By Yankuba Jallow & Mustapha Jallow
A recent study on the real estate sector by the Gambia Competition and Consumer Protection Commission has revealed that some of the real estate companies are engaged in swindling their customers.
According to the Association of Real Estate Companies (AREC), The Gambia has over hundred registered real estate companies and the number is growing annually.
Land is becoming more expensive as most consumers spend their life savings to buy properties and end up losing their monies without any form of redress or compensation given to the aggrieved consumer.
The sector remains unregulated with a good number of the actors surviving by swindling their consumers. The actors are free to operate in the way they wish since they are not regulated. Many people have decried that the companies fail in their duty to allocate plots of land to them even after completing their payments.
“For years, consumers in the sector have been vulnerable to deceptive and unfair practices,” Baboucar Njie, Director of Consumer Protection at GCCPC said.
Njie said consumers are mostly prone to exploitation due to their illiteracy and in most cases ignorance of their consumer rights and responsibilities.
“This is made worst by the inherent lack of regulation from the Government,” Njie said.
Njie said consumers in the real estate sector are prone to a higher degree of risk than they are in most sectors of the economy.
“Even though it is booming, and some of the real estate companies are performing well, the sector is immensely unregulated, thus generally lacks the required code of ethics,” Njie said.
Director Njie said all players in the real estate sector are normally referred to as real estate companies, when in fact, most of them often play very different roles based on their scope of operations. He said there is an urgent need for the Physical Planning Department to update its 1989 housing policy which does not cater tor real estate companies. Perhaps, this can help avoid some of the shortcomings of the Department, he noted.
The lack of regulation, according to a study by GCCPC, is alarming that such an important sector is not regulated leaving consumers vulnerable at the mercy of stakeholders in the land transaction process.
The Physical Planning Department has raised several issues that affect their work. The department held that most of the real estate companies do not acquire the necessary documentation from the Department as required since most of them sell or buy property or land that is not properly processed by relying on their lawyers, who develop deed of assignments and this, is seen as an official transfer by consumers when it is not.
This often brings problems for consumers once they want to start building on their properties as they cannot provide authentic or adequate documentations of the property to the Department for building and occupancy permits. The deed of assignment prepared by the lawyers alone cannot determine title of the land or property. However, most consumers tend to rely on it due to ignorance.
The physical planning department highlighted that some real estate agents sell all available lands without reserving any portion for social amenities like schools, cemeteries, play grounds or good road network.
There is a heavy public outcry over consumer rights violations and the increasing number of victims of swindling by real estate dealers has indicted some companies for allegedly employing several dubious means to deceive consumers such as false and misleading advertisements.
Foroyaa’s investigation revealed that most of the players in the real estate sector are engaged in serious swindling of their customers and this has been corroborated by the GCCPC study on the real estate sector.
Over a hundred victims have reached out to Foroyaa after our first and second publications on the alleged swindling activities of some of the real estate companies in The Gambia.
Many victims of the alleged swindling of the real sector have lodged their complaints with the Gambia Police Force to investigate the alleged dubious activities by players in the sector, but have expressed frustration over the way police have been handling their complaints. They complained that some of the real estate dealers have no lands, but would take monthly deposits from people (customers) and wouldn’t allocate any plots of land to them.
There are so many cases involving customers and real estate companies which are stalled at the courts owing to slow litigation of the Gambian court system where a civil case usually takes years before it is decided. The complainants are with the view that the police should carryout investigation into the sector in a view to sanitise it by apprehending the dubious dealers – especially those that are without lands, but would still collect money from people.
The victim list (with receipts of payments) of Gam Housing and Solid Properties real estate companies among others amount to over eleven million dalasis being payments made to the two companies. But they are still struggling to get their lands. There are several other real estate companies allegedly engaged in such dubious activities.
All of the victims provided Foroyaa with their contract and all other relevant documents they signed with the real estate companies as well as provided a proof of payment.
The real estate sector is under the purview of the Ministry of Lands and Local Government. However, the sector is not regulated by Government which has led consumers vulnerable to various types of unfair, misleading and deceptive market practices by stakeholders in the land transaction process.
