The real estate market in Nigeria remains under the influence of the Land Use Act of 1978, a law that redefined property rights and land management. The law's enactment involved the state government in the concept of complete ownership by seizing the proprietorship of the land in every state and awarding statutory rights of occupancy as a replacement. The Act was intended to eliminate land speculation and distribute it more evenly, but it has not been entirely successful, and the real estate development process remains hindered. This study will evaluate the Land Use Act and its diverse impacts on development efficiency, identify the Act's structural barriers, and propose feasible solutions for the next decade and beyond.

Legal Framework and Administrative Complexity

The legislation established two land management systems: urban land, controlled by the Governor, and rural land, under the authority of Local Government Councils. A Certificate of Occupancy (C of O) must be granted to the urban developers, along with the time-consuming process of obtaining the Governor's express consent. Thus, the entire journey from seeking the Governor's consent to applying for the Certificate of Occupancy (C of O) creates significant delays, and consequently, urban development cannot materialize. In Lagos, the Government has a five-year waiting period for C of O applications, and a similar scenario occurs in other states. The delay is attributed to overlapping authorities, each trying to impose its power, poor record-keeping, and manual processing. These factors have not changed since the Act came into force in 1978.

The requirement for consent under Section 22 of the Act causes even a greater level of ineffectiveness. The Governor's approval is necessary for any act concerning the statutory rights of occupancy, whether it is a sale, mortgage, lease, etc. Thus, even straightforward market transactions are involved in a prolonged administrative process. The requirement for consent raises the overall transaction costs, and accounting for legal fees, processing charges, and informal payments that facilitate movement through bureaucracy makes the transaction costs equivalent to 15-25% of the property value.

Title Verification and Investment Risk

The prevailing situation regarding land title security in Nigeria remains highly risky. The lack of an efficient cadastral system has placed Nigeria amongst the very few locations where it is almost impossible to verify titles. Usually, there is more than one person claiming ownership of a piece of land—traditional rights, family claims, and government allocations are overlapping each other, causing conflicts regarding land ownership. Furthermore, the non-digitization of land records and, therefore, inaccessibility for developers adds to the situation where they have to conduct extensive searches through different registries, which might still lead to finding inconsistent documents.

Investors are not going to take such risks, so the uncertainty will be a factor against them. The land insecurity that breaks investors’ confidence is characterized as the primary hindrance for foreign investments in Nigeria's real estate sector. Local construction companies, on the other hand, have to face the same problem, as the courts of Nigeria are burdened with around 40% of real estate disputes concerning the right to the land. The legal battle may take about 5 to 10 years to reach a point where it is very clear that the development, in terms of its economic aspect, is not viable. One of the ways through which banks and financial institutions handle this problem is by applying very stringent lending conditions not only on loans backed by land but also on land that requires additional collateral, and in this case, the interest premium charged would be 3-5% higher than the already very high standard commercial rates.

Economic Implications for Development Efficiency

The Act has resulted in creating inefficiencies that are easily translated into monetary losses. The time needed by the average development project in Nigeria is 60-80% more than in the rest of the region, and land acquisition, together with title perfection, takes a minimum of 30-40% of the entire time given to the project. All those mentioned delays increase the cost of financing significantly due to prolonged interest obligations and inflation-adjusted costs of construction. A housing development project, which takes three years for land paperwork, will have its total cost increased by 20% before the actual construction starts.

The actual situation in the market will be such that the land available for sale will be less than the real amount due to the scarcity created by the bureaucratic processes. The slow-moving land acquisition method considerably narrows the already tight supply, even though there is a lot of land—mostly on the outskirts—that can be used. Lagos requires 100,000 new housing units annually; however, it can produce fewer than 30,000 due to limited access to land, which is one of the major reasons. Consequently, housing prices stay at the same high level, and when it comes to Lagos, property prices are 40-50% higher than those in the rest of Sub-Saharan Africa when adjusted for purchasing power.

