Lagos New Monthly House Rent: And The Fight Begins

The recent pronouncement by the Lagos State Governor, Babajide Sanwo-Olu, that his administration would enforce a monthly tenancy on property occupancy from 2022 to alleviate yearly financial pressure on tenants is generating mixed reactions from renters, landlords and other stakeholders.

Sanwo-Olu was supported by the Minister of Works and Housing, Babatunde Fashola when he (minister) declared that the yearly rental system had created inequality in housing supply and widened the affordability gap for low-income earners.

Fashola had brought the rent down from two years to one year during his administration as the governor of Lagos State to ease rent burden, but the forces of demand and supply hiked the prices of apartments.

The Commissioner for Finance, Rabiu Olowo, said the state government would implement the new policy by working with different relevant stakeholders.

“Now, Lagos State has a model that will work and enable residents to pay their rent with ease.

“Landlords have nothing to lose because they will continue to receive their rent and their default risk is zero. The monthly tenancy is a pro-people plan to reduce financial pressure of yearly rent on tenants. The goal of this policy is to equate rental arrangements with the mode of earning which is by and large monthly.”

He noted that the percentage of residents depending on tenancy arrangements for housing in Lagos is high, while landlords charge double rent for an apartment every two years.

The Special Adviser to the Governor on Housing, Mrs. Toke Benson-Awoyinka, said the monthly rent payment scheme would benefit landlords as they would be paid promptly, while tenants would be free from the burden of yearly payment of huge amount of money.

Benson-Awoyinka explained that for tenants to come on board, they must meet the requirements, which include ensuring that they have the capacity to make the payment monthly.

“We know we cannot enforce monthly rent collection on landlords but we have created a platform that will make monthly rent payment possible for tenants. When the system begins and runs fine, many more landlords will come on board.”

A real estate company, which has been an advocate of bit-by-bit payment of rent, Rent Small Small Ltd., said eight in every 10 residents of Lagos preferred to pay their house rent monthly.

The Chief Executive Officer of the company, Mr. Tunde Balogun, said the preference for monthly payment was revealed by a survey conducted in Lagos, which polled 1,389 adults, of which 851 were working class youths between the ages of 20 and 40 years.

“It is not surprising that many will not like to continue the cycle of yearly rent payment. This is due to financial pressures ranging from raising quarterly school fees to footing basic bills that families experience in Nigeria.

“Naturally, it’s easy to assume that Nigerians will like to pay their rents upfront for one or two years in some cases. This is because it has always been the pattern, considering that it is what the landlords want.

“This time, however, it is amazing to see that more Nigerians want something different from the norm. Personally, I do not believe funds that have not yet been worked for should be tied up as rent for a year. Such money could still be put to use to work for you and make you enjoy a level of financial stability. 

“When people can rent monthly, it makes it easier for them to pay their bills, make investments, take vacations and make plans for long-term projects,” Balogun, a co-founder of Rent Small Small explained.

For James Ojurongbe, a FESTAC-based renter, if properly implemented, the planned monthly tenancy will be highly commended.

“Have you ever wondered why life is so difficult to live in Nigeria? It’s because we earn monthly incomes but our key expenses are yearly – rent, school fees and others. In advanced countries, payments for rents are done weekly and monthly. Bills are paid weekly in the United Kingdom and monthly in the United States. This is because salaries are mostly earned weekly and monthly in those countries. This policy will also reduce the number of empty apartments that litter the Lagos landscape while many people are sleeping under the bridge.

“For instance, a person sleeping under the bridge may not be able to afford a house of N150,000 per year, but if asked to pay N15, 000 monthly for the same apartment, he would most likely be able to afford it,” Ojurongbe said. 

Also, a teacher and a mother of four, Mrs. Bisi Ajani, who hails from Ogun State, said most Nigerians were largely daily or monthly income earners, therefore, bills should be paid monthly to ease cash flow.

“The monthly tenancy is a welcome development. I believe that landlords will accept the monthly payment if Lagos State government enforces a system that will guarantee zero-default by tenants such as direct-debit payment and prosecution,” she said.

But other residents of Lagos who spoke to The Guardian felt that the monthly payment of rent would put more pressure on the tenants.

To them, the government is coming up with the new policy to cover up for its failures. They are of the view that the renters and tenants will be able to pay their rents promptly if there are good jobs for them to do and save money.

Blessing Morgan, a hairstylist who operates at Isolo in Oshodi-Isolo Local Council Development Area, said: “I prefer yearly tenancy, though it’s hard to gather, but it has a way of taking your mind off rent for the next 12 months. At least, you will be able to focus on another thing.

“Monthly rent will put too much pressure on the tenants because you will be thinking of your rent daily. It will make you not eat good food because you will always remember that you have a rent to pay at the end of the month, especially when you don’t have the money. Yearly rent payment helps you push this through.”

For Ovie Ewekheme, a trader at Balogun Market, Lagos Island, payment of rent monthly is not ideal. According to him, the yearly tenancy allows him to focus on his business without putting his hands in his capital.

“Before the rent expires, I would have planned where the money will come from. I don’t need to start pulling money out of my business monthly. I want to separate my capital from my personal expenditures. Once you pay it at a stretch, you have some peace for the rest of the year. Spending such money on regular basis is sickening. It’s like sucking one’s blood,” he said.

A civil servant and a father of two, Mr. Lekan Ibrahim, who lives in a rented apartment at Oshodi, said the move would hike rent as landlords would want to collect monthly rent in round figure amounts.

“For instance, N1million rent per year, if divided by12 months, is N83, 333 per month, but no landlord will want to collect that amount per month. Almost all of them will push the rent to a round figure of N100, 000. If that happens, the rent will have to go up.

“I know how these landlords reason. Paying this every four weeks, tell me how many tenants can afford N100, 000 to N150, 000 every four weeks? It is easy for the governor to come up with laws because he gets free living on taxpayers’ money. This policy is funny. Who advised the governor on this?” he queried.