The real estate sector is a key sector in the socio-economic development of The Gambia and the sector has been rapidly growing in the past decade especially after the change of regime in January 2017.
Several victims have filed their complaint with the Police about their alleged victimisation and have expressed frustration in the judicial system of the country. The police are yet to come up with their findings.
Some victim groups have written petitions to the State House, Ministry of Justice, Ministry of Lands and some other government agencies seeking government’s intervention.
The victims recommended for the Government to close down some of the companies until such time the sector is regulated to avoid more people becoming victims.
The real estate companies have been running their own mortgage schemes as they collect down payments and monthly deposits from consumers. However, after completing the payments the customers would have to struggle all by themselves to get their plots. It takes some years before they are allocated their lands while many still do not have their lands.
Abubakar Bensouda, the CEO of Blue Ocean Properties and the head of AREC, said they are concerned about the reputational damage suffered by the whole sector due to the conduct of some of the unscrupulous companies in the sector. He said AREC has come up with an initiative to engage the Government and relevant stakeholders with a view to regulating the sector.
AREC Steps In While Gov’t Delays
Bensouda said in their bid to bring sanity to the sector, they are developing internal guidelines to regulate the activities of the real estate companies until the Government is ready to regulate the sector. However, he said these guidelines are yet to be endorsed by the Ministry of Lands and Local Government.
Bensouda said not all real estate companies are registered with AREC. He said there should be a framework for the protection of consumers which includes making deposits.
“There should be licenses and there should be criteria,” he said, adding lawyers found wanting should lose their license to practice.
Bensouda said AREC was founded in 2014 and it has a membership of about 40 registered real estate companies (both big and small companies) in the sector.
“We are lobbying for the Government to create some sort of regulations to address the problems in the real estate sector,” he said.
He said the Government has asked them to create AREC but do not give them any powers, saying companies can decide to register with them or not. He detailed that AREC lack enforcement powers in their attempt to bring sanity in the sector.
“People can refuse to register with AREC and still operate. There is not much AREC can do,” he said.
He opined that the real estate operators should be categorized into three; developers, agents and agencies and put some criteria in a view to regulate them. On the requirement for companies to make deposits, CEO Bensouda said it is to protect the consumers in case of bankruptcy.
“Some of the problems some real estate companies do is they do not fulfill their promises to provide water, electricity and road. A real estate company is required to develop lands by providing water, electricity and roads, but most of the companies are not doing that,” Bensouda said.
On the problems they are faced with in the sector, CEO Bensouda said most of the lands in the country are not registered as the majority of the lands are held under customary land ownership.
He said the Alkalolu do not have proper records of their land transactions to help trace land history. There is also problem regarding lack of proper land mapping. He said leasing of properties take years before it is approved, adding the process of leasing of properties should not take too long.
He said AREC has no legal backing to perform oversight over real estate companies and this is why some of the companies chose not to register with them. He said setting standards in the real estate sector is very important.
“There has to be a code of conduct and there have to be ethics – there have to be standards you must follow. In the event that you don’t follow those standards and you don’t meet that criteria, we take your license and you cannot operate as a real estate company again in The Gambia,” he said.
Given the population growth and matching surge in household size, there is a natural demand for housing in the Gambia. Over the last few years, land has become scarce in the Greater Banjul Area. As such, the demand for land in the West Coast Region (WCR) has immensely increased and has led to real estate companies focusing their operations mainly there- in places like Tujereng, Jambanjelly, Brikama, Jambur, Farato, Mariama Kunda, Salaji, Jabang, Tanji, Sanyang and Brufut.
Despite the proliferation of the number of real estate companies and the number of consumers buying properties from them, the sector still remains free-for-all. This has inevitably led to unsuspecting and vulnerable consumers being manipulated and ripped off by some of the market players and stakeholders in the transaction process.
The lack of regulations means there are no regulatory requirements to start-up. This makes it possible for literally anyone to penetrate the market without much obligations or responsibilities. And this, in the long-run, has led to negligent and fraudulent behavior by some of the players as they penetrate the market to make quick profits at all cost.
This has led to low consumer confidence and a bad image for the real estate companies, which is unfair to some of them that have built an impressive track record and are striving based on high quality of the products and services, professionalism and ethical behavior.
