Housing sector experts have faulted the advocacy by Babatunde Fashola, Nigeria’s minister of works and housing for a monthly rent payment as against the two or three-year advance payment demanded by landlords in the country.
Citing obstacles to the minister’s proposal, the experts argued that monthly rent was not sustainable in view of dependable institutional framework, job security and business downturn that interrupt income flow. Besides the obstacles, the experts also said monthly rents could discourage investment in real estate.
Okupe Adewunmi, managing director, Ace Hi-Teck Construction Company Limited, noted that a landlord who borrowed money from the bank to build a house for rent might find it difficult to pay back the loan through monthly payment.
“When tenants pay monthly, there will be further reduction in housing provision because the landlord has no incentive or part capital to start a new one. That is even if he has not borrowed to build the house,” he said.
Chudi Ubosi, principal partner at Ubosi Eleh and Co, agreed, adding that lack of institutions and delay in getting judgment in court would make it difficult to collect monthly rent.
“Paying rent monthly is a good idea. After all, no one earns a salary a year or two in advance. But the key thing is that we don’t have the institutions to back it. Even when tenants pay you annually, it’s tough getting their rents subsequently.
“When they default, your option is the law court, but no matter how good a case you have, the minimum time frame to get the first judgment is three to five years. How then do you think you can collect monthly?” he queried.
Read also: Fashola, Sanwo-Olu back monthly rent to end inequity in wealth distribution
Uncomfortable with the proposal, the immediate past president of Real Estate Developers’ Association of Nigeria (REDAN), Ugochukwu Chime, had many questions for the minister and the Federal Government. He asked why the government that wants legislation on monthly rent has failed to control the prices of building materials.
“Why not build more houses and allow the laws of supply and demand to apply? Are you controlling the cost of other commodities in the market? Why not reduce the transaction cost and fees charged on the value chain of housing development?” he asked.
Continuing, he asked, “why not remove or reduce the cost of planning approval and title perfection and transfer costs? Why not reduce or remove the multiple taxation and the means of enforcing them?
On his part, executive director of Housing Development Advocacy Network (HDAN), Festus Adebayo, described the proposal as out-dated, explaining that the era of paying rents on monthly basis was over in the urban areas.
He disclosed that a recent survey conducted by HDAN confirmed that majority of Nigerians in both formal and informal sectors now prefer to pay annually as many of them are not sure their businesses could sustain monthly payments.
Fashola, who spoke at the 10th Council of Lands, Housing and Urban Development in Lagos, had noted that as a country, Nigeria might not be able to make all its people homeowners, but could reduce the number of those who lacked shelter.
“I am sure that our country will be a much better place when one, two or three years rent in advance, for middle class and working family residential homes become monthly rent, payable at the end of the month. Why we may not get there immediately, this is an area of immense exclusion that we can remedy by legislative action at state level,” the minister noted.
He added that this was a matter in which the Federal Government had no legislative competence as “it is a matter for the states, and I urge you not to turn your backs.”
Fashola called on all state legislators to see this as an important area of representation of their people to make life easier, adding, “So must governors and commissioners through executive bills.”
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