Lagos Moves to Regulate Estate Agency Charges

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Lagos State government has initiated moves to regulate estate agency fees in the state which it claims ranks highest when compared with other countries.To this end, a stakeholders’ meeting was recently convened at the instance of the Lagos State Real Estate Transaction Department (LASRETRAD) to deliberate on “Real Estate Agency Fees in Lagos”. In attendance were various associations of estate agents, legal practitioners and developers, among others, operating in the state.

Issues discussed at the meeting included acceptable rates to be collected as agency commissions, the models to be adopted, based on best practices obtainable in other countries.

The State’s Attorney-General and Commissioner for Justice, Mr. Ade Ipaiye, in a paper titled: ‘Agency Fees and its Related Issues’, noted that agency fee is a contractual agreement which is subject to negotiation. Ipaiye who was represented by the Senior Special Adviser to the governor on Justice, Mr. Olanrewaju Akinsola, drew a comparison between Nigeria and other countries, noted that agency fees in Nigeria are the highest.

According to him, agency fee in Ghana is five percent; in Kenya it is 1.25 percent and in South Africa, it ranges from four to eight percent. He further noted that agency fees in these countries are either paid by property owners or shared by owners and buyers/tenants whereas in Nigeria, estate agency fees range from 10 percent to as high as 75 percent.

Also speaking at the event, Special Adviser to the Governor on Housing, Mr. Jimoh Ajao, said the state government is worried on the number of negative complaints received from the public on the activities of estate agents in the state. “Government has realised that estate agents are charging varying percentages as agency fees, some as ridiculous as 75 percent of rent for low-end properties,” he noted. According to him, the appropriate fees to be paid must be known; the true condition of the property must be disclosed, according to article 3 (1-5) and 5 (i-3) of the primary duty to clients in the Code of Conduct of an estate agent.

Ajao said LASRETRAD was established for five basic objectives: maintaining real estate market confidence; ensuring the protection and enhancement of the stability of Lagos State real estate market; securing certain level of protection for property seekers; making property transaction process extremely transparent; and total eradication of quackery in real estate industry in Lagos State. “As we roll out the approved bill board advertisement for properties in the state, we hope to create a uniform advertisement platform with the aim of identifying quack agents for necessary prosecution,” he added.

In his remark, Chief Operating Officer, Property Communications, Boye Ajayi, said the regulation of the sector is necessary to stop the chaotic situation where estate agents charge indiscriminately. “For someone to rent a room apartment, such a person must be economically handicapped. Why would an estate agent charge such a person huge amount as agency fee? It is unimaginable for an agent to charge agency fees of same amount as the rent. The government is only trying to sanitise the industry. By doing this, these nefarious activities will come to an end. There must be a regulated fee so that somebody who wants to buy or rent a house will know what he has to pay,” he stated.

 

In : Lagos

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