Alasan Jobe, assistant registrar of companies at the Ministry of Justice, said the rate at which real estate companies are registering is alarming. He explained that there is no extra requirement for the registration of real estate companies and this is why they cannot refuse anyone from registering their companies.
“It is cheap to register real estate companies,” Jobe said.
Jobe said people blame them for registering real estate companies when it is what the law provides. He encouraged consumers to do a search of companies before investing their monies in them and later regret. He said the search fee is two hundred dalasi. He said the law empowers them to close companies provided they do not update their annual returns. To him, the Companies Act should be amended to suit the current realities.
Momodou Alieu Njie of TAF said the consumers should have the right to access water, road and electricity and it is the responsibilities of the companies to construct them. He said all real estate companies should make deposits.
Omar Sarr of Home Finance Company said there is something wrong for a country as small as The Gambia to have a hundred real estate companies.
“There is an urgent need to regulate the sector,” he said.
Magistrate Dawda Fatty, the Chairperson of the Consumer Protection Tribunal, said the tribunal has no jurisdiction to hear cases involving a consumer and real estate company. He said the Act that established the Tribunal does not give it power to hear land cases.
The Ministry of Lands informed Foroyaa in an exclusive interview with Musa Badjie, a deputy permanent secretary responsible for the real estate sector, that they have engaged the Ministry of Justice for a legislation to be put in place to regulate the activities of the real estate companies and they have received a draft bill from the Ministry of Justice. The Ministry of Lands and Local Government is reviewing the bill internally, which shall also be subjected to further scrutiny through a validation workshop. The Bill is expected to be tabled before lawmakers in the first quarter of this year. However, concerns have been raised by AREC about the lack of consultation with them in the process of the formulation of the bill.
The Ministry of Lands informed the Consumer Protection Commission that the Department of Physical Planning and real estate companies and any transactions with regard to land are under the purview of the Ministry. The Ministry participates in the process of consumers’ buying land (through the Department of Physical Planning), it also has the responsibility of issuing development permit or lease for properties.
According to the Ministry, the leasing process can take at least six months because of the need to ensure due process is followed. However, it is currently working on developing a software that will help accelerate the process of consumers acquiring their leases. The automated system will show the status of application and all information required to complete the process.
According to the Department of Physical Planning, it has a housing unit which monitors the activities of the real estate companies. It also highlighted that its housing policy of 1989 is archaic as it does not cater for real estate companies and as a result, the Department is working on updating the policy to make it all inclusive. The mandate of the Department is to authorize official transfer of land and property, issue building and occupancy permits to buyers; develop layout planning; ensure private residences are not built within agricultural areas, industrial areas, tourism development areas (TDA) etc.; and plan for infrastructural development and social amenities in a given location.
The department lamented the issue of lack of mobility as they find it difficult to exercise their duties due to mobility constraints. Currently, it only has two vehicles to execute its mandate and as a result there is delay in its daily operations and limits its scope.
LAND TRANSACTION PROCESS
For properties held under customary tenure, the transaction starts with the real estate company and the consumer agrees to sign a contract for the buying of a land or property. Once the contract is signed, the real estate company starts the transaction process with the local and central governments to obtain the transfer documents (local and official transfer).
The documentation process of any land begins with the Alkalo, who has the responsibility of inspecting and verifying the rightful ownership of the land or property, before issuing a transfer of ownership to the buyer. In some cases, the transfer is made in the name of the real estate company and it later transfers the demarcated plots to each of its consumers. In other cases, the transfer can be made directly in the name of the consumers. The transfer fee is up to five thousand dalasi which is paid to the Alkalo for preparing the local transfer.
The Alkalo transfer is, however, not the official transfer as the official transfer can only be issued by the Area Councils. The sole responsibility of the Alkalo in the documentation process is to confirm ownership of the land and prepare a local transfer.
Once the local transfer is done, an official transfer can be obtained from the Area Council. Before the official transfer is prepared, the Department of Physical Planning has to conduct a survey of the land sketching and verifying that the land to be transferred is not Government reserved land and it is meant for residential purposes. The consumer then pays the fees to the bank, which defer depending on the Council and the receipt of payment is then taken to the cashier at the area council.
