Lagos has one of the highest rent to income rates in the world, the Chief Executive Officer and Co-Founder of Rentsmallsmall, Tunde Balogun has noted.
He described this as an aberration, saying a worker for instance should not be paying more 25 per cent of his income on house rent.
Balogun in a chat with Daily Trust in Lagos said the rentsmallsmall platform which was designed to provide affordable houses for Nigerians gives flexibility to tenants in paying their house rent.
Daily Trust reports that the rentsmallsmall provides avenues for tenants to rent apartments in Lagos and choose a monthly or quarterly payment plan.
Balogun noted that the platform is a clear departure from the current practice where landlords would demand for more than one year and two-year rent.
He said, “We have developed this platform to give Nigerians especially the young professionals the ability to pay their rents flexibly as against paying upfront.
“And Lagos has one of the highest rents to income rate in the world. From our research, cities like New York and Hong Kong, they do collect 59 to 60 per cent, people pay their income to their rent. And Lagos is around that as well, mostly on the Island because everybody has just kind of settled in and is not supposed to be like that”.
The CEO explained that the rentsmallsmall would eliminate agency and legal fees which often raise the house rents in Lagos.
“I have been to many places and lived outside the country for many years. I have never seen a country where people pay upfront on the first payment and pay agency and legal fees that actually makes the price to skyrocket because when you pay agency and legal fees of 10 per cent each and then the base salary the money heightens.
“With rent smallsmall there is no agency no legal fee, what we do is to get the base rent from the landlord, we mark it up by certain percentage which still makes sense at the end of the year, because by the time you add the agency and the legal fee to the base rent, and mark it up to the base rent you will find out that rentsmallsmall still gives advantage”.
He explained further that the rentsmallsmall platform pays landlords more than collecting upfront payment.
Balogun said "We have created incentives for the landlords to get them buy into the model. Remember I said we mark up the base rent, what rentsmallsmall earns is very little, after the mark-up, we give majority to the landlords, so what the landlords get at the end of the year together is higher than what they usually get if they are collecting upfront."
"So that appeals to them that they are actually getting much more. If a property in the first instance you are not making anything from it. But now you get to find someone that pays monthly and at the end of the day you get a margin of interest, the second incentive that we are using to get landlords is insurance and it’s the first of its kind, we created it".