Real estate has become one of the most lucrative and rapidly expanding sectors in Nigeria today. Venturing into real estate, either as an agent or investor, offers great potential for financial success. With growing demand for housing, commercial properties, and land investments, there are vast opportunities in the real estate market.
Starting a real estate company can be rewarding and also challenging. The market is highly competitive with both professionals and newcomers competing for opportunities. However, instead of letting the competition discourage you, focus on creating a distinctive & reputable brand that sets you apart from other real estate companies.
But first, you need a clear understanding of the legal and regulatory requirements to set up your business. Let’s get started.
What is Real Estate?
Real estate refers to properties, which can include land, buildings, or even large collections of properties. Meanwhile, the real estate business involves activities related to the buying, selling, or renting of properties, homes, land, or buildings. Real estate agents play a key role in helping homeowners, businesses, and investors with transactions involving various types of properties.
The real estate industry is diverse and covers residential, and commercial real estate areas. Residential real estate includes properties such as undeveloped land, houses, and townhouses. Commercial real estate covers office spaces, warehouses, and retail buildings, while industrial real estate includes factories, mines, and farms.
Steps to Starting a Real Estate Company in Nigeria
1. Have a Business Plan
To start a successful real estate business in Nigeria, research the industry to understand its various sectors, such as property management, investment, and real estate agency. Identify the area that suits your skills and goals. Study market trends, local economies, and consumer preferences to guide your decisions. Finally, create a detailed business plan outlining your objectives, target market, strategies, financial projections, and marketing plans for success.
2. Register Your Business
A real estate business in Nigeria is required to be legally registered with the Corporate Affairs Commission (CAC). There is no fixed minimum share capital for real estate companies in Nigeria. However, if a foreigner is involved as a director or shareholder, the minimum share capital required is N10,000,000 (Ten Million Naira).
Here are the key requirements for registering a company in Nigeria:
- Two proposed company names will be submitted to the Corporate Affairs Commission (CAC) for a name search and approval. Once approved, the promoters can proceed with the registration using the approved name.
- Company’s proposed registered address, email, and phone number.
- Details of shareholders, directors, and the company secretary including their full names, contact/home addresses, email addresses, phone numbers, dates of birth, occupations, a copy of their National Identity Card with their National Identity Number (NIN), and electronic signatures.
- Confirm that the company is being registered as a real estate business, specifying the area of expertise.
Registering your real estate business ensures that you operate legally and shields you from potential lawsuits or disputes with clients and competitors. Also, registration provides access to funding opportunities for startups that may not be available to unregistered businesses.
3. Register with the Federal Inland Revenue Service (FIRS)
Tax registration is compulsory for all companies operating in Nigeria. After incorporation with the Corporate Affairs Commission (CAC), a company is automatically assigned a Tax Identification Number (TIN). The TIN is required for filing tax returns and making payments to the tax authorities. However, the company must still register with the Federal Inland Revenue Service (FIRS) for tax purposes.
The requirements for FIRS registration include:
- An application letter on the company’s letterhead.
- Incorporation documents.
- Details of the company directors.
- A utility bill.
Once registered, your company can take advantage of tax reliefs, incentives, and exemptions that may be available to businesses in the real estate industry.
4. Legal and Regulatory Requirements
There are various legal requirements involved in operating a real estate business in Nigeria. These include:
- Real Estate License and Permit: To operate legally, real estate agents in Nigeria are required to be licensed. The Nigerian Institution of Estate Surveyors and Valuers (NIESV) regulates the profession. NIESV is a non-profit, voluntary professional body that represents the interests of professionals in land transactions. If you plan to engage in property management or valuation, you must register with NIESV and obtain the necessary licenses.
- Compliance with Land Use Laws: Nigerian real estate transactions are governed by the Land Use Act of 1978. Ensure that you understand the local land laws, including zoning regulations, ownership rights, and land titles, as well as the process of land transfer.
- Building and Environmental Permits: Depending on the nature of your real estate business, you may need to obtain building permits and environmental clearance before constructing properties. Local government councils regulate these.
5. Secure Capital to Start
One of the main challenges when starting or expanding a real estate business in Nigeria is securing funding. Fortunately, there are several financing options available for entrepreneurs in need of financial support. Common avenues for funding include personal savings, loans from banks and lending institutions.
Another option is seeking funding from venture capitalists, angel investors, or start-up investors who may be interested in your business idea. With proper planning, diligent effort, and strong networking, obtaining funds from investors can boost your chances of success in the competitive Nigerian real estate market.
6. Get Started
As earlier mentioned, real estate is a highly competitive market. But, with effective marketing, you can differentiate your business from others. Employ marketing strategies by building a user-friendly website with property listings, services, and client testimonials. Use digital platforms like Instagram, Facebook, and LinkedIn to promote your business.
Once your real estate company is operational, continuously monitor its growth. Use financial statements, customer feedback, and market trends to evaluate the performance of your business.
Conclusion
Starting a real estate business in Nigeria is an exciting yet challenging venture. By following the steps outlined in this article, you can succeed in the property industry. While it is not legally required to hire a lawyer to set up your real estate company in Nigeria, it can be highly beneficial.
A real estate lawyer can help ensure that your business complies with all legal requirements, including registration with the Corporate Affairs Commission (CAC), obtaining necessary licenses, and meeting regulatory standards for the real estate industry. Having a lawyer by your side can safeguard your interests and ensure a smoother setup.