It is the responsibility of the cashiers to enter the details of the property and the details of the transfer in a computerized system. The Capital Gains Tax (5-10% of the sale price) is then paid at the income tax office by the real estate company or the individual selling the land or property.
GCCPC said: “Our investigation revealed that, in some cases, consumers are misled to incur extra cost by paying for the Capital Gains Tax. Consumers are only meant to pay for the stamp duty which is only payable for leasehold or freehold land.”
According to the Brikama Area Council, the Capital Gains Tax depends on the value of the land. When the payment of the tax is done, the official transfer is prepared, stamped and signed by the CEO of the Council. The official transfer is also signed by the Alkalo and the Chief to complete the process.
CONSUMER PROTECTION ISSUES IN THE SECTOR
The Consumer Protection Commission in their study into the real estate sector found out that some of the Alkalolu do not take due diligence to obtain proof of ownership of properties or if the land to be sold is a reserved land for social amenities or other purposes different from residential.
According to the Study, some of the Alkalolu have the reputation of wanting to make money by reselling land that they know belongs to others. This is known as double allocation of land, which the Alkalolu illegally selling one plot of land to different people.
Interestingly, the GCCPC research on the sector revealed that some of the real estate companies buy these properties through Alkalolu knowing that they already belong to someone else. Problems then arise when it is time to provide the documentations for the land or show consumers the land they paid for. In some instances, real estate companies buy land from the owners through payment plans, they sign the payment plan agreement with the seller and the seller urges the Alkalolu to make the transfer to the real estate company even without the company completing their payments.
The companies then divide the land into plots and start selling them to consumers. Problems start occurring when the company starts defaulting on its payments to the land owner and some of the land owners resort to engaging their Alkalolu so that they could sell the already transferred land to another real estate company.
This results to scenarios where one land is sold to two or more companies and all of the companies start selling the plots to their consumers. This is one of the reasons why some of the consumers do finish making the installment payments and the companies cannot provide them with documentations or show them their properties, as the companies are aware that they are not the rightful owners of the properties they have been selling.
It was discovered by the Consumer Protection Commission that there were also situations when real estate companies buy a property, sometimes sold by an individual without the knowledge or permission from their family members, clans or “kabilos”, compelling multiple claims of the same land. Consumers are also victims in this case as they find it difficult to have access to properties they have paid for.
The research also found out that another reason given for such difficulties for consumers to have access to their documents or properties is because of very poor record keeping by the Alkalolu. As a result of poor and informal record keeping, sometimes land records are lost or misplaced, causing mix-ups when identifying the rightful owner of each plot.
One of the Alkalolu interviewed lamented that they do not have proper record keeping system, as such, a piece of land can be sold to one person by different Alkalolu (during different tenures) of the same village. According to him, there is no official handing over of Alkaloship from one Alkalo to another. Thus, he said the Alkalolu rarely have access to the records of previous Alkalolu and because of this, they cannot conduct thorough verification through their records.
The issue of people falsifying Alkalo’s stamp and signature and using it to transfer lands was highlighted by one of the Alkalolu as another reason why consumers have difficulties accessing properties they have fully paid for.
Some of the real estate companies and Alkalolu acknowledged that issues of corruption and deceptive market practices from both parties are the reasons why consumers are vulnerable during land transactions with real estate companies.
From the real estate companies’ point of view, they are also concerned about the high level of bureaucracy involved in obtaining documents for land. This was highlighted as one of the reasons why consumers are not able to obtain their documents within a reasonable time.
It is important to note that Alkalo or local transfers are the beginning of the process to get official transfers or lease for properties, thus, if there are fraudulent practices at that stage, consumers are at the risk of never getting their necessary documents to develop their properties or even lose the properties to the original owners of the land.
False and misleading advertisements
The study by GCCPC corroborate the victims’ allegation that some of the real estate companies have been engaged in false and misleading advertisements as they misrepresent their locations, amenities near the location and size of lands that are sold to consumers.
Mr. Njie said this constitute a violation of section 12 0f the Consumer Protection Act 2014.
The victims complained that most times when they visit the properties, they find out that they have been misinterpreted and are not what was advertised to them.