To avoid regulatory prohibitions, the informal land market has quickly developed. It is estimated that about 70% of land sales conducted in cities are unofficial, and the government doesn’t get involved in these deals. This keeps the market functioning but also adds a legal risk. Lands that have been sold using informal means are still subjected to government seizure, destruction without compensation, and exclusion from the formal credit market. The reality of informality creates two divisions—one is the group of wealthy developers having access to and being able to afford to go through the formal regulatory channels, while the other is the group of small operators who are marginalized and pushed out of the industry all the time.

Technological and Administrative Solutions

Digital transformation is often seen as a major source of efficiency. This is one of the key benefits it can deliver. Many countries have discussed and planned the introduction of e-land registration systems. However, much work remains. A nationwide cadaster with a GIS connection could eliminate all duplicate searches. This would speed up verification, taking days instead of months. Blockchain, a revolutionary technology, can make title records unchangeable, keeping ownership chains clear and unmixed.

Estonia's e-Land Registry perfectly demonstrates how digitization can transform the whole process, making it 90% faster and more accurate at the same time.

To tell the truth, the administrative reform has to address the "consent" requirement problem. The standard residential development would not be subjected to the delay of the Governor's consent for routine transactions under the specified value threshold if it were to be done automatically. Setting up statutory approval timelines with automatic deemed consent after 60 days would be a strong incentive for administrative efficiency. The recent move by Lagos State that reduced the time for C of O processing for documented applications to 14 days is a case in point for the huge gains that can result from changing the process.

The transfer of government land administration to operate agencies with a commercial perspective could be a great way to improve government responsiveness. Independent land registries could be created along with performance metrics that are based on processing speed and customer satisfaction, thus bringing in the accountability that is currently lacking in government departments. The public-private partnerships in the registration services, as successfully applied in Rwanda, are examples of the models that can deliver better service.

Policy Recommendations for Enhanced Efficiency

The most extensive solution pathway to the issue is through a legislative amendment. Although the complete repeal of the law seems politically impossible, the targeted changes could greatly enhance the working of the law. Thus, consent for subsequent transactions after the first C of O issuance would no longer be needed, and to this effect, there would be no bureaucratic touch points. On the other hand, consent for outright sales would be an imbalance, as market-led regulatory support would apply to the sales area and not to the leasing and mortgaging area, which would be non-consent.

Exclusive and specialized land courts for property disputes would result in much quicker dispute resolution. Today, the legal traffic jam in general courts is such that land cases are waiting for years until they can be heard. Processes with a six-month mandate for quick resolution will help to avoid the uncertainty that may arise. Such is the case in Kenya's Environment and Land Courts, where six months is already the time limit for hearings. Compulsory mediation before litigation could lead to 40-50% of cases being settled without resorting to court, since such mechanisms are usually among the options for dispute resolution.

Increasing transparency regarding the fees paid by opening access to the amounts charged would also stop the informal payments. The introduction of online payments in some states is still far from a uniform system for all states in Nigeria. Making fees linked to inflation-indexed rates rather than arbitrary determinations will provide predictability for development budgeting.

The issue of land administration personnel skills development, however, is very important and cannot be ignored. The modern land management process is demanding in regard to technical skills in the areas of surveying, GIS, legal frameworks, and customer service; thus, these skills are a necessity. The professional training programs that are aligned with international best practices would raise the capacity of the institution.

Conclusion

The Land Use Act in Nigeria is one of the most influential factors that affect real estate development. Nevertheless, it has led to difficulties in the system, wherein the costs are increased, the time taken is longer, and the investment is reduced. The Act, which was meant to bring about an even distribution of land, still claims its objectives, but the implementation methods used have been proven unfit for the current market demands. A complete reform is the only way out, which will take one and a half decades to be realized through a combination of tech innovation, administrative reorganization, legislative change, and judicial enhancement. Digital cadastres, automated processes, and specialized dispute resolutions are only some of the measures that have been successfully applied in similar jurisdictions. The lack of radical reforms will keep Nigeria's real estate sector operating below potential, thus impeding economic growth and housing delivery while making the currently inefficient system even more unbearable for the poor. The journey ahead demands not only a political commitment to land administration reform but also a recognition of such reform as the primary infrastructure for economic development, based on the understanding that efficient property rights systems are the foundations of functioning market economies.