Plans underway to create uniform advert platform to identify quacks in estate agency practice

Plans to identify quacks in estate agency practice in Lagos State are underway through the creation of a uniform advertisement platform and a roll out of approved bill-board advertisement for properties, authorities of the state government have revealed.

The state authorities added that an Estate Agent Academy would soon be established in the state to deliver a wide range of capacity building courses aimed to bridge the skills-gap and meet capacity needs of professionals in the housing sector.

Jimoh Ajao, the Special Adviser to the state Governor on Housing, explained that the programme of the Academy, which would be jointly established by PSSD and Lagos State Real Estate Transaction Department (LASRETRAD), would be designed to prepare participants for profitable investment in real estate.

Ajao, who spoke at a ‘Stakeholders Forum of Real Estate Agency Practice’ organized by his office recently, added that the programme would also cover issues of housing management and maintenance, modern approach to fixing rents on various categories of properties, collection of rents with minimum default, when and how to issue quit notices and how to carry out tenant eviction legally.

The special adviser explained that the forum was organized as a response by the state government to activities of some estate agents who were charging ridiculous agency fees as high as 75 percent of rent for low end properties.

In his presentation at the forum titled  ‘Agency Fees and its Related Issues’, Ade Ipaye, the state Attorney General and Commissioner for Justice, gave credence to how ridiculously high 75 percent charge is by pointing out what obtains in other property markets including neighbouring Ghana.

In Ghana, he said, the seller pays the 5 percent estate agent’s commission; in Kenya, the average commission is 1.25 percent and payable by the buyer;  in Uganda, the rate is between 5 percent and 10 percent and it is paid by the buyer;  in United Kingdom, it is between 2 percent and 3.5 percent,  in  France, it is between 3 percent and 10 percent and it is split between buyer and seller, while in Germany, it is negotiable between 3 percent  and 6 percent.

Ipaye noted however, that “whether it is called agency fee, commission, or brokerage, what is important is that an agent must be paid for his service; agency fee is a payment made to an agent in exchange for advice or services; the fee is usually charged as a flat rate, a percentage of the selling or rental value, or a set amount plus a percentage of the selling or rental value”.

According to him, agency is usually a contractual relationship and parties are presumed to have what is called ‘freedom of contract’, explaining that freedom of contract is the ability of parties to bargain and create the terms of their agreement as they desire without any interference from government.

Such freedom, he however pointed out, is not absolute, “because the determination of agency fee is a contractual matter that is to be agreed between the principal and the agent and should subject to industry standard. “It is in the interest of all the stakeholders to agree on an average standard. This facilitates doing business and creates confidence in the industry”, he opined.

Chuka Uroko