Calls for monthly rent intensify as the economy bites

Increasingly, calls for monthly rent payments are becoming a daily event as landlords continue to tighten the noose around tenants’ necks and the bad economy piles pressure on Nigerians and their income.

From the Federal Government, the Lagos State government, and now the Senate of the Federal Republic, the message is the same that landlords should give a human face to the rent they demand from tenants.

Experts say the call has become urgent and necessary now because it is not only that the money in these tenants’ pockets has reduced in quantity, but also the value has been eroded, making it difficult for them to feed their families and pay bills, including rent.

Apart from being one of the most expensive housing markets globally, Nigeria is also a very active rental market where a study by NOI Polls shows that 51 percent of the country’s population lives in rented accommodation.

The study shows further that 40 percent of this number pays between N20,000 and N100,000 yearly as rent, adding that only 31 percent of the citizens surveyed say they live in their personal houses they may have built, bought, or inherited.

This dire rent situation in the rental market, according to the experts, is the reason tenants are always at the mercy of their landlords who, sometimes for inexplicable reasons, jerk up their rents to levels where many tenants cannot afford.

In Ijesha, a Lagos suburb, for instance, landlords increase their rents almost per month. Moyinoluwa, a lady who works in Victoria Island, rented a one-room self-contained apartment in this neighbourhood in November 2020. Her first rent was N70,000. Today, she pays N200,000 for the same apartment.

It is the same story for Abel, a dispatch rider who works in Ikeja but lives in a two-bedroom flat with his family in Ejigbo, where his first rent was N90,000. Five years later, he is paying N250,000 for a room and parlour self-contained created out of his former two-bedroom flat.

Johnson Chukwuma, a civil engineer, tells BusinessDay that this is why the Federal Government is canvassing legislation at various states legislature to compel landlords to jettison one or two years advance rent, contending that many of the people who pay these rents are workers that do not earn their salaries in advance.

“Yearly rental system has created inequality in housing supply and widened the affordability gap for low-income earners,” noted Babatunde Fashola, minister for works and housing, who spoke at the 10th annual meeting of the National Council on Lands, Housing and Urban Development in Lagos, late 2021.

Though Fashola does not believe that Nigeria has a housing deficit, he believes that no country, not even in the advanced economies, has succeeded in providing housing for all its citizens, hence there are always renters whose interest must be accommodated in any housing policy of the government.

Fashola has always been a strong advocate of monthly rent and that explained his decision as governor of Lagos State to enact monthly rent in the ‘Lagos Rental Law of 2012,’ which prescribed various levels of penalties for landlords and tenants that demanded or paid more than one month rent.

On its part, the Lagos State government is perfecting plans to implement monthly rent which is a modified version of what Fashola wanted to do with the Lagos Rental Law of 2012.

“In Lagos, we operate a very robust Rent-to-Own programme of 5 percent down payment and 6 percent simple interest rate payable over a period of 10 years,” Babajide Sanwo-Olu, the state governor, said at the meeting.

According to the governor, the state is working on another product, which is a purely rental system, where residents would pay monthly. This, he explained, was to accommodate those who are not keen on home ownership, adding that the state government believes that no one would be excluded from its intervention in this critical sector.

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“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 noted.

Recently, the Senate also lent its voice to the call for monthly rent. The upper legislative chamber has moved to regulate rent charges by landlords in Abuja, the Federal Capital Territory.

A bill to that effect, which has already passed the first reading, is seeking to restrict landlords in FCT to collecting three months’ rent from residents seeking new apartments within the city.

BusinessDay gathers that the bill titled, ‘Advanced Rent (Residential Apartments, Office Spaces Regulation Bill, 2022’), is being sponsored by Smart Adeyemi (APC senator from Kogi-West).

Adeyemi explained that there was an urgent need to enact laws that could directly affect the lives of the people in such a manner that Nigerians would be able to have three square meals and also a roof over their heads.

”Some of the problems confronting our nation today is the high level of corruption and if you take a look at Abuja in particular, you see so many uncompleted houses, some of them you don’t even know the owners.

“Those, who own these properties did not secure loans for them, there is free money that people have gotten, illegal monies, and put up structures. And these structures are put out in such a manner that an average Nigerian cannot afford them,” he said.

Housing sector stakeholders, especially developers, are however saying that neither the government nor the legislators have the right to legislate on house prices or rent, explaining that housing or real estate generally is a private business.

“Government cannot give what it does not have; the best it can do is to develop its own houses, put them out on the market for sale or rent and allow market forces to determine the price,” notes Ugochukwu Chime, former president of Real Estate Developers Association of Nigeria (REDAN).

Chime advises that the government should rather legislate on import duties, knowing that housing depended, up to 70 percent, on imported materials. “They should also legislate on land charges and make land acquisition convenient and cheap; they should also legislate on the price of cement and other inputs,” he says.