VAT Exemption Will Not Reduce Nigeria’s Soaring Rents, Real Estate Stakeholders Warn

Key players in Nigeria’s property sector have dismissed claims that removing Value Added Tax (VAT) on land and rent will curb the sharp rise in housing costs, insisting that the core drivers of escalating rents remain unaddressed.

Their reaction follows clarification by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, who stated that land, buildings and rent are already exempted from VAT under the Nigeria Tax Act currently in force. The clarification came amid reports suggesting the Act had introduced a 25 percent tax on building materials and related items.

While Oyedele maintained that ongoing tax reforms are aimed at easing rental pressures, industry stakeholders argue that taxation is not the primary cause of surging housing costs.

Across major cities including Abuja, Lagos, Kano, Enugu and Port Harcourt, rental prices have climbed steeply, triggering widespread concern. In parts of Abuja such as Dawaki, Jabi, Jahi, Kubwa, Dutse and Nyanya, annual rent for a one-bedroom apartment has reportedly jumped from between N500,000–N1 million to as high as N1.5 million–N2 million, representing increases of over 100 percent. Similar trends have been recorded in other urban centres, with annual rent in many cases surpassing the earnings of workers on the N70,000 national minimum wage.

Former President of the Real Estate Developers Association of Nigeria, Aliyu Wamakko, identified the soaring cost of building materials—particularly cement—as the fundamental issue.

According to him, cement prices now exceed N10,700 per 50kg bag, with factory prices hovering around N10,500. He explained that rising demand, including increased use of cement in road construction, continues to drive prices upward, thereby affecting housing delivery and rental costs.

Wamakko noted that Nigeria faces a housing deficit estimated at over 14.9 million units, concentrated largely in Abuja, Lagos, Kano and Port Harcourt. He argued that as long as building material costs continue to rise, rental prices are unlikely to decline. In his view, meaningful relief in the real estate sector must begin with reducing cement prices.

President of the Association of Abuja Tenants, Hakeem Suleiman, attributed the crisis to weak regulatory oversight and the lack of accessible mortgage systems for average Nigerians.

He said arbitrary rent increases—often implemented without property improvements—have become common, with some landlords and agents raising annual rent from N250,000 to N1 million without justification. Suleiman called for stronger government intervention, improved regulatory frameworks and functional mortgage systems that would enable tenants transition into home ownership.

He warned that continued inaction would deepen the hardship faced by citizens already grappling with economic strain.

Although the National Bureau of Statistics recently reported a decline in inflation to 15.10 percent in January 2026, many Nigerians say the cost of living, particularly housing, remains persistently high.