Nigeria’s housing crisis remains one of the most urgent and persistent socio-economic challenges facing the country today. With an estimated deficit of over 28 million housing units, millions of Nigerians continue to live in overcrowded, insecure, and inadequate conditions. For many, the dream of owning a home remains elusive, while even renting a decent space in urban centres becomes increasingly unaffordable.
The Nigerian government recently introduced two major reforms aimed at addressing this crisis. The first is the Nigeria Tax Act 2025, signed into law on June 26, 2025, which will take effect on January 1, 2026. The second is the launch of the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund, a bold initiative to expand access to affordable housing finance. These developments signify a positive policy shift, but they should be viewed as part of a broader conversation about housing governance and the structural reforms still needed.
The new Tax Act 2025, effective from January 1, 2026, will allow individuals earning less than ₦25 million annually to deduct 20 per cent of their annual rent from taxable income, capped at ₦500,000. This policy is a progressive step that recognises the financial burden of rent on low- and middle-income earners. By permitting tenants to deduct part of their rent, the government attempts to align tax policy with the realities faced by ordinary Nigerians. However, the cap limits its effectiveness. In urban centres like Lagos and Abuja, where annual rents often exceed ₦2 million, the ₦500,000 ceiling offers limited relief. Additionally, the policy excludes homeowners, failing to support those transitioning from renting to ownership or those who have already invested in property. A more inclusive tax framework would benefit both renters and homeowners, especially in high-cost urban areas.
Complementing this tax reform is the MOFI Real Estate Investment Fund, a ₦1 trillion initiative designed to democratise access to housing finance. By reducing equity contributions from 20 per cent to 10 per cent and lowering mortgage interest rates from 12 per cent to 9.75 per cent, the fund aims to make homeownership more accessible. With a 25-year repayment period and partnerships with six financial institutions, the fund has already disbursed over ₦8 billion and approved 173 mortgage applications across Lagos, Abuja, Nasarawa, and Enugu. This is a notable achievement, illustrating that with the right incentives, private capital can be mobilised to support public housing goals.
However, despite its potential, the fund’s reach remains limited to the formal sector. Over 90 percent of Nigerians work in the informal economy, and without inclusive financing models tailored to irregular income earners, the housing crisis will persist for most. Micro-mortgage schemes, rent-to-own programmes, and flexible repayment options are essential to prevent the exclusion of informal workers. The current model, while innovative, risks reinforcing existing inequalities by favouring those with formal employment and access to traditional banking services.
Beyond finance and taxation, Nigeria’s housing crisis fundamentally stems from governance issues. The institutions responsible for delivering housing – the Federal Housing Authority (FHA) and the Federal Mortgage Bank of Nigeria (FMBN) – operate under outdated legal frameworks that hinder their effectiveness. Reforming these institutions is vital to ensure they can respond effectively to contemporary housing challenges with agility and innovation. This includes updating mandates, improving transparency, and equipping them to collaborate with both public and private sector actors to deliver affordable housing at scale.
Land governance is another significant obstacle. The high costs and complexities associated with land titling and registration discourage investment and perpetuate informal settlements. Streamlining these processes, digitising land records, and decentralising access to land information are crucial steps to unlocking land for development and reducing corruption. Without secure land tenure, even the best-designed housing finance initiatives will struggle to succeed.
Urban planning must also be integrated with housing policy. Affordable housing should not be relegated to the outskirts. It must be connected to jobs, transportation, and essential services. Vertical development, mixed-use zoning, and infrastructure investment are key to creating liveable, inclusive cities that support economic growth and social cohesion. The current sprawling, disconnected housing estate model is unsustainable and worsens social and economic exclusion.
Nigeria is at a crossroads. These recent reforms are significant milestones, but they must mark the start of a nationwide housing transformation. We need a rights-based approach to housing, one that views shelter not as a commodity but as a fundamental aspect of human dignity and social stability. Solving the housing crisis requires bold leadership, inclusive policies, and continuous investment. It also necessitates a shift in mindset: from seeing housing as a product to be delivered to understanding it as a process that must be governed with fairness, transparency, and accountability.
The time to act is now. If Nigeria is to meet the housing needs of its growing population and build cities that are resilient, inclusive, and just, housing governance must be central to national development planning. The reforms of 2025 are a good beginning. However, to truly make housing accessible for all Nigerians, we must go further.
Okara is a lawyer and property law lecturer at a UK-based university, with research interests in housing, homelessness, and equitable housing solutions across the Global South
