About 60 percent of tenants will not be able to pay their house rents in Nigeria in the coming months as the rampaging coronavirus pandemic persists with its crippling impact on household income, estate agency professionals have said.
This, according to the professionals, means that six out of every 10-renter will default in their rent payment or, at least, they will struggle to pay not necessarily because they don’t want, but because they cannot pay.
This is going to affect residential and commercial properties, but Chudi Ubosi, managing partner at Ubosi Eleh+Co, a firm of estate surveyors and valuers, reasons that the default will be more on residential properties.
He has two reasons for that. One is that landlords, on moral and humanitarian grounds, find it difficult to push tenants out of their houses. The second, according to him, is that tenants in commercial properties don’t joke with their rents because delayed or non-payment can affect their business.
Fears of rent default are worldwide. In UK, for instance, Propertywire, an online residential property platform, reports that about 40 percent of renters will struggle to pay because their ability to pay rent has been hit by the coronavirus crisis.
Ryan Bembridge, Editor of the online platform, notes that not being able to keep up with rental payments is the number one concern of many tenants, with the ability to pay council tax, financial instability and ‘survival’ also being cited as key areas of fear during the pandemic.
This, indeed, is a trying time for the property market, but the reason is not far-fetched. “There is no economic activity going on anywhere because of Covid-19 and so, people are not earning income. This has been made worse by the lockdown which has confined everybody to their house,” Ubosi explained.
Tom Gatzen, co-founder of Ideal Flatmate, shares this view, saying, “clearly, this is a very concerning time for many renters and our recent findings bring into focus the worries many tenants have at the moment.”
Gatzen advises that renters should get in touch with their landlords as soon as possible if they feel they may not be able to keep up with their monthly payments; “and we would encourage all landlords to be constructive in their conversations with tenants who are struggling through no fault of their own during the current crisis,” he advised further.
The rental market in Nigeria has always been active despite the lull in the real estate market which exited a 12-quarter recession in the first quarter of 2019, but slipped again into negative growth in the following quarter.
Sustained activity in the rental market until the coming of coronavirus was understandable. A report on ‘The State of the Real Estate Market’ estimates that 80 percent of Nigeria’s 200 million population lives in rented accommodation.
The report, conducted by the Pison Housing Company, reveals that, in Lagos, the country’s commercial nerve centre, over 60 percent of the city’s 20 million people lives in rented accommodation, meaning that six out of every 10 Lagosian are renters who, the report says, spend over 50 percent of their income on paying house rents.
The situation, at the moment, is worrying given that there is neither clarity nor certainty as to when God will heal the world and the virus will go away. This explains the concerns that “in the coming months there will be frictions between landlords and their tenants,” noted Kunle Awobodu, President, Nigerian Institute of Building (NIOB).
Awobodu noted further that, ordinarily, the rate of rent default would not be that high, but some tenants are already using coronavirus as an excuse to withhold rent payment, pointing out that over all, there are genuine cases.
Tom Gatzen, co-founder of Ideal Flatmate, shares this view, saying, “clearly this is a very concerning time for many renters and the findings of this study bring into focus the worries many tenants have at the moment.
“It is very important that renters get in touch with their landlords as soon as possible if they feel they may not be able to keep up with their monthly payments and we would encourage all landlords to be constructive in their conversations with any tenants who are struggling through no fault of their own during the current crisis.”
Source:Businessday.ng
