Dealing with rent hikes in Lagos

Rent hikes have become a significant burden, particularly for Lagos’s low- and middle-income earners. The primary culprits? A poor housing supply and minimal investment in social housing from the government! As the pressure mounts, dissecting the problem and proposing actionable solutions to ease the strain on Lagosians is crucial.

The reality is that a corresponding increase has yet to match the rapid urbanisation of Lagos in terms of housing supply. According to notable experts, Lagos requires about 700,000 new housing units annually to meet this growing demand. However, less than 20percent of this need is met yearly by the government and the private sector, resulting in a severe housing deficit. This scarcity has driven up rent prices, pushing them beyond the reach of many residents.

Furthermore, the government’s investment in social housing has been dismal. Sadly, the current administration has no interest in bridging the vast deficit or dealing with the rent crisis in Lagos. A recent report revealed that the Sanwo-Olu Administration had built only 492 units in 2019, 388 units in 2020, and 2,994 units in 2021, comprising a mixture of low, medium and high-income schemes. In comparison, Alhaji Lateef Jakande built and delivered over 14,000 units.

Even worse, the houses built by the Lagos state government mostly end up with government cronies who acquire these buildings and leave them unoccupied. The result is a market where most housing caters to the upper-middle class and wealthy, leaving average Lagosians grappling with unsustainable rent hikes.

Worryingly, and given current inflation, rent, after food, consumes a significant portion of income, with many spending upwards of 55-65percent of their earnings to keep a roof over their heads. This is significantly higher than the global standard, where rent should ideally consume no more than 30percent of income.

Compared with other African cities, one will come to the revelation of the depth of the crisis. In cities like Nairobi or Accra, rent takes up about 25-35percent of the average income, still burdensome but less severe than in Lagos. For low-income earners in Lagos, the situation is even more dire. The current minimum wage in Nigeria is ₦70,000 ($44) per month, yet average rent for a one-bedroom apartment in a decent area can range from ₦600,000 to ₦1,000,000 annually, depending on the location. This makes it nearly impossible for low-income workers to afford rent without sacrificing other basic needs.

Families are particularly hard hit. Many are forced to live in cramped and substandard conditions as they cannot afford the space needed for a growing household. This lack of affordable family housing has led to overcrowded neighbourhoods, with multiple families sharing single units, creating environments ripe for social issues, crime and health hazards.

Addressing the housing crisis in Lagos requires a multifaceted approach. I will propose a few solutions, some of which I championed during last year’s governorship campaign.

One innovative approach to tackling the housing crisis in Lagos is the implementation of cross-subsidisation. This involves raising taxes on luxury developments and using the gains to finance affordable housing projects. In a city like Lagos, where luxury estates often coexist alongside slums, this strategy ensures that high-end real estate contributes directly to solving the housing deficit for lower-income residents. The government can create a steady pipeline of low-cost homes by leveraging a progressive luxury property tax, which will be channelled into funding affordable housing.

This model not only diversifies housing options but also fosters more inclusive communities, where people from different economic backgrounds can coexist in well-planned, sustainable environments.

Notably, the government must actively participate in the housing sector by investing in affordable social housing projects for low- and middle-income earners. This will help to significantly bridge the gap between supply and demand and reduce reliance on the private sector, which currently caters to mostly high-income earners.

Although quite controversial, the government must implement rent control policies to stabilize the market and protect tenants from exploitative rent increases. These measures should be carefully designed to ensure they do not stifle investment in new housing but promote fairness and affordability. It is worth mentioning that any play to implement rent control schemes without simultaneously bridging the supply gap will worsen the housing crisis.

Offering incentives and collaborating with the private sector to develop affordable housing can produce a win-win situation. Incentives such as tax breaks, land allocation and bank guarantees to create access to long-term funding can encourage private developers to build more affordable units, ensuring a broader range of housing options.

Finally, upgrading slums by investing in basic infrastructure and social services can be transformational. Many Lagosians live in informal settlements where housing is substandard. Instead of demolishing these areas, as has been the dominant state policy, the government should invest in upgrading them and improving living conditions.

Rent hikes in Lagos have become a major crisis and should be treated with the urgency it requires. My vision is to drastically increase the percentage of home ownership in Lagos and pursue policies that save young people from drowning over huge rent costs.

According to Moore’s expert report, only 10% of Nigerians who desire to own a home can afford it through purchase or personal construction. Meanwhile, 92percent of Singapore can afford it by either means, 78percent in the United Kingdom, 50percent in Korea, and 60percent in China. Lagos state can achieve 30percent home ownership in a decade, and I’m confident in my plan to deliver on it.

.Rhodes-Vivour Lagos was the gubernatorial candidate of the Labour Party (LP) IN 2023.