The new Lagos monthly rent scheme

The Lagos State Government will be implementing a monthly rent scheme in the state beginning from January 2022, which is no longer far from today. That means renters in the state will no longer be required by their landlords to pay their rents yearly or two, three years in advance.

This immediately calls to mind the State’s dormant Tenancy Law, which was enacted in 2012, through the House of Assembly, by Babatunde Fashola the former Governor. The Tenancy Law, which exempted properties in Apapa, Ikeja GRA, Ikoyi, Victoria Island, hospitals, emergency homes, among others, clearly spelt out rights and privileges of tenants, the tenant’s duty towards his landlord, and also rights of the landlord.

The law which is clearly skewed in favour of the tenants, says “it shall be unlawful for a landlord or his agent to demand or receive from a sitting tenant to offer or pay rent in excess of three months in respect of any premises.

“Any person who receives or pays rent in excess of what is prescribed shall be guilty of an offence and shall be liable to a fine of N100,000.00 or to three months imprisonment or any other non-custodial disposition.” New tenants were also required not to pay more than one-year rent.

The incoming scheme should, as much as possible, take care of intimidation, harassment, and eviction if the tenants are to challenge the landlords in a tenancy dispute

Though the law says a landlord can take his tenant who owes more than six months rents to court to recover the house from him without issuing him a quit notice, it provides that “a tenant cannot be asked to pay commission, agency or legal fees to the landlord’s agent or lawyer; the landlord who hires these professionals is the one to pay their fees and commission.”

It is against this backdrop that the new monthly rent scheme, which the state government says it has set aside N5 billion for, is generating controversies, concerns, and even fears among landlords and potential investors in the State’s housing market.

In Lagos, housing is a big and sensitive issue. Besides being one of the most expensive housing markets in the world, Lagos has a population that is just too large for its very low housing stock. The annual housing supply in the state is said to be far too small for its estimated three million housing deficit burden.

The State’s rental market is so active that a report on ‘The Lagos Real Estate Market’ reveals that about 65 percent of the state’s over 20 million population live in rented accommodation, spending over 50 percent of their income on paying house rent.

This may well explain why the state government intervenes frequently to regulate activities in the rental market most of which are unwholesome and worrying, such as a recent report that an agent callously collected rent from 100 prospective tenants for just 11 apartments.

Read also: Here are other reasons govt is involved in housing provision—Sanwo-Olu

Against this background, we are concerned about how the present intervention on monthly rent will work. We agree with the government’s argument that people who collect monthly salary should not be made to pay rent yearly. However, we share in the fear among landlords and investors that this may not be sustainable in our kind of environment where there is no job security. Again, we are concerned that the government is not offering any alternative to renters.

Many developers build their houses with bank credit in which case they would like to recoup their investments in good time to avoid piling pressure and interest on the loan. We are of the view that if that is allowed to happen, it will discourage investment in rental housing, thereby reducing supply more.

It is heart-warming hearing Moruf Akinderu-Fatai, the State’s Commissioner for Housing, who has assured that the State Government is doing something to address the concerns of both landlords and investors in the new rent policy of the government.

The commissioner says “there is a system we are working on to make sure that the tenants and landlords are protected,” explaining that a legislation would be put in place to ensure that default rate is reduced and, where it occurs, will be dealt with expeditiously.

That, we believe, is a good step in the right direction, but there’s so much more that the state government should do to make the monthly rent work and thus not go the way of Fashola’s Tenancy Law.

Adequate monitoring mechanisms should be put in place. The scheme, like the Tenancy Law, should not be used to blindfold the people most of whom are tenants. Already, one tenant has described the new policy as a prayer come true. We can only hope that this tenant and many others like him, will not be disappointed.

The incoming scheme should, as much as possible, take care of intimidation, harassment, and eviction if the tenants are to challenge the landlords in a tenancy dispute. The policy should not be a political gimmick in which case government should be seen as simply playing to the gallery.

Many have reasoned that government cannot give what it does not have and we cannot agree more. Government cannot rightly legislate on property it does not own. This is why we advise that, for the monthly rent to succeed, the government has to go the extra mile.

By this, we mean that government should dedicate some of its own housing estates, which it prefers to sell, to the new monthly rent scheme. By so doing, it shall be implementing a social and welfare scheme, which aligns with the social security agenda of the All Progressives Congress (APC). It will also be setting an example that this indeed is the way to go.

Alternatively, though it is not yet clear to us how the N5 billion will be deployed, that money, in our opinion, could be used to pay off landlords as annual rent for their houses and those houses will then be rented out to deserving tenants on monthly basis.

This has a double-edged effect. It has empowered the landlord to build more houses, and at the same time, helped the less privileged and ‘homeless’ residents of the state to have access to shelter. A lot will be gained by so doing.

All told however, there is much to commend in this new scheme of the LASG. Our fervent hope is that it will not be derailed at the level of implementation.