Some of the consumers shared concerns that some real estate companies do not reveal the stipulated terms and conditions clearly until after they signed the contract or when disputes occur. There are also concerns from consumers that they are sometimes not notified when actions are taken against them by the companies. These conducts or practices of the real estate companies constitute flagrant violation or breach of section 7(1) of the Consumer Protection Act, which requires the businesses to bring all the terms and conditions to the attention of consumers before or upon the execution of the contract.
High penalties for opting out during the course of payment
In cases where consumers wish to opt out of the contracts with real estate companies, there are penalties in the form of percentage of their payment or deposit being deducted by the companies and consumers refunded the remaining balance. According to the companies and consumers interviewed, the percentage deduction ranges from as low as 10% to as high as 50%. Most of the consumers have lamented that the percentage deducted by some real estate companies is high and unjustified, and this could be a violation of Section 9 of the Consumer Protection Act 2014.
In accordance with section 9 of the Consumer Protection Act 2014, real estate companies are urged to expunge or remove all sales terms agreement that are deemed unfair to consumers in terms of conditions, prices, charges and costs etc. It is important to note that even though there is no sector specific regulation for the sector, provisions of the Consumer Protection Act 2014 as cited above including section (g) cited herein can be invoked against companies that contravene the Act.
Collection of deposits and installments by real estate companies
Some of the stakeholders have raised concerns about the legality of the real estate companies collecting deposits, given the fact that they are not regulated. Concerns have been raised that in the case of bankruptcy or owners suddenly stopping operations, consumers have no mechanism of recovering their deposits and installments.
Basically, consumer interests are not safeguarded in such situations. There are already cases of real estate companies stopping operations and up to date some of their consumers are yet to receive any form of refund or compensation from them, which is a violation of Section 8(4) of the Consumer Protection Act 2014.
The Commission found out that some of the practices found to be occurring in the sector are a cause for alarm. The lack of regulations are the main causes of the perennial problems faced by consumers in the real estate sector as consumers are left at the mercy of market players and other stakeholders involved in the transaction process.
GCCPC said some of the real estate companies and Alkalolu are found to be engaged in fraudulent and deceptive practices which have yielded little or no consequences. The Consumer Commission found out that issues like the falsification of documents and illegal selling of properties has caused lots of problems for consumers.
The Consumer Protection Commission recommended the lessening of bureaucracy at the level of the Department of Physical Planning should also be prioritized by the Ministry of Lands and Local Government, as the preparation of documentation and the demarcation functions by Department of Physical Planning is viewed to take too long. Stakeholders have raised concerns that it takes up to two years to lease their properties.
The Commission welcomed the fact that the Ministry of Lands and Local Government has received a draft bill from the Ministry of Justice for regulation of the sector. “However, it needs to ensure that adequate consultations are done with all stakeholders involved in the transaction process, as this is the best way to ensure that most of the issues are adequately tackled by the draft bill”, the report added.
The Commission discovered that the sector is among the fastest growing sectors in the country which could have contributed significantly to the country’s GDP in terms of licensing and regulatory fees etc. But it said this is not realized due to lack of regulation.
The Commission opined that unless the right policies and regulations are introduced in the sector and effectively enforced, the stakeholders involved in the transactions will not be held accountable for their fraudulent and misleading market practices. It said there needs to be holistic review of the transaction processes to ensure that it is quicker, transparent and more efficient.
The Consumer Protection Commission tasked the Government to assign an independent regulator that will be charged with regulating the activities of the real estate companies and all stakeholders involved in the transaction process.
The Commission also tasked the Ministry of Lands and Local Government to prioritize the creation of a database for land ownership. This it believed will boost consumer confidence, saying such a database will immediately ascertain ownership of every square meter of The Gambia. The database should also be made accessible to the general public in order to solve the major consumer issues of multiple ownerships and create a fair and safe environment for businesses as well as consumers.
GCCPC recommended that a review of the legislation that deals with property ownership and registration to cater for most issues currently affecting the sector, as highlighted in the study, to minimize consumer disputes in the Gambia. GCCPC also said strengthening of the collaboration between the Central and Local Government is of immense importance in streamlining land allocation and transfer system.