By OLUSEGUN OLAOYE 

The real estate and housing sector plays a vital role in the economic growth of any nation. Access to adequate financing is one of the key determinants of sustainable real estate development. In Nigeria and many developing countries, one of the most significant means of financing real estate acquisition is through mortgage loans provided by financial institutions. However, the process of obtaining these mortgage loans is often fraught with numerous challenges.

Estate Surveyors and Valuers, being professionals trained in property valuation, appraisal, and management, occupy a strategic position in the mortgage process. They serve as intermediaries between property owners, investors, and lending institutions by assessing the true value of properties offered as collateral. Yet, from their professional perspective, several problems persist in the procurement of mortgage loans problems that not only hinder clients from accessing funds but also affect the stability of the housing market.

A major problem encountered by estate surveyors in mortgage transactions is the inconsistency between professional valuations and the valuations accepted by financial institutions. Often, banks rely on their in-house Valuers or adopt rigid valuation templates that may not reflect prevailing market realities.

For instance, an estate surveyor may value a residential property at N50 million based on market comparable, while a bank’s internal valuation may place it at N35 million due to conservative lending policies. Such discrepancies can delay loan approval or significantly reduce the loan-to-value ratio offered to the borrower.

This inconsistency undermines professional standards and discourages investors who expect fairness and accuracy. From the surveyor’s point of view, a standardized and mutually accepted valuation framework between professionals and banks is essential to ensure transparency and confidence in the mortgage process.

Another major challenge arises from the difficulty of using real estate properties as collateral for mortgage loans. Many properties, especially in Nigeria’s urban and semi-urban areas, suffer from issues such as unclear ownership, lack of proper titles, and multiple encumbrances.

Estate Surveyors often face significant hurdles verifying ownership claims, checking for existing mortgages, or ensuring that the property has a valid Certificate of Occupancy (C of O). Properties acquired through family inheritance or informal land markets are especially prone to disputes, making them unacceptable to financial institutions.

This situation not only limits the number of properties eligible for mortgage financing but also increases the workload of surveyors who must conduct extensive due diligence before certifying a property as acceptable collateral.

Financial institutions generally perceive real estate investment as a high-risk venture. Factors such as fluctuating property values, lengthy foreclosure procedures, and low property liquidity contribute to this perception.

From the estate surveyor’s perspective, this conservative approach often translates into low loan to value ratios (LTV) sometimes as low as 50–60 per cent. As a result, clients are unable to secure adequate funding relative to the true value of their properties.

Moreover, banks tend to favour salaried borrowers or corporate organizations with stable income streams over individual real estate investors. This limits access to mortgage finance and slows down property development activities, particularly among middle-income earners and small-scale investors.

The legal framework governing land and property ownership in Nigeria presents additional challenges. Problems such as land tenure disputes, lack of approved building plans, and incomplete property documentation make mortgage processing cumbersome.

Estate Surveyors often have to verify a range of documents including survey plans, building approvals, title deeds, and tax clearance certificates to ensure compliance. This verification process can be time-consuming and costly.

Additionally, the Land Use Act of 1978 vests ownership of land in the state, meaning individuals only hold a right of occupancy. Obtaining Governor’s consent or rectifying land documents can take months, causing delays in mortgage approval and disbursement.

Many financial institutions do not fully appreciate the standards and methodologies applied by Estate Surveyors and Valuers. Instead, they rely on internal valuation departments or templates that may not align with the Nigerian Institution of Estate Surveyors and Valuers (NIESV) or International Valuation Standards (IVS) guidelines.

This disregard for professional input undermines the credibility of valuations and creates confusion when discrepancies arise. Estate Surveyors argue that recognition and adoption of professional valuation standards by banks would promote uniformity, accuracy, and fairness in the mortgage lending process.

The procurement of mortgage loans involves extensive documentation. Estate Surveyors must prepare comprehensive valuation reports, market analyses, site inspection reports, and sometimes feasibility studies. While these are essential for risk assessment, the process is often viewed as cumbersome by clients.

In many cases, surveyors are required to respond to multiple queries or provide clarifications to different departments within the same institution. This bureaucratic process slows down loan approval and discourages potential borrowers from pursuing mortgage financing.

One of the realities faced by estate surveyors is the limited liquidity of real estate markets in many parts of Nigeria. Properties in certain areas especially emerging or low-demand locations are difficult to sell quickly if repossession becomes necessary.

This illiquidity discourages banks from accepting such properties as collateral. Additionally, some properties experience rapid depreciation due to poor maintenance, infrastructural decay, or economic downturns. These factors affect the recoverable value of mortgaged properties, further complicating loan procurement.

Most financial institutions in Nigeria offer only conventional residential mortgage products. Estate surveyors have observed that other property types such as commercial, mixed-use, or industrial developments often struggle to qualify for mortgage loans.

This lack of product diversity limits investment opportunities for developers and investors. For example, a developer seeking funding for a small shopping complex or a student hostel may find it difficult to obtain financing because such projects fall outside the scope of traditional mortgage schemes.

Estate Surveyors advocate for more flexible and diversified mortgage products that cater to different property types and market segments.

From a practical standpoint, delays in loan approvals are among the most common problems observed by Valuers. Clients often face weeks or even months of waiting before funds are disbursed.

These delays can affect property transactions, disrupt construction timelines, and cause missed investment opportunities. Estate Surveyors who work closely with developers note that timing is critical delays can lead to cost overruns, loss of buyer confidence, or even project abandonment.

Streamlining the mortgage approval process through digital platforms, automation, and better communication between stakeholders could help address this persistent challenge.

The Nigerian economy is highly sensitive to inflation, currency fluctuations, and changing interest rates. These factors directly impact property values and mortgage affordability.

Estate Surveyors often find themselves in the difficult position of justifying valuation figures in a rapidly changing market. For example, inflation may increase construction costs and, consequently, property prices yet banks may remain conservative in their lending estimates.

This mismatch between market reality and lending standards creates tension between valuers and financial institutions. It also complicates negotiations with clients who may not understand why loan offers fall short of expected amounts.

In conclusion the procurement of mortgage loans from financial institutions remains a complex process influenced by economic, legal, institutional, and professional factors. From the perspective of Estate Surveyors and Valuers, these challenges include inconsistent valuations, poor property documentation, legal bottlenecks, and high risk perception by lenders, and inadequate mortgage products.

Addressing these problems requires a collaborative approach among key stakeholders — government agencies, financial institutions, and professional bodies. Efforts should be made to:

Strengthen legal frameworks governing land and property ownership;

Promote the adoption of professional valuation standards across the banking industry;

Introduce flexible and inclusive mortgage products; and

Improve transparency and efficiency in documentation and loan approval processes.

By recognizing the central role of Estate Surveyors and Valuers in the mortgage system, Nigeria’s financial institutions can foster greater trust, efficiency, and growth in the real estate sector. Ultimately, an effective mortgage system not only supports property ownership but also stimulates broader economic development through job creation, infrastructure expansion, and wealth generation.

*Olaoye an Estate Surveyor and Valuer wrote from Lagos State.