Tax Reforms May Push Up Rents, Mortgage Costs, Property Prices — Experts

Real estate experts have warned that the Federal Government’s tax reforms could reshape Nigeria’s property market, with early signs pointing to rising rents and higher property costs.

Managing Director of AlphaCrux Limited, Tobi Adama, said the new tax regime is among the key policies likely to influence the sector in 2026, with both positive and negative implications. According to Adama, property owners are already adjusting to the reforms by passing new tax obligations on to tenants and buyers.

He said, “One of the major issues is the new tax reform. We are still grappling with it and trying to understand it fully. But one of the effects we have observed is an automatic increase in rent and property prices. Most property owners now have tax liabilities. Instead of absorbing the cost, they are adding the equivalent to existing property prices. On the broader economic outlook, when the economy moves in a positive direction, real estate naturally follows.”

Adama also pointed to improving macroeconomic indicators and renewed investor interest as positive signals for the industry.

“We are seeing inflation trending downward, external reserves improving, and foreign investors returning to the country. These are encouraging signs for the real estate sector this year,” he added.

He noted that technological innovation has significantly transformed the industry over the past decade, from digital invoicing systems to sustainable building design and platforms that facilitate property acquisition, leasing, and sales.

Adama explained that the conference was conceived as a forum to bring together industry professionals, financiers, and stakeholders to discuss collaboration and value creation for the year ahead.

Also speaking, Chief Operating Officer of Brokerfield Real Estate Services Limited, Akin Opatola, described the reforms as necessary and progressive, particularly the introduction of a 1.5 per cent luxury property tax.

He said the tax, targeted at high-end residential developments, could become a major source of government revenue.

“Reforms are steps in the right direction. Globally, taxation is a major driver of government revenue, and this policy reflects that reality,” Opatola said.

“I appreciate that the 1.5 per cent luxury tax is focused on the upper segment of the market. Across Victoria Island, Oniru, and Ikoyi, numerous high-end developments have emerged in recent years, many priced in dollars. There is a strong demand level, with over 90 luxury high-rise developments across those locations.”

Opatola, however, stressed that infrastructure development must accompany taxation to sustain growth in the sector.

He highlighted persistent challenges such as poor road access to Banana Island, which becomes difficult to navigate during heavy rainfall.

“When you compare the price of a three-bedroom apartment in Banana Island, often quoted in dollars, with similar developments abroad, it raises serious questions. Nigeria still has significant gaps in infrastructure: roads, drainage systems, street lighting, and security,” he said.

He urged the Lagos State Government to intensify infrastructure investment and collaborate with the organised private sector, noting that improved infrastructure would stimulate construction activity and expand the tax base.

“With proper infrastructure, more developments will emerge, government revenue from taxes will increase, and Lagos can move closer to becoming a resilient, vibrant smart city,” Opatola said.

While acknowledging ongoing infrastructure projects, including the Lagos–Calabar Coastal Highway, he maintained that more comprehensive improvements are required.

The 1.5 per cent luxury property tax forms part of the broader Nigeria Tax Act 2025. The policy introduces an annual tax on high-end residential properties valued in prime locations such as Ikoyi and Banana Island in Lagos, as well as Maitama and Asokoro in Abuja.

Beyond luxury property taxation, the Act also introduces significant reforms to personal income tax, corporate taxation, capital gains tax, minimum effective tax rates, and tax administration procedures.