Rent: The China bull in Nigeria’s households

Of the many challenges facing Nigerian households today as a result of worsening economic conditions, house rent stands out as a China bull and, in some cases, a monster ready to destroy and devour. High food prices, rising energy costs, and spiking transport fares also raise concerns.

In matters of housing, Nigeria is a pathetic case. The country’s housing and homeownership story, in our view, is one that makes the head swirl and the stomach rumble. It belies the country’s claim to greatness and Africa’s largest economy.

A Pison Housing Company report on ‘The State Real Estate Market in Nigeria’ estimates that 80 percent of the country’s over 200 million population lives in rented accommodation, spending over 50 percent of their income on paying rent.

Despite protestation against these numbers in some quarters, Nigeria has a housing demand-supply gap put variously at 17 million, 20 million, 22 million, and 28 million units. Added to this, homeownership level is estimated at 25 percent of the population.

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It is estimated too that the country’s total housing stock is 42 million units and, painfully, only 5 percent of the number are in formal mortgages, meaning that 95 percent are what Andrew Nevin, former chief economist at PwC, terms dead assets that are largely unbankable.

From the foregoing, it is understandable why the rental market in Africa’s most populous nation is very active with the dream of homeownership, especially among low-income earners, receding from reality on a daily basis.

Like most Nigerians, we are worried and pained by this state of things in the rental market that has been made worse by the country’s hyperinflation, which, until last January, had peaked at 34.80 percent, leading to unaffordable prices across the board.

“From the foregoing, it is understandable why the rental market in Africa’s most populous nation is very active with the dream of homeownership, especially among low-income earners, receding from reality on a daily basis.”

Though Nigeria is not new to rent increases, the situation in the rental market today has become a crisis, having increased to a point where it respects neither location nor position. Everywhere and everyone is affected by the crazy rise in house rent.

We are more worried that even in the hinterlands of the country’s big cities, especially Lagos, renters in the last 12 to 24 months have seen over a 50 percent increase in their last rent, with house owners pointing at costs of building materials, especially cement being sold at arbitrary cost.

In Ojo, a Lagos suburb, for instance, two-bedroom apartments are in high demand. It is such that between October 2023 and January this year, rent for a two-bedroom flat in that area has moved from N500,000 per annum to between N850,000 and N1 million per annum.

Similarly, one-room self-contained in Isashi, a rural community in the Alimosho area of Lagos, has moved from N250,000 to N350,000 and N450,000 per annum, representing almost a 100 percent increase in just 12 months.

A two-bedroom apartment in Surulere now goes for between N1.8 million and N2.5 million per annum, and that is coming from between N1.2 million and N1.5 million per annum not long ago.

On Lagos Island, a one-bedroom apartment goes for N2.5 million, while a two-bedroom goes for between N2.5 million and N3 million, depending on location and age of the house.

In low- and mid-income locations of Lagos, such as Surulere, Yaba, Ilupeju, Gbagada, Egbeda, Ejigbo, and Okota, the situation is worse. In these locations, landlords are brazen in increasing rents. In most of these locations, tenants have seen over an 80 percent rise.

Like Nigeria, however, both the UK and the US are also experiencing a crisis in the rental market. In the US, the tight inventory is leading to bidding wars, typically more of a fixture of the home-buying market. Rising costs and a shortage of available units are giving landlords the leverage to hike rents at all price points. This happens in Nigeria too.

In the UK, rent is becoming increasingly unaffordable and scarce, and even where renters find houses to rent, they are being forced to jump through extreme barriers just to access them. But unlike Nigeria, the governments of these countries are looking out for ways to protect tenants from their landlords.

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It gladdens our heart that renters in the UK, particularly in England, are given protection from landlords. One of the measures for doing this is the ban on Section 21 notices that do not allow evictions without good reason.

This is what we canvass for governments at federal and state levels in Nigeria to do. Though there was a move by the Lagos State government to provide protection for private tenants through the state’s Tenancy Law, the enforcement of that law, unfortunately, was lame-duck because the government could not provide alternatives like the Council Flats in London.

In view of the present state of the economy and the hardship households are going through, we call on the governments at all levels to do all they can to not only protect tenants from landlords but also provide the favourable environment to enable developers to deliver housing at a cheaper cost. Above all, the government should do something about the prices of building materials, especially the price of cement, which many experts believe is arbitrary.