Lagos Landlords Reduce Advance Rent Demand

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An interesting development unfolding in the rental market in Lagos is that most landlords no longer demand multiple-year rent in advance. Nobody is sure if it is a response to the Lagos State Tenancy Law or whether they are just tired of lingering court cases on rent default, or if it is a desire for regular cash inflow.

House-hunting is becoming very interesting these days. Agents not only make offers but are also willing to introduce the prospective tenant to the landlord for further negotiations.

Better still, professional real estate surveyors now have a form that profiles the would-be tenant and this include the gross income. The idea behind this research is obvious, said an Estate Surveyor and Valuer, Sam Adeniyi, explaining that “most landlords want to be able to vitualise the type of person that wants to rent their property. They want to be sure the person has a regular means of income to renew the rent when it is due or be willing to move out if he/she cannot renew the rent.”

Adeniyi said they have been advising landlords to reduce the demands made on prospective tenants because “from our experience, most people clean up their accounts and maybe borrow to meet the initial rent but the renewal takes some fight to get from them. We have several cases in court and this eats into our productive time whenever the cases come up. It is not worth the trouble.”

Another real estate surveyor, Emma Okei said the landlord of a property asked him if tenants could pay their rents every six months because he needed regular cash-flow. He explained that “the man said he does not have too many needs to spend bulk money on and that it was unreasonable to wait till the end of every year to collect money from his tenants. I told him he could and that I would inform the tenants.”

According to him, the demands of landlords were influenced by other landlords, saying “they compare notes, and some advise others to jerk-up their rents, regardless of the fact that they all do not have the same challenges to spend money on.”

Lagos Rent Law… Discussing the new law after it came into effect, Afolabi Adedeji, an Engineer, like most people, said the laws that govern the economic forces of supply and demand, apply not just to consumer items, goods and services, but also to the need for residential accommodation, office space, market stalls, shopping plazas, car parking spaces, among others. Adedeji said: “In a situation where the available stock of Housing falls far short of the number of Lagosians with effective demand for residential accommodation, then the so-called ‘shylock’ landlords/landladies cannot but have a field-day, not forgetting middle-men and ‘quack’ agents.”

Laws and guidelines usually have their ‘spirit’ as well as their ‘letter(s)’, he said. “The Spirit of the rent control law in Lagos State is good and very welcome, but caution must be exercised in its implementation, so as not to create a black market if the letter of the law is unrealistic.”

Looking at the issue of possible sabotage by even desperate tenants, he said “An Oil Industry or Telecomm. Company Executive that has just been re-deployed to Lagos and whose Wife is heavily Pregnant, will not hesitate to say, oga landlord or mama landlady, please write N950,000 per annum in my receipt in accordance with the Lagos State rent edict, but here is N4,000,000.00 for two years rent in advance on a 3 – bedroom flat for me and my expectant wife in South-West Ikoyi, I am tired of staying in a hotel.”

Regardless, sometimes people require an official reason to act on what has been bothering them. For instance, landlords who have been under the influence of their peers to collect rents in advance of two to three years or more had an opportunity to ask for the rent they consider reasonable and for a maximum of a year’s rent or even six months in advance. “Some will like to collect monthly as it was in the past if they are sure the tenants can keep up,” said an agent, Dehinde Macaulay.

He said the Lagos Rent Law was a major reason some landlords have reduced their demands because most tenants now default and when they go to court or to arbitration, the tenants always win.

Macaulay said the tenants usually lived in the house for as long as the case is in court, adding “gone are those days when a landlord will get thugs to tear off the roof of the building to evict the tenant. That is even an offense now. So, landlords appeal to the tenants ahead of time if they do not want to renew their rents. Some give an option of not collecting the year’s rent and will give the tenants six months to look for alternative accommodation and sometimes the period is extended.”

When the rental law came into effect in 2011, it attracted harsh criticism from some people, who thought the government should have built homes for Lagos residents before attempting to control rents charged in buildings they did not build. But, as things turned out, it is beginning to influence landlords’ behaviour towards the tenant and vice versa.

Government’s Housing Scheme… In response to the issue of government building homes to accommodate Lagos residents, Governor Babatunde Fashola launched a unique home ownership scheme known as Lagos Homs.

The scheme is designed to curb homelessness and, on account of this, the government reached a decision that only first time home owners were eligible. “Only those who have not owned a home either acquired privately or built or bought from government will be eligible,” said Governor Fashola at the presentation of the scheme, recently.

People are expected to pay 30 per cent equity contribution and the rest paid over 10 years through mortgage loans, he said, adding “this is in accordance with laid down global practices, while the balance will be paid on a monthly basis over 10 years. The scheme is for everybody, whether you are a petty trader or a government worker or artisan. We already have trained mortgage counsellors, who will help people determine what they can afford.

Prospective homeowners, he said would take oath in this regard and that the consequence of making a false statement was that the home would be repossessed whenever information gets to the team that the homeowner lied about their status. “The board has a right to repossess the home even in the 10th year.”

He said only Lagos residents, who are tax payers, “not indigenes”, who must have stayed in the state for six months and must be registered as a residence of Lagos.

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