Empirical Investigation of Nigeria’s 2025 Tax Act on Residential Housing Development - A Perception-based Cross-sectional Assessment

Abstract

Nigeria’s housing sector is a critical component of sustainable urban development and economic growth, yet it continues to face challenges related to affordability, rising construction costs, and inadequate housing supply. Against this background, recent changes in Nigeria’s tax framework have raised important questions about their implications for residential housing development. This study examined construction professionals’ perceptions of the Nigeria Tax Act 2025 in relation to construction costs, private-sector investment, and housing supply. The Nigeria Tax Act, 2025 (Act No. 7 of 2025), was enacted in June 2025 and commenced on 1 January 2026. A quantitative cross-sectional survey design was adopted. Structured questionnaires were administered to builders, architects, quantity surveyors, civil engineers, and property developers in Lagos State. Out of 80 questionnaires distributed, 60 valid responses were retrieved and analyzed. Descriptive statistics, including frequency, percentage, and mean score index, were used to summarize respondents’ perceptions. Three separate single-predictor linear regressions were used to examine the statistical association between the Tax Act composite measure and each of the three outcome composites. Each construct was represented by a composite Likert score calculated as the arithmetic mean of its constituent questionnaire items. Respondents reported high awareness of the Act, with availability of information recording the highest mean (4.05). The perceived impact on construction cost was also high, particularly for material cost (4.32), while profitability recorded the highest investment-related mean score (4.30). The reported regression coefficients were positive and statistically significant for construction cost (β = 0.62, p = 0.001), private-sector investment (β = 0.55, p = 0.003), and housing supply (β = 0.59, p = 0.002). Because the survey was conducted at the commencement of the Act in January 2026 and captures professional perceptions rather than observed pre- and post-implementation transactional or market data, the regression findings indicate perceived statistical associations and cannot establish that the Act caused changes in costs, investment, or housing supply. The study therefore recommends clearer sector-specific guidance, predictable tax administration, accessible housing-related incentives, and longitudinal monitoring of actual housing-market outcomes.