Lagos State government and the residents of the state hold divergent views on when it is appropriate and convenient for tenants to pay their house rents, data from a recent report on the state’s housing market shows.
Whereas the state government has consistently advocated a monthly rental system which, in its thinking, is convenient and economically viable for renters in the state, the report compiled by BuyLetLive, an online property platform, reveals a preference by the residents to pay yearly rent.
Though the report titled ‘Residential Occupier Report’ did not offer reasons for the residents’ preference for yearly as against monthly rent, it shows that “about 62.6 percent of people who responded to the survey prefer annual rental payments to other payment methods.”
“This response coming from residents of the state, for me, is curious considering that many of these residents are low-income earners whose income can hardly support advance rent payment. Moreover, the state government has been advocating monthly rents in view of this,” Omorodian Urueme, an estate manager, said in a chat with BusinessDay.
Urueme reasoned that fear of the unknown arising from lack of job security in the country could be a reason those who responded to the survey said what they did, explaining that some people would like to pay their rent in advance and free themselves from the headache from their landlords.
Right from the days of Babatunde Fashola as governor of the state, Lagos has been canvassing monthly rent payments which is part of the state government’s response to the housing shortage in the state.
The state’s housing deficit is estimated at three million units which is not even the major worry of those who watch the housing situation in the state closely. The worry, instead, is that, of the state’s estimated 20 million population, 80 percent lives in rented accommodation, according to a Pison Housing Company Report on ‘The State of Lagos Real Estate Market.’
Fashola as governor of the state was against the yearly rental system because, according to him, it created inequality in housing supply and widened the affordability gap for low-income earners.
At a meeting of the National Council on Lands, Housing and Urban Development held in Lagos, Fashola noted that, though a monthly rental system might not translate to making all Nigerians homeowners, it would help reduce the number of citizens who lack decent shelters and live on the edge.
He added that advanced payment of rent had created a mismatch in wealth distribution by putting more money in the hands of the rich at the expense of low-income earners, suggesting that the system should be reversed by bringing monthly income close to monthly rent obligation.
“Our country would be a much better place when rent in advance for middle-class and working families’ residential homes becomes rent payable at the end of the month. Asking someone to bring three years advanced rent when he earns monthly in arrears is creating a huge mismatch,” he said.
Governor Babajide Sanwo-Olu agrees, stressing that the current rental model in which people remit yearly rent in advance to property owners has become inadequate to address contemporary realities in the housing sector, especially in cities where demand for properties is high and expensive.
The governor urged policymakers to consider the idea of monthly rentals and initiate a regulatory framework that would aid the transition to the new rental system, disclosing that his state was already working out monthly rent modalities to accommodate residents not keen on the state’s homeownership scheme.
“In Lagos, we operate a very robust Rent-to-Own programme of five percent down payment and six percent simple interest rate payable over 10 years.
We are working on another product, which is a purely rental system, where residents will pay monthly. This is to accommodate those who are not keen on home ownership and address current realities. In doing this, we believe that no one would be excluded from our intervention in this critical sector,” he said.
From the above, it does seem that the data from the BuyLetLive survey is in disagreement with popular opinions and plans by the state government to introduce and, possibly, enforce monthly rent payments in the state’s real estate sector.
Among other things, the survey shows that about 36.4 percent of respondents indicated an interest in moving between the next 6 months to 12 months, adding that there is a strong demand for affordable housing in the state.
In addition, the survey shows that about 34.5 percent of respondents prefer to pay between N1 million and N3 million as annual rent; 11.8 percent prefer rent prices between N100,000 and N500,000 while 26.4 percent prefer rent payments between N500,000 and N1 million per annum.
