Lifeline for renters as rent now, pay later solution hits market

Prospective tenants in Nigeria can now heave a sigh of relief as a rental solution that eases renting and makes access to homes a lot easier has entered the property market. The solution, known as Rent Now Pay Later is a rent-financing initiative, offering low-interest, collateral-free loans up to N3 million.

The solution is being promoted by a property technology (proptech) company known as Spleet which, according to its officials, was created to enable renters to find a home and pay monthly, quarterly or annually. The firm has raised $2.6 million led by MaC VC to scale up its property management products.

Renting an apartment does not come easy in Nigeria. Besides the stress of looking for a suitable house, there is also the financial burden of exorbitant rent required to be paid one or two years upfront. Rent is so expensive that a low-mid income apartment can cost between $1000 and $5000 per annum.

Rents are generally high in the country, especially in the cities, because landlords and developers also face challenges arising from inflation and rising construction costs, leading to increases in the price of accommodation in major cities across the country.

The situation is such that most renters in the country spend as much as 40 percent of their income on house rent alone. A former commissioner for housing in Lagos, Akinderu Moruf-Fatai, confirmed this when he spoke at a real estate forum recently.

“Rent Now, Pay Later was created to give current and prospective Spleet members access to credit facilities in order to make total upfront payments for their homes on a flexible repayment schedule. Spleet members can access up to N3 million with as long as 12 months in the repayment schedule,” Akintola Adesanmi, Spleet’s Co-founder and CEO, explained in Lagos.

“At Spleet, we believe that people should be able to rent a suitable home without nearly going bankrupt, and all our efforts tie into making that a reality. Rent Now Pay Later is open to all current and prospective Spleet members,” he added.

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To become part of the Spleet membership and benefit from the credit facilities it offers, Adesanmi explained further that an existing or prospective tenant is required to create a Spleet account and, thereafter, visit Spleet Marketplace to explore their carefully curated apartment options.

“When a member finds an apartment he likes, he should click on ‘Pay with RNPL’ under the payment options; fill in the necessary details, including his bank statement and employment history, to help the team ascertain his eligibility. This takes between 24 hours and 72 hours,” he said.

When the applicant’s loan request is approved, he said, the apartment will be paid for and he will be ready to move into his Spleet home.

The CEO disclosed that RNPL is for young to middle-aged salary earners looking for a flexible and convenient way to pay for an apartment, adding that 4 percent per month interest is charged on the loan given or on the approved amount on a reducing balance basis.

“We recover the loan we give out through a well-defined process. Loan applicants consent to monthly direct debits from their linked bank account. There is also equity contribution to make which is 16.67 percent of the rent the applicant is required to contribute to meet the eligibility criteria,” he said.

Continuing, he said, “We give a two-month grace period (interest will still accrue daily for every day repayment is missed), but in the event that the applicant can still not repay the loan after the grace period is over, Spleet will begin an eviction process.”

The rental market in Nigeria is very active and has seen a good number of products that ease renting and homeownership process. One of those products is Rent-to-Own which allows a tenant to move into a house already paid for by a vendor and continues to pay rent on the house up to a point where it is enough for him to own the house.

Alpha Mead Development Company (AMDC), a subsidiary of Alpha Mead Group, has another product in the market called ‘Rent4Less’ which is a product designed as a response to the economic challenges in the country.

The company recognised that over 80 percent of Nigeria’s growing population lives in rented accommodation and so, “we are happy that we have not just solved a major problem with Rent4Less, but also proved that we can accelerate growth and replicate this success across Africa,” Damola Akindolire, former MD of the company, said in an interview.