NIGERIANS, especially professionals in the built environment have continued to express mixed reactions over the proposed monthly rental payment by the government.
While the Lagos State Government, according to the Special Adviser to the governor on Housing, Mrs BarakatOdunuga-Bakare, is targeting end of this year or early next year to kick-start the implementation of the policy in the state, a senator in the National Assembly is already initiating monthly rental payment bill in the Senate for the purpose.
As the push towards the proposed policy gathers momentum, there have been arguments for, and against the monthly rental collection by the public.
Some people who are in support of the proposed policy believe that the regime will make it easier for tenants to pay their rents monthly instead of the “oppressive” one year or two years advanced rental payment.
Others, who are campaigning against monthly collection of rent, said it would discourage private investments in the real estate sector of the economy, among other factors.
Experts’ views
Founder/CEO, RentSmallSmall, Mr. Tunde Balogun, gave reasons monthly rental payment will work in Lagos, adding that the company supports the Lagos State government moves.
“SmallSmall, a pioneering property technology company in Nigeria, welcomes the Lagos State Governor’s recent declaration to enforce a monthly rental solution in the state. This move aligns with our long standing vision at SmallSmall torevolutionise the real estate sector by providing flexible housing solutions for all,”Balogun said.
The proposed monthly rental system, championed by Governor BabajideSanwo-Olu and reinforced by the Special Adviser on Housing, Barakat Odunuga-Bakare, he said presented an opportunity to address the contemporary realities faced by tenants, especially in high-demand urban cities like Lagos.
According to him, the transition would 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, he emphasised the importance of leveraging existing expertise and players in this sector to expedite the process.
“With six years of proven success in implementing flexible payment options and ensuring seamless transactions between landlords and tenants, SmallSmallstands 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.
“Our product, RentSmallSmall is tested and proven, and thousands of tenants have used our 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 said.
He urged the government to consider partnering with established industry players to streamline the implementation process and maximize the program’s impact.
“By leveraging our product’s, RentSmallSmall, technology and expertise, the government can overcome potential roadblocks and ensure a smooth transition to the monthly rental system,” he said.
“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.
Reacting to the proposed policy in Lagos, a real estate practitioner, Mr. Femi Oyedele, said: “Rent’s control cannot and has never worked in any country all over the world.”
The best and practical way to control price, the built environment expert said was for government to build more houses and rent them out at government’s rent.
According to him, in a country like Nigeria where there is no rule of law, rent control cannot work.
“The experience of “food price control” which happened at Idioro-Mushin Food Market readily comes to mind.
“The marketers who have been subsidised by the Lagos State government so as to sell at subsidised price to the members of the public sold all foods to their family members and associates who created “black market” outside the food market to sell at market price to buyers.
“A day after, the official marketers will tell buyers that they are out of stock but can help buyers to buy from elsewhere at higher than official price,” he said.
Another expert, Emmanuel Akin, argued that the monthly rent payable by tenant in some countries around the world remained a product of macro-economic stability and cultural norm, supported by compassionate and caring government.
“In those relatively civilized climes, access to funding is seamless, and the cost of finding is more reasonable.
“In those countries, the likes of that senator pretending to love suffering Nigerians by proposing monthly rent that may not fly constitute investors that invest in the mortgage sector to increase housing stock and reduce interest rates,” he said.
He argued that monthly rental looked easily implementable on the surface, but that in real terms are socio-economic and financial fundamentals that should be put in place at macroeconomic level to allow such suggestion of monthly rental to become acceptable.
“Otherwise, the senator may be another joker, even if dancing around is not his own hobby,”he said.
According to him, a property developer that is hugely indebted would never allow his rental property to be forcefully given out to tenants on monthly rent terms, adding “not even with the threat of the gun or imprisonment without trial!”
In a country such as South Africa where monthly rental collection works, a professor of building, Mrs. Abimbola Windapo, said that tenants were typically required to sign a one-year lease agreement with the landlord.
She said: “My experience in South Africa is that it is common for rental properties to be rented out on a monthly basis. “However, tenants are typically required to sign a one-year lease agreement with the landlord. This means that the tenant commits to renting the property for a minimum of one year and cannot break the lease and the conditions therein before the end of the term without facing potential liabilities.”
“To do this in Nigeria will require a swift judicial system,” professor Windapo said.
Founder and Chief Executive Officer, Comwell Professional, Sola Enitan, said the first thing to address should not be rent, but the interest rates.
He pointed out that in all the territories and jurisdictions where rent is charged monthly, interest rates are traditionally and justifiably lower than rents.
He argued that if monthly rental becomes the law, mortgage repayment will be impossible in the Nigerian situation.
“It is a total eradication of the mortgage system if allowed. The Mortgage Bankers Association should never be silent in the face of such threats to its existence. There’s a reason why interest rates are technically designed to be lower than rents. In Nigeria however, illicit flow of funds, corruption funds and money laundering is endemic in our development systems and makes it challenging for good economic reasoning for some of our leaders. They just talk anyhow,” Enitan said.
According to him, government cannot control what it does not produce, pointing out that that free market system is what drives investment into the economic sectors.
In his article titled:” Stop Distorting the housing Market: Rent Control is Injurious to Housing Investment Sector in Nigeria”, the estate surveyor and valuer, said the recent statements by concerned public servants in Lagos and Abuja about the galloping house rents and the yearly payments rental market convention “speaks to a lack of proper understanding of how the housing market operates.”
He argued that if government could not find a peg for the drowning Naira, how
would it hope to achieve rent control which responds directly to governments failure at achieving financial stability.
In examining the home rental market in Nigeria amidst high-interest loans, negative equity, and two-year rent advance payments, Enitan pointed out that several factors contributed to the incongruence between desirable monthly rent payments and the challenges faced by landlords.
To achieve monthly rental payments and mitigate the challenges faced by landlords, Enitan urged government to consider some measures not limited to interest rate subsidies or mortgage refinancing programs; property value support programs; affordable housing initiatives; financial literacy programs; collaboration with financial institutions, and tax incentives for landlords, among others.
By addressing these factors and implementing supportive policies, the professional stated that government would need to contribute to a more sustainable and balanced home rental market in Nigeria, ensuring that both landlords and tenants benefit from a fair and economically viable system.
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