Stories by Maduka Nweke
Lagos State, Nigeria’s commercial hub, has battled perennial housing shortage.
Added to the horror is escalating rent, a worrisome development that gave rise to shanties, which have become the rule rather than the exception.
To help solve the traumatising housing crisis and snatch the state from the horror of shantytowns, the state government is pursuing a flexible rent payment system; monthly, quarterly and annually.
The issue has raised tensions and expectations across the real estate landscape.
While the government positions the policy as a solution to housing affordability and financial stress, tenants welcome the relief from bulk payments and landlords weigh the implications for income stability and property management.
To actualise the new rent template, the state government has continually engaged all relevant stakeholders for the smooth takeoff of the system for the benefit of rent seekers.
The state government also urged professionals and trade associations within the real estate sector to respond thoughtfully to growing public concerns over frequent and alarming rent hikes, as well as the imposition of arbitrary charges that flout the provisions of Lagos state’s real estate regulations.
The Commissioner for Housing in Lagos State, Moruf Akinderu-Fatai and the Special Adviser to the Governor of Lagos State on Housing, Barakat Odunuga-Bakare, gave this commitment and charge during an exploratory meeting with executives of the Estate, Rent and Commission Agents Association of Nigeria (ERCAAN) in the state. The duo, while expressing the concern of the Lagos State Government on unwholesome practices among estate agents, with consequential upward swing in rent default, referred the practitioners to the provisions of the Lagos State Real Estate Transaction Law. “The existing law recognizes your role and specifies a percentage of chargeable fees of not more than 10 per cent on real estate transactions,” stated the Honourable Commissioner.
Akinderu-Fatai also encouraged estate agents and similar bodies to come out strongly against quacks that encourage property owners to increase rent arbitrarily and create fees unknown to the real estate transactions law of Lagos State.
He further advised ERCAAN members to help spread the promotion of monthly, quarterly, and yearly rent among its members. The Commissioner stated that the Lagos State Government is ready to partner with all stakeholders to promote the rent payment system to “halt the indiscriminate practices, make rent affordable, guarantee the interest of property owners, and ensure the continuity of regular rent payment by tenants.”
Speaking on the commitment, the President of the Estate, Rent and Commission Agents Association of Nigeria (ERCAAN), Mr. Godwin Aleke, in his remarks, stated that its members are committed to rent affordability and will assist the Lagos State Government to promote the monthly, quarterly, and yearly rent system. He pledged the association’s readiness to work in synergy with other professional bodies and stakeholders to sanitize the real estate practice in Lagos State going forward. The meeting was part of the ongoing strategic stakeholders’ engagement on rent and indiscriminate fees charged by agents in Lagos State. The meeting was also attended by the Permanent Secretary, Ministry of Housing, Abdulhafis Toriola, and Directors in the Ministry.
In the same vein, the State Government charged the leadership of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Real Estate Developers Association of Nigeria (REDAN), and Association of Estate Agents in Nigeria (AEAN) to support the drive to reduce rent burden on Lagosians and shun the prevalent illegal fees in real estate business. The professional bodies were also urged to stem the rate at which agents across the real estate value chain engage in competition of fees in real estate transactions. The introduction of illegal fees such as caution fee, inspection fee, finder’s fee, and others represents professionally harmful practices which affect tenants and put the integrity of the practitioners and property owners at stake.
The NIESV, REDAN, and AEAN were invited to a stakeholders’ meeting jointly chaired by the Commissioner for Housing, Moruf Akinderu-Fatai, and Barakat Odunuga-Bakare, the Special Adviser to the Governor of Lagos State on Housing. The session was a continuation of the strategic engagement to curb arbitrary rent charges, demand for high agent fees, and promote sanity in real estate business in Lagos State. The State Government, through the Commissioner and the Special Adviser, challenged the associations to protect the integrity of the real estate business with support for the joint effort of all stakeholders for full enforcement and compliance with the real estate transaction laws of Lagos State.
Akinderu-Fatai, in his remarks, stated that the aim of engaging all stakeholders is to strengthen the working relationship between the State Government and the professional bodies for the benefit of Lagosians. “Lagos State Government is concerned about the challenges faced by families in securing and retaining rental accommodation in the State with unpleasant rent increments and illegal estate transaction charges.”
The Commissioner reiterated the plan of the Lagos State Government to encourage and promote monthly and quarterly rent payment in the State in line with the tenancy law.
He said the State Government is aware of the increase in demand being greater than supply, but the government would no longer tolerate or allow the extortion of accommodation seekers through unwholesome practices. “I want to assure you that the State Government under the leadership of Mr. Babajide Sanwo-Olu is compassionate and will leave no stone unturned to ensure sanity in real estate business in the State,” Akinderu-Fatai said.
The Special Adviser to the Governor on Housing, Barrister Barakat Odunuga-Bakare, stated that “there are existing State laws such as the 2015 Tenancy Law and LASRERA Law which specify a percentage of chargeable fees of not more than 10 per cent on real estate transactions.” She also reminded stakeholders of the responsibilities of the Lagos State Real Estate Regulatory Authority (LASRERA), as established by law, to register, regulate, and monitor real estate business in Lagos State. Odunuga-Bakare also urged stakeholders to cooperate with the State Government to ease the conditions under which Lagosians secure accommodation.
Speaking at the meeting, Gbenga Ismail, President of NIESV Lagos Branch; Dr. Kolawole Tony of REDAN; and Dr. Adeniyi Tinubu of AEAN jointly expressed their readiness to forge a workable alliance with the State Government to solve high rent costs and excessive charges. The professional bodies will also join the State Government in promoting advocacy, public enlightenment, and sensitization programmes on best practices in real estate transactions. The meeting further resolved to convene another stakeholders’ forum to be attended by representatives of all practitioners in real estate business, including the Nigerian Bar Association, for a holistic buy-in of every sector for the benefit of Lagosians.
The meeting was also attended by Abdulhafis Toriola, the Permanent Secretary, Ministry of Housing; directors and management of the Ministry of Housing; Office of the Special Adviser on Housing; Lagos State Real Estate Regulatory Authority (LASRERA); and other representatives of NIESV, REDAN, and AEAN.
However, some members of the public who spoke to Daily Sun opined that it is easier to negotiate payment time and amount of rent with a monthly pay contract than a yearly one because it is a smaller amount, not a lump sum.
According to Mr. Chima Benjamin, a property marketer with one of the popular real estate firms in Lagos, paying rent monthly gives room for financial growth because you get the opportunity to grow your funds through investments or other means, as opposed to paying a large sum for rent upfront. He stated that tenants who pay monthly can use delays in rent payment as leverage against their landlords in cases where there is a breach of contract on the part of the landlord, hence making the landlord respond on time so they can get their payment. “For the landlords, monthly pay provides them with cash at hand per time, as opposed to waiting for a longer period to receive funds.”
“Although the system has some setbacks on monthly rent payment. It is cumbersome for both tenant and landlord. The tenant has to remember to include it in their budget and pay their rent every month, which may be stressful over time. While the landlord has to ask for his rent monthly, it may be distressing in case of late payments. It is easier for a landlord to serve a monthly tenant a quit notice, as opposed to a tenant who pays yearly, because the signed agreement is for a shorter duration, making the tenant homeless in a short period,” he said.