Several court cases and contentious battles have continued to increase astronomically in Lagos State due to rent defaults by state tenants who, for the most part, can no longer honor prompt payment of their obligations. annual rent.
This is due to financial constraints and the precarious state of the Nigerian economy which is causing job losses, sky-high food prices, inflation, market volatility, inflationary pressures and gradual growth in living standards. and rising commodity prices in the market.
Homeowner eviction notices have steadily increased, with tenants being notified to vacate residential apartments due to non-payment of rent by tenants. This has seen many landlords and tenants face a protracted legal battle that often lasts for more than two years.
While these cases seek redress in the courts, tenants stay in these homes without paying rent, most of the time they end up using the money they are supposed to pay to pay their rent arrears to find a home. another apartment, leaving the owners in a state of financial loss and oblivion.
Addressing the factors responsible for rent defaults in Lagos State, Mr. Felix Douglas, a residence in the Igando neighborhood of Lagos, provides insightful information on rent defaults in the real estate sector and property management systems.
He argued that unemployment and job loss are one of the factors causing rent defaults, especially in white collar jobs and other similar sectors of the economy. He said the unemployment rate in the country is quite alarming and this has had an impact on the rental sector of the economy.
He suggested that the unilateral rent increase by landlords led to an increase in rent defaults by tenants who disagreed with the outrageous annual rent increase by landlords, while stating that the The rent increase should be agreed upon by both parties when signing the lease contract.
He cited other factors such as; Inappropriate rental contract, tenant irresponsibility, loss of jobs, business disruption, current state of inflation, market volatility and unprecedented food price shock.
Responding to the question, a senior consultant, Mr. Toyin Afilaka, said that requiring monthly rent payments in the Nigerian mega-city would definitely remove barriers to accessing good properties in prime areas of the state. But it has its own downside and that is because it is most likely to cause a rat race in which tenants are constantly chasing monthly rent renewals, putting pressure on household budgets and rental plans. personal growth on a larger scale.
As a result, there is a need to reorganize the property rental space by reforming the property rental industry in Nigeria by offering affordable and flexible rental plans, as well as eliminating discrimination based on tribe, gender and religion that tenants regularly face.
Position of Lagos State
The Lagos State government has indicated the terms of launching a monthly rent payment program, which is expected to start in the state very soon.
The new initiative, which is a social investment program launched by the state government, will significantly ease the burden of paying annual rent for residents of Lagos.
This disclosure was made by the Lagos State Governor’s Special Advisor for Housing, Ms. Toke Benson-Awoyinka, during a discussion on rental policies at the Second Lagos Real Estate Market Conference and Exhibitions which just took place on Victoria Island, Lagos.
Benson-Awoyinka explained that tenants, who are interested in the program, must be able to meet certain requirements, including the ability to make payments on a monthly basis, noting that the program will start with those in the formal sector with monthly income. after which the informal sector will be integrated.
She said that while landlords will receive their annual rent payment up front, tenants will no longer have the burden of paying a huge amount of money annually.
Benson-Awoyinka said tenants can use the savings from the annual payment to make other forms of investment or to pay for school fees.
Lagos State Commissioner of Finance Dr Rabiu Olowo said the initiative was part of the current administration’s resilience policy, noting that the state government had conducted a rent survey. and found that 88% of tenants would prefer to pay their rent. monthly.
Olowo said: “We had to continue on this path by working with different relevant stakeholders and now we have a model that will work and allow Lagosians to pay their rent on a monthly basis. Landlords have nothing to lose because they will continue to collect their rent each year and their risk of default is zero. ”
He said the program will start with the formal sector to enable them to minimize risk, saying: “As a ministry, we are already looking at the informal sector to bring them into this program, but we have to start with the sector first. formal to allow us to minimize the level of risk.
“It’s easier for us to check how much those in the formal sector are earning and for us to know what we will get and how we will get it. When we do, we will expand into the informal sector. There is an insurance pack that helps us manage all risks. We have a data plan that will help us spot failures. ”
Nobleserve Capital Management Managing Director / CEO Mr. Korede Adeyemi described the initiative as a market platform that talks about social impact.
He said: “With what we do, each landlord will receive their rent every year and at the same time tenants will have the ability to pay their rent on a monthly basis. This platform will be demand driven due to the convenience of payment. People will be able to log into the platform to search for homes. ”
According to him, the initiative is a robust system that takes care of everyone and is designed to clean up the price of Lagos homes in terms of rental rates, noting that a similar property in the same area in the state of Lagos can go the same or lower.
Charles Anthony LLP managing partner Mr. Charles Adeosun-Phillips said it was a welfare program and a win-win program for homeowners, the government, financial institutions and all relevant stakeholders.
Speaking on this, public policy expert Ugo Aliogo said mortgage banks should build a social housing program for citizens which will be made more affordable and cheaper to rent.
He claimed that in developed societies around the world, the government is working with mortgage banks and the mortgage industry to provide good housing.
He postulated that the government should partner with private sector operators and key private sector actors to invest in the real estate sector, adding that this would provide adequate shelter, reduce housing risks and reduce vulnerabilities for people who live in the city. cannot afford decent shelter and shelter.
This, he said, will provide rent insurance to landlords against rental default or damage, which will foster a beneficial relationship for landlords and tenants.