By Olakunle Olafioye
Lagos tenants who are having difficulty in paying their yearly rents and their landlords who go through difficult times recovering their rents from recalcitrant occupants of their apartments now have little to worry about following the introduction of a new rent regime by the Lagos State government.
The scheme which is known as monthly tenancy scheme is yet another state government’s policy aimed at making light the burden of tenants residing in the state.
The state government had in 2012 during the administration of Babatunde Raji Fashola succeeded in baring landlords from demanding more than one year rent from intending tenants and not more than six months from old tenants following the passage of the tenancy law in the state.
Prior to the passage of the law, tenants and intending tenants had had painful experience in securing and retaining their accommodations as shylock landlords in the state were in the habit of requesting far more than a year rent especially from intending tenants while sitting tenants would often have to cough out at least a year rent to retain their accommodation for another year. However, with the introduction of the new law, both new and old tenants in the state heaved a sigh from oppressive landlords.
With a new scheme seeking to further relieve residents of the state from heavy financial responsibility of securing new accommodation and servicing their tenancy in place, tenants residing in the state now have less to worry about in the area of paying their rents.
Explaining the rationale behind the monthly tenancy scheme during a panel discussion at the Lagos Real Estate Marketplace Conference and Exhibition, Lagos State Commissioner for Finance, Rabiu Olowo, said the scheme was set up to support tenants and landlords regarding rent remittance after a survey conducted by the state revealed that a large percentage of residents of the state who are tenants find it difficult to meet up with the payment of their house rent on yearly basis.
According to the Commissioner, “following a survey, we have been able to create a model that will be launched and it is known as the Lagos monthly rental policy. The survey reveals that a large percentage of Lagos residents finds it difficult to pay their rent on yearly basis, hence the introduction of the initiative. You have nothing to fear. You will get a better deal by joining the scheme.”
Olowo also disclosed that a N5 billion portfolio had been put in place to kick off the scheme, adding that the state government would welcome more support from financial institutions to raise the bar of the portfolio for the masses to enjoy the policy.
While revealing that the scheme will start with those in the formal sector, the commissioner said that the decision to commence the scheme with interested subscribers from the sector was part of mechanism put in place to mitigate the risks associated with the initiative.
“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.’’
On the modality for the new scheme, the Special Adviser to the State Governor on Housing, Mrs. Toke Benson-Awoyinka, explained that tenants who were interested in the scheme must be able to meet certain requirements which include the capacity to make the payments on a monthly basis and disclosed that the scheme would begin with interested tenants in the formal sector with monthly income after which the informal sector will be brought on board.
The scheme, according to her, will still allow landlords to get their annual rent upfront directly from the scheme, while tenants remit their rent on monthly basis to the government.
By this arrangement, Benson-Awoyinka noted that tenants would be able to use the savings from the yearly payment to make other forms of investments or for payment of school fees.
As laudable as the scheme appears, stakeholders say the scheme will only provide temporary succour to residents having challenges in fulfilling their contractual obligations to their landlords while a few others express doubts over the motive behind the introduction of the scheme.
Some tenants and landlords who spoke to Sunday Sun said that the state government needs to convince Lagosians that the motive behind the scheme is purely altruistic.
A resident of the state, Mr Francis Eguaroje described the scheme as a scratch on the surface considering the magnitude of challenges confronting Lagosians in the area of housing.
He added that most people have devised means of meeting up with the payment of their rents, saying that the challenge of meeting up one’s yearly rent paled in significance compared to the enormous task of building one’s own house.
His words: “The monthly rental scheme of the Lagos State government is just an attempt to scratch the problem associated with housing on the surface. The majority of the people I have interacted with on the scheme favoured yearly payment above the new scheme because they claimed once they are able to pay their rents upfront they find it easy to concentrate on other major financial obligations. Besides, a good number of them said they have developed convenient ways of meeting up with their payments without having to borrow from anybody. In my own case, I am into a contribution which I collect three times in a year. In the last five years, I have dedicated my last collection to the payment of my rent and this has helped a great deal. Personally, I think the government should focus more on providing affordable houses in the state.”
There are, however, residents of the state who lauded the scheme. Mrs. Funmilola Akindiya is one of them.
Akindiya was of the opinion that the scheme would bring great relief to tenants in the state.
According to her, ”the programme will ease people’s headache as regards the payment of rents. The monthly tenancy scheme will certainly help the people to be able to spread payment of their rent over a period of 12 months rather than being compelled to pay the bulk rent at a go. It is even interesting to note that the policy also factors the welfare of landlords into the whole arrangement. The scheme is commendable because it will help to forestall the usual frictions arising between landlords and tenants over delayed payments.”
Some landlords who reacted to the issue expressed the fear that the scheme could end up being a bait by the government to get them captured on the government’s register possibly for some sorts of levies. Mr Kehinde Ajibola, who is a landlord, wants the state government to come out more transparently and convince Lagosians that there are no ulterior motives behind the floating of the scheme.
He said: “The government still needs to make more clarifications about the scheme as it will affect landlords in the state. They should be able to tell us at whose expense and at what cost does the government intend to pay the landlords on behalf of the tenants who are expected to refund the government on monthly basis? What percentage of the rent will the government or its agents retain as their commission and what percentage will get to house-owners? These questions are necessary because the government has said it will involve banks and insurance companies. It won’t come to me as a surprise if the tenants the government claims they intend to assist end up paying more in terms of commissions and sundry charges.”
Speaking in the same vein, another house owner in the state, Alhaji Subairu Adelakun lauded the policy.
He, however, expressed the fear that there could be more to the rationale behind the scheme.
His words: ”The policy is a good one if the government is truthful about its motive. The information in the public domain is that the scheme is designed to relieve tenants. On the part of the landlords, I hope the government will not turn round to say it will deduct taxes and other rates like the tenement rate from source before remitting the balance to landlords? That is my fear about the scheme”.
Some real estate experts believe the state government has no business paying rent, pointing out that most tenants prefer yearly payment of their rent to having to pay monthly.
They want the government to concentrate its effort in the area of addressing the enormous housing challenge in the state. One of the experts who hold such view is Mr Fuhad Saheed.
Mr Fuhad described the Lagos monthly tenancy scheme as a misplaced priority, expressing doubt about its implementation.
“For me, it is a misplaced priority on the part of the government. When coming up with a policy you should also consider its implementation. Before this particular policy there was the Lagos Tenancy Law during Raji Fashola’s administration. There was a similar question about its implementation. We all saw what happened at the end of the day. How does the government intend to regulate a sector that is not within its control? The problem with rent is not about the tenure rather it is the way rent continues to go up in the state. This should be the concern of the state government. The government should be worried about how to make housing available and affordable to the people. Everything goes back to the state of the economy. It is a very simple logic: if the demand is more than supply the price will definitely go up. So, the government should focus more on how to ensure that the problem of housing deficit is addressed,” he stated.
Fuhad, therefore, urged the government to improve the state of road infrastructure to ease the movement of people and reduce congestion in the central part of the state. “The government should improve on infrastructure so that anybody living around Badagry and working on the Island, for example, can move freely without having to die in traffic. A lot of people who live in central Lagos and are paying crazy rents are only doing so because they are afraid of the Lagos traffic. So, the way to help the masses, if the government is genuinely interested in their plights, is to come up with schemes and policies that will make more people in the state house-owners. If it is possible the government can subsidize building materials to encourage the people own their houses. The government can also partner with developers to build houses and subsidize it for the people,” he suggested.