the owner. Ask for the identity cards of the assumed homeowner and crosscheck with the names written on the property document. These are the ways to solve this menace.”

Speaking further, the secretary noted that property offered at a very low price and not at variance with prevailing market trends within that vicinity should be a red flag to any potential buyer.

“Above all, we need a regulatory body that will control the practice of sales and marketing of real estate in Nigeria. We can’t solve the problems if we can’t solve that.

“There is also a need for certification for agents to practice in the real estate space if we are to move forward. Some agents just rent a small office, scam people and then disappear. So, we need a regulatory body that will provide certification,” he stated.