In a bid to bridge the housing deficit in Lagos, the state government plans to enforce a policy that will propel landlords and real estate developers to collect monthly rent payment from tenants.
Babajide Sanwo-Olu, the governor of Nigeria’s commercial city announced a recent round table discuss organized by the Lagos State Real Estate Regulatory Authority (LASERA), an agency committed to recommissioning the real estate sector.
“We are almost at that edge where we are going to identify real big players and we will sit with them and conclude on how well we can leapfrog housing stock,” Sanwo-Olu said, acknowledging that indeed there is housing deficit in the state he explained that the available “stocks are not be fully utilised.”
While addressing the industry stakeholders, the governor “what needs to happen” to achieve a monthly rent payment system? “What kind of data do we need to have for people to be able to pay rent monthly or at most three months so that we can reduce those incidents of people looking for support to pay their rent?”
Read also; Sanwo-Olu tasks real estate practitioners on int’l best practice
To rent an apartment in Nigeria, one would have to make a down payment of not less than one year, in other cases; some tenants are expected to pay up to 3 years upfront rent.
This is however not the case in some African countries like Botswana, South Africa, Benin Republic, Togo and Rewanda, where rent payment frequency is paid on monthly basis without also an upfront or down payment, survey by BusinessDay show.
The frequencies at which rent is paid and how much is required as an upfront payment are the two criteria in determining rent payment system in a country.
Using both indicators, Nigerian cities come at the bottom of the pyramid, accompanied by; Cameroun, Ghana and Sierra Leone, as the data from the survey by Estate Intel revealed that they are all in the same level.
But, the Lagos Tenancy Law 2011, for example, provides that it is unlawful for a landlord or his agent to demand or receive from a new or prospective tenant, rent over 1 year in respect of any premises; it is also unlawful for the new or prospective tenant to offer or pay rent above 1 year.
“Tenants earn salary monthly and it is ok that they are paying rent monthly. If the policy is enforced, tenants will no longer be stressed financially. They wouldn’t have to take unnecessary loans to for house rent,” Tunde Balogun, CEO of Rent Small-Small said.
Haven operated the monthly rent payment system for several years, Balogun said when people are used to a particular system is always hard to change it. ”We don’t want to experiment or try new things, except when it becomes a law and even when that happens some people still find a way around it.”
“From offering monthly rental service in the past few years, we have seen landlords who have tried the system testify that they didn’t know they would have enjoyed monthly payment of rent as much as they have done,” he explained.
Explaining the reasons for Nigeria’s rigid rent system, Adeniyi Akinlusi, CEO, Trustbond Mortgage said, landlords in some cities in Nigeria collect upfront payment of 2 years because of the high-interest rate on the loans they borrowed from banks and as such are constantly in search for ways to recoup and pay up as soon as possible.
“The second reason maybe because they are not sure that the tenants will be consistent in their monthly payment.” He added saying the “fear of high default rate due to the lack of credit collection system,” is a challenge.
James Olanrewaju, a landlord that owns a duplex at Yaba area in Lagos said: “The monthly rent payment by my tenants will not allow me to get a quick return on my property.”
For the landlords to benefit from the policy when implemented, Ibraheem Babalola, Co-founder/CEO of Muster, a Protech company, explained that “if they can plug into credit check platform that can help them verify the tenants,” they will be able to “make more money because there is a premium when people are paying monthly rent.”
Babalola also disclosed to BusinessDay that Muster is already partnering the federal government to roll out monthly payment across the nation.
