• Sunday, April 21, 2024
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BusinessDay

Rent: the monster in most Nigerian households

Nigeria’s retail rents surge 36% in H2

Of the many challenges facing Nigerian households today as a result of worsening economic condition in Nigeria, house rent stands out as a monster ready to devour and destroy. High food prices, rising energy cost, 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 200 million population lives in rented accommodation, spending over 50 percent of their income on house rent.

Despite the central government’s protestation to the contrary, Nigeria has a housing demand-supply gap put various at 17 million, 20 million and 22 million units

Despite the central government’s protestation to the contrary, Nigeria has a housing demand-supply gap put various at 17 million, 20 million and 22 million units. Added to this, homeownership level in the country is estimated at 25 percent of the population.

It is estimated too that the country’s total housing stock is 13 million units and, painfully, only 5 percent of the number are in formal mortgage, meaning that 95 percent is what Andrew Nevin, chief economist at PwC, dead assets that are largely unbankable.

From the foregoing, it is understandable why the rental market in this Africa’s most populous nation is very active with the dream of homeownership, especially among low-income earners, receding from reality on 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 hyper-inflation, which rose to 19.64 percent in July, the worst in 17 years (since September 2005).

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 worried the more that even in the hinterlands of the country’s big cities, especially Lagos, renters in the last 12 to 24 months have seen over 40 percent increase in their last rent.

In Ijegun, a Lagos suburb, for instance, two-bedroom apartments are in high demand. It is such that between October 2021 and June this year, rent for two-bedroom flat in that area has moved from N450,000 per annum to N700,000 per annum.

Similarly, one-room self-contained in Isashi, a rural community in Alimosho area of Lagos, has moved from N120,000 to N250,000 per annum, representing over 100 percent increase in just 12 months.

Read also: Rent crisis in Nigeria indifferent to location, position

A two-bedroom apartment in Surulere now goes for between N550,000 and N700,000 per annum and that is coming from between N350,000 and N500,000 per annum 12 months ago.

On Lagos Island, one bedroom apartment goes for N2.5 million while two bedroom is about N3.5 million, up from N1.8 million and 2.3 million, respectively, in Lekki axis.

In low- and mid-income locations of Lagos such as Surulere, Yaba, Ilupeju, Gbagada, Egbeda, Ejigbo, Okota, the situation is worse. In these locations, landlords are brazen in increasing rents. In most of these locations, tenants have seen over 50 percent rise in rent.

Like Nigeria, however, both UK and the US are also experiencing 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’re being forced to jump through extreme barriers just to access them.

But unlike Nigeria, governments of these countries are looking out for ways to protect tenants from their landlords. It gladdens our heart that renters in the UK, particularly in England, are given protections from landlords. One of the measures for doing this is the ban on Section 21 notices that allow evictions without good reason.

This is what we urge 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, unfortunately, the enforcement of that law 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 it can to, not only protect tenants from landlords, but also provide the favourable environment to enable developers deliver housing at cheaper cost.