Nigeria’s economy is currently experiencing one of its worst runs amidst high cost of living and rising inflation.
The recent inflation report by the National Bureau of Statistics shows that the headline inflation increased from 29.9 per cent in January to 31.7 per cent in February.
Also, the property sector is not left out as prices of building materials have shot through the roof resulting in high rents.
Consequently, conversations around payment of monthly rent are heating up in the country on how to ease the burden of paying high property rents annually.
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Only recently, Senator Ned Nwoko (PDP, Delta North) initiated a bill titled, “One-Month Rent Limitation and Landlord Registry Act.”
The proposed bill, if passed into law, will enable tenants to pay their rents monthly instead of the one year/two or three years initial rent payment demanded by property owners, thereby making it flexible for tenants.
The bill is also seeking a rent control body to effectively monitor and implement the law in every state and local government area of the country.
One of the vital features of the proposed bill is that every tenancy agreement must be in written form, while a copy must be filled by both landlord and tenant at the rent control agency.
The agreement must be put in place two weeks before the commencement of the tenancy.
Worthy of note also is that the proposed bill stipulates a strong penalty against any defaulting party, and imposes a fine of 10 per cent of the total rent sum.
Commenting on the bill, Senator Nwoko said, “Rent control is for both rich and poor. There are houses/flats of different classifications all over the country.
“The issue here is that it is unfair on tenants to be asked to look for such huge amounts for advance payment of rents of one year or two years.
“It is not done in any civilized nation. Where does the money come from? What is needed is a rent control body to effectively monitor and implement the law in every local government and in every state. Every tenancy agreement must be in written form and a copy must be filed by both landlord and tenant at the rent control agency.
“This must be done two weeks before the commencement of the tenancy otherwise there will be a fine of 10 per cent of the total rent sum.
“The low-cost housing has nothing to do with rent control. They are houses built by any of the tiers of government for the low-income earners or for the vulnerable in society including the disabled etc. They are not houses where rent is paid. They are simply built for the masses in the categories mentioned earlier,” Nwoko explained.
Consequently, the Lagos State government has already expressed its intentions to start implementation of the monthly rent payment scheme.
The Special Adviser to the State Governor on Housing, Barakat Odunuga-Bakare, noted that the state’s monthly rental scheme will be enforced before the end of 2024 or early next year.
She said, “We all see what is being done in other climes; rents are collected monthly. Hence, we are looking and hoping that before the end of the year, or by early next year, we will be able to implement the policy of monthly rental. Also, the rental would be charged according to tenants’ earnings.
“The good part about it is that we would be test-running it first within the public sector since we can ascertain how much everybody is earning, and once we see that it works in the public sector, we can now push it out to the private sector.”
Odunuga-Bakare reiterated that the N5bn allocated for the monthly rental scheme was still untouched.
She added that the fact that the scheme was slow to take off showed that the Lagos State government was still trying to perfect one thing or the other.
“The last administration that initiated the monthly rental scheme was coming to an end when the scheme was to be introduced. Now, we have a new administration and the governor wants the scheme to come into effect by the end of this year or early next year,” she noted.
Daily Trust reports that in 2021, Governor Sanwo-Olu, had said the rental model in which people paid yearly rent in advance to property owners had become inadequate to address contemporary realities in the housing sector, especially in cities where demand for property was high and expensive.
Sanwo-Olu advocated rental policy
The governor advocated a monthly rental system, which he said would be affordable to low- and middle-income earners pressured by the yearly rent obligation.
Why monthly rental payment will work in Lagos
SmallSmall, a property technology company in Nigeria, which pioneered monthly rental payment, has said the plan by the Lagos State Government to implement monthly rent payment is feasible.
While welcoming the move by the state government recently announced to the public, the firm said a monthly rental solution is desirable.
SmallSmall platform welcomed the move to enforce a monthly rental solution in the state, it said as it aligned with its long-standing vision of revolutionizing the real estate sector by providing flexible housing solutions for all.
It stated that the proposed monthly rental system, championed by Governor Sanwo-Olu and reinforced by the Special Adviser on Housing, Barakat Odunuga-Bakare, presents an opportunity to address the contemporary realities faced by tenants, especially in high-demand urban cities like Lagos.
SmallSmall, in a statement backing the government’s move, expressed optimism that the transition will offer relief to low- and middle-income earners burdened by yearly rent obligations.
While acknowledging the government’s intention to test-run the programme within the public sector, SmallSmall emphasizes the importance of leveraging existing expertise and players in the sector to expedite the process.
“With six years of proven success in implementing flexible payment options and ensuring seamless transactions between landlords and tenants, SmallSmall stands ready to collaborate with the Lagos State Government in rolling out the monthly rental programme.
“We’ve paved the way in redefining the rental experience, offering verified tenants quality property management, and innovative technology-driven solutions,” the founder/CEO, Tunde Balogun, said.
He said thousands of tenants have used its solution and they are better off today.
“We’ve demonstrated that monthly rentals are not just feasible but also beneficial for both landlords and tenants. Over the years, we’ve identified the loopholes of the monthly rental model, and we’ve used technology and other means to ensure it’s safe for both landlord and tenant,” Balogun added.
SmallSmall urged the government to consider partnering with established industry players to streamline the implementation process and maximize the programme’s impact.
“Rather than attempting to build a new system from the ground up, we encourage the Lagos State Government to leverage RentSmallSmall’s existing capabilities and experience,” Balogun added.
