Why Capping Rental Returns at 5% Could Transform Nigeria’s Housing Market

The government can make housing more affordable by capping rental yields at around five percent per annum and focusing only on construction costs. Land values would be excluded when calculating allowable rent. Buyers remain free to purchase property at any price, but landlords could only charge enough rent to recover construction expenses. Claims of higher building costs would need clear proof, especially for high-rise or reclaimed-land projects. This approach would ease the cost of living crisis while preserving real estate as a viable investment. It prevents housing from holding the broader economy to ransom without deterring capital from the sector. Unlike movable goods such as automobiles or food, property cannot relocate. A reasonable cap on returns ensures that landlords do not outsmart everyone at the expense of ordinary Nigerians.

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