Tax reform: HDAN seeks tax relief for social housing developers

The Housing Development Advocacy Network (HDAN) has joined the push for the realisation of federal government’s tax reforms even as the controversy over its desirability or otherwise rages.

The group which, as its name implies, is advocating for affordable and social housing for low-income and vulnerable Nigerians, is calling on President Bola Tinubu and the National Assembly to include tax relief for developers of these house types as well as building materials producers in the reform.

Festus Adebayo, the group’s executive director, explained that the tax relief is to lessen the burden of construction cost, noting that excessive taxation could hinder the delivery of affordable housing, thereby eroding the hope of millions of Nigerians in dire need housing.

HDAN, specifically, is advocating for the inclusion of low-income housing tax credits in the new reforms, which would provide a vital incentive to construct or rehabilitate affordable rental housing for low-income households.

Adebayo urged the federal government to issue these tax credits through a competitive process, ensuring that only those genuinely committed to addressing the nation’s housing crisis benefit from the relief.

Nigeria’s housing deficit remains a critical issue, compounded by a fast-paced urbanisation and a growing population estimated at 224.6 million and projected to reach 262.6 million by 2030.

With 51.4 percent of Nigerians classified as being multi-dimensionally poor and 58.8 percent of the urban population living in slums, the demand for affordable housing with basic infrastructure is urgent. However, challenges such as high building material costs, exchange rate volatility, and high cost of urban land continue to impede progress in the sector.

The housing sector is also on the throes of economic pressures that affect the delivery just as increase in interest rates make access to affordable mortgages increasingly difficult.

However, Adebayo hopes that tax reforms, when it sails through, would alleviate, rather than exacerbate, these challenges by creating a more supportive fiscal environment for developers of affordable housing.

He noted that the Nigeria Tax Bill has sparked widespread debate, pointing out that some provisions of the bill, such as the proposed increase in value-added tax (VAT) from 7.5 percent to 10 percent by 2025 and eventual hikes to 15 percent by 2030, have drawn criticisms for being a potential burden on ordinary Nigerians.

The bill also introduces a 27.5-percent company tax, a 4-percent development levy on companies, and a 5 percent excise tax on telecommunications services, among other measures.

Adebayo is worried that these tax policies, while aimed at generating revenue, could deter investment in critical sectors like housing unless provisions are made to support social housing initiatives.

He urged lawmakers to consider the significant disparities in housing needs across the country and provide targeted solutions to bridge the gap.

In addition to tax relief, HDAN is also advocating for the passage of 11 pending housing and mortgage-related bills in the National Assembly, calling for a review of outdated laws, such as the Land Use Act and Mortgage Bank Act, to create a more enabling environment for private sector participation in housing delivery.

As a research-driven, non-profit, volunteer, and non-governmental organization dedicated to promoting affordable housing across Africa, HDAN has over 5,000 professional members, spanning various disciplines within the housing and construction industry.