This is not the best time for accommodation seekers in Nigeria as the high cost of available housing units in major cities is pushing them to the suburbs. Experts have however tasked Sanwo-Olu and others on how to tackle the housing challenges in the country.
Even within some locations in the suburbs, the high cost of homes and rents is posing a major challenge to existing tenants and fresh accommodation seekers in Lagos, Abuja, and Port Harcourt, among others.
While existing tenants are already defaulting in payment of rent, no thanks to the general rise in the prices of commodities, harsh economy, and high-interest rates, fresh accommodation seekers are finding it more difficult to provide the one-year upfront rental payment required by most landlords.
As some individuals are blaming greed on the part of landlords for the high rental cost, others have identified high-interest rates, high building materials costs, the rising cost of land, and documentation as contributing factors.
Presently, the average rental value for a three-bedroom flat in Ikeja and Ogba costs between N1.8 million and N2 million per annum, while one-bedroom costs between N900,000 and N1.2 million in the same locations, depending on the condition of the buildings.
For newly constructed housing units, one and two bedrooms cost between N7 million and N15 million.
Looking at how to meet the housing needs of low-income Nigerians who cannot afford high rents being dictated by landlords, some experts in the sector are already canvassing monthly collections of rents to reduce pressure on average citizens.
Speaking with the Nigerian Tribune, founder and Chief Executive, of Cromwell PSI, Mr. Sola Enitan, said the situation would require a range of solutions, emphasizing the need for sustained investment in affordable housing and infrastructure development
He stated that the high cost of annual rent in major cities in Nigeria had been a persistent problem for many years.
“This he said had been a major challenge for individuals and families looking to rent apartments.
He explained that there had been suggestions to consider the monthly rental collection as a possible solution to encourage urban-rural migration.
“In examining the housing market, both options have their advantages and disadvantages,” he said
Monthly rental collections, according to him, would provide tenants with more flexibility in terms of payment and could potentially make renting more affordable for some.
This option, he said, could also help landlords to better manage their cash flow and reduce the risks of default by tenants.
However, he noted that the implementation of monthly rent collections might pose challenges for landlords who already invested in properties with the expectation of receiving annual payments.
“It may also lead to higher administrative costs and challenges in ensuring timely payment of rent by tenants,” he said
On the other hand, he pointed out that encouraging urban-rural migration could help reduce the demand for housing in major cities and potentially lead to a reduction in rental prices.
“It can also provide individuals and families with access to more affordable housing options and reduce the strain on already limited resources in urban areas.
“However, the implementation of such a strategy would require significant investment in infrastructure and services in rural areas to ensure that they are livable and attractive to potential migrants.
“Additionally, it may not be a feasible solution for individuals who work in urban areas and cannot afford the costs or time associated with commuting from rural areas.”
To address the challenges of the housing market in Nigeria, Enitan said it has become essential to explore a range of solutions that could work in tandem.
One of the approaches, according to him, could be to encourage the development of affordable housing in urban areas through public-private partnerships.
Besides, he said the government could decide to implement policies and regulations to encourage landlords to offer more flexible rental arrangements, including monthly payments.
“In addition, investment in rural infrastructure and services, such as transportation, healthcare, and education could make rural areas more livable and attractive to potential migrants,” he said.
The real estate guru stated that challenges in Nigeria’s housing market would require a multifaceted approach that considers a range of solutions.
“While monthly rental collections and urban-rural migration may provide some relief, there is a need for sustained investment in affordable housing and infrastructure development to ensure that individuals and families have access to safe, decent, and affordable housing options in both urban and rural areas,” Enitan said.
Chairman, H.O.B. Housing Estates, Chief Olusegun Bamgbade, made a case for monthly rental collection, saying it remained an easy route to sustainable financial plans for tenants and landlords.
“The idea of yearly rent is burdensome to tenants. Raising money for yearly rent is not an easy task. It encourages corrupt practices. It delimits the capability of the tenants in choosing preferred accommodation. It has negative consequences on the financial plan of the tenants.
“I always encourage my tenants to pay according to their financial capabilities.
It’s better to be at peace with your tenants than continuous imbroglio at all times because of the yearly rent which they find difficult to pay,” he said.
Former chairman, of the Lagos branch of the Nigerian Institution of Estate Surveyors and Values, Mr. Dotun Bamgbola, went down memory lane, saying that monthly rental collection was the order of the day in the 1970s to early 1990s.
The prevailing trend of annual rental after that, he said, was a response to the rising cost of construction.
“The cost of construction is still rising and where rental income is the means of recouping the investment in property development, it may be difficult to have adequate monthly rental collections to meet up with the cost of funds, especially in the residential houses sub-sector.
“At the same time, particularly in Lagos, the Rent Control and Recovery of Residential Premises Law 1997, which limited monthly rent receivable by property owners to three months for individuals, also stirred property owners towards embracing more annual rent collection by any means. It was and still remains a return on investment issue,” he said
He decried the process of seeking remedy for default in rent payments either monthly or annually as well as eviction of tenants or occupiers saying the process was tedious and long.
The Tenancy Laws nationwide, Bamgbola explained, favored tenants or the occupiers, while considering them the less privileged to be protected.
“Hence, it is difficult to evict defaulting or difficult tenants or occupiers regardless of whether it is a monthly or an annual tenant.
“With such extant laws and processes, property owners would rather take their chances at once on an annual basis rather than monthly.
“Though there have been some calls for monthly rent payment, it must be understood that real estate investment or property ownership is an investment to yield desirable income, especially in the private sector.
“Even the public sector corporations in the industry consider the return on investment (ROI) these days as they venture into projects. That is why they develop to sell at profit rather than do social housing,” he said.