Several court cases and litigation battle have continued to surge in astronomical proportion in Lagos state as a result of rent defaults by tenants in the state who mostly can no longer meet up with the prompt payment of their yearly rent obligations
This is due to financial constraints and the precarious state of the Nigerian economy that is causing job loss, exorbitant food price, inflation, market volatility, inflationary pressures and incremental growth in standards of living and hike in commodity price in market.
Eviction notice from landlords has been on a recurring rise with tenants being served notice to quit the residential apartments due to nonpayment of rent by tenants. This has seen many landlords and tenants facing themselves in a protracted legal battle that often times last beyond two years.
While these cases are seeking redress in the courts, tenants stay in these houses without paying rents, mostly, they end up using the money they are supposed to pay up the backlogs of their rents to look for another apartments, thereby, leaving the landlords in a state of financial loss and oblivion.
Factors Responsible
Addressing the factors responsible for rent defaults in Lagos State, Mr. Felix Douglas, a residence of Igando area of Lagos, provides relevant information on rent defaults in the real estate sector and property management systems.
He argued that unemployment and loss of jobs are one of the causative factors of rent defaults, especially, in the white collar jobs and other similar sectors of the economy. He said the rate of unemployment in the country is quite alarming and this has impacted on the rental sector of the economy.
He hinted that the unilateral increase of rent by property owners has resulted to a surge in rent defaults by tenants who do not properly agree with the outrageous increase of yearly rent by homeowners while he stated that rent increase should be agreed upon by both parties while signing the lease agreement.
He cited other factors such as; improper tenancy agreement, irresponsibility of tenants, loss of jobs, business disruptions, current state of inflation, market volatility and unprecedented shock in food price.
Reacting to the issue, a lead consultant, Mr. Toyin Afilaka said, pushing for monthly rent payment in Nigeria’s megacity would definitely remove the hurdles to accessing good properties in choice areas of the state. But it has its own downside and this is because it is most likely to occasion a rat race whereby the tenants are consistently chasing up the monthly rent renewal thereby putting pressure on household budgets and personal growth plans on a wider scale.
As a result of this, it is necessary to revamp the property rental space by reforming the property rental Industry in Nigeria by proffering affordable and flexible rental plans, as well as eliminating the discriminations on tribe, gender, religion which renters face regularly.
Lagos State Position
The Lagos State government has stated the modalities for the commencement of a monthly rent payment scheme, which is expected to commence very soon in the state.
The new initiative, which is a social investment scheme initiated by the state government, will greatly ease the burden of yearly rent payment on Lagos residents.
This disclosure was made by the special adviser to the Lagos state governor on Housing, Mrs. Toke Benson-Awoyinka, during a discussion on Rental Policies at the just-concluded Second Lagos Real Estate Market Place Conference and Exhibitions which took place in Victoria Island, Lagos.
Benson-Awoyinka explained that tenants, who are interested in the scheme, must be able to meet some requirements which include the capacity to make the payments on a monthly basis, emphasizing that, the scheme will begin with those in the formal sector with monthly income after which the informal sector will be brought on board.
She stated that although the landlords will get their annual payment of house rent upfront, tenants will no longer have the burden of yearly payment of a huge amount of money.
Benson-Awoyinka said that tenants can use the savings from the yearly payment to make other forms of investments or for payment of school fees.
Speaking, the Lagos state commissioner for Finance, Dr. Rabiu Olowo, said the initiative was part of the resilience policy of the current administration, noting that the State government did a rental survey and found out that 88% of tenants would rather pay their rent monthly.
Olowo said: “we had to pursue this by working with different relevant stakeholders and we now have a model that will work and enable Lagosians to pay their rent monthly. Landlords have nothing to lose because they will continue to receive their rent yearly and their default risk is zero.’’
He said the scheme will commence with the formal sector to enable them to minimise risk, saying, “we as a Ministry are already looking into the informal sector to bring them into this programme but we need to first begin with the formal sector to enable us to minimise the risk level.
“It is easier for us to verify how much those in the formal sector earn and for us to know what we will get and how we will get it. When we succeed in this, we will roll out to the informal sector. There is an insurance pack that helps us manage all of the risks. We have a data plan that will help us fish out defaulters.’’
The managing director/CEO, Nobleserve Capital Management, Mr. Korede Adeyemi, described the initiative as a market platform that speaks to social impact.
He said: “with what we are doing, every landlord will get their rent annually and tenants at the same will have the capacity to pay their rent on a monthly basis. This platform will be demand-driven because of the convenience of payment. People will be able to log into the platform to search for houses.’’
According to him, the initiative is a robust system that takes care of everyone and is designed to sanitise the pricing of Lagos houses in terms of tenancy rate, noting that similar property in the same area within Lagos State can either go for the same price or lower.
Managing partner of Charles Anthony LLP, Mr. Charles Adeosun-Phillips, said it is a social welfare programme and it is a win-win for the landlords, government, financial institutions and all stakeholders concerned.
Stakeholders’ recommendations
Speaking on this, public policy expert, Mr. Ugo Aliogo said, mortgage banks should build social housing scheme for citizens that will be made more affordable and cheap for rent.
He averred that in developed societies of the world, government work along with the mortgage banks and mortgage sector to provide good housing Investment for citizens through social housing and low-cost housing projects to boost standards of living for the citizens in the country.
He posited that government should partner with private sector operators and key players in the private sector to invest in the real estate sector adding that this would provide adequate shelter, reduce housing risk and vulnerabilities of people who can’t afford decent homes and shelter.
This, he said, will provide rent insurance for property owners against rent default or damages, which foster a relationship beneficial to homeowners and tenants.
© 2021 || Leadership Media Group || All Rights Reserved.
© 2021 || Leadership Media Group || All Rights Reserved.
Menu
