Property market: Flexible monthly payment of rents takes centre stage

Considering the dwindling disposable income of young Nigerians and the hurdles of having to pay one year rent upfront for accommodation, a firm has deployed prop-tech platform to change the narrative to flexible monthly payment of rents. Dayo Ayeyemi reports:

This is not the best time to seek rental accommodation in most Nigeria cities due to high rents and various hurdles associated with the process.

Apart from the difficulty of having to pay for the traditional one or two years advanced rents, the issues of service agency fee, commission, agreement and service charges are also waiting for first-time accommodation seekers or sitting tenants.

Also, due to recent outbreak of COViD-19 pandemic, recession, general inflation and unstable foreign exchange market, most landlords have increased their rents major cities of Lagos, Abuja, Enugu and Port Harcourt, making it difficult for starters and young population seeking accommodation to come up with one year or two years advanced rents.

Exploring the market and trying to move people away from the old tradition of one  and two year upfront payment of rent, the firm of Messrs Rent small-small Limited, a pro-tech platform, is currently attracting young Nigerians to a new home or apartment where they can pay their rent just as they earn their salary monthly.

The on-line platform is providing a unique rental solution to Nigerians in order to improve home-seekers’ rental experience and increase home-owners occupancy rate.

Speaking exclusively with Nigerian Tribune when interviewed in Lagos on how the process works, Co-Founder/CEO, Rent small-small, Mr Tunde Balogun, explained that home seekers would need  to log on to the firm’s website, search the property by locations, by their price point and  budget, adding that they could also search by other features that meet their needs.

Balogun said he discovered that a lot of young adults/population could not afford to rent an accommodation and pay upfront rent of N500, 00 to N1 million per annum. Besides, he added that a lot of property his firm was getting was very expensive at the range of N200,000 and N300,000 monthly.

To bring the rent further down at N40,000 and N50,000 per annum, he said the firm had to initiate a sort of partnership with landlords and developers, where some buildings were converted to studio apartments, one–bedrooms and mini flats

“For example, we have an estate at Awoyaya that we have to partner with the developer. It is a cooperative that owns the estate, they could not complete the estate, so we partnered with them, we brought the money to complete the estate and converted the estate to mini units of studio apartments and one bedroom instead of four bedrooms.

“By doing so, we are able to bring down the rent to about N40,000 monthly, and that includes power, service charge, security,” he said.

The co-founder of rent-small-small disclosed that the company had done up to 1,000 tenants since the launch of the company three years ago, adding that more than 500 tenants are currently  living in their property.

“We have more than 250 housing units in the pipeline. In Awoyaya Estate for example, we have 120 units of studios and one-bedrooms. The demand is huge. In the last three years, our traction or traffic has been in hundreds of thousands. Beyond the traffic, our waiting list is over 10,000,” Balogun said.

Through the pro-tech platform, he explained that from finding a house to paying for the apartment monthly is being driven by technology.

On how the firm makes money from the process, he said: “We don’t collect legal fees, we don’t collect agency fees, we structure our rent in such a way that we take our fee from what goes to the landlord. That is our commission.”

 

Experts’ views

Commenting, Principal Partner, Ubosi Eleh and Co, Mr Chudi Ubosi, an estate surveyor and valuer, expressed some resentment about the process of collecting rents per month, saying it would be nice to know the success rate and whose properties are being used and landlords involved.

According to him, paying rent monthly is a good thing, but there are no institutions such as law courts to back it.

“Paying rent monthly is a good thing. After all, no one earns a salary a year or two in advance. But the key thing is that we don’t have the institutions to back it.

“Even when tenants pay you annually, it’s tough getting their rents subsequently. When they default, your option is the law courts. No matter how good a case you have, the minimum time frame to get the first judgement is three to five years! Now you think you can collect monthly,” he said.

Corroborating Ubosi, Past Chairman, Lagos Chapter of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Pastor Stephen Jagun, said he was yet to read much about rent-small-small, but submitted  that collection of rent monthly would make the house more expensive, adding that home seekers or new tenant would spent 50 per cent of their salary on rent alone.

Besides, he said it was going to cost the firm more money to collect the rent, going by bank charges

Jagun urged professionals and the government to look at the model in order to protect consumers. “Invariable, they (referring to the firm) are not going to lose money but the landlords,” he said.

Lagos-based estate surveyor and valuer, Chief Gbade Oyepeju, is of the opinion that the cost of collecting rents monthly would be very enormous.

According to him, the administrative and logistic charges put together would wipe off the supposed fee from such monthly rent.

Besides,   he noted that the culture of people not paying their dues as at when due might complicate the issue, adding that monthly rent’s payment would discourage development of tenanted property due to the spiral rising cost of construction.

Chairman, HOB Estate Limited, Chief Olusegun Bamigbade, a developer, stated that monthly rental collection was ideal, describing it as “a welcome idea given the present financial predicament in the country where it’s pretty difficult for a lot of people in every facet to make ends meet.”

“I personally subscribe to it. It doesn’t change the game, rather it’s going to enhance the property business with increased participations,” he said

According to him, monthly rental payment would reduce the number of homeless people in the country, adding that it would also reduce the financial stress on the people.

“It will engender reasonable livelihoods. Corruption will even nosedive in the country. It is the new normal and the people will benefit in diverse areas,” the real estate developer said.

Also, Professor of Housing and Estate Management at the University of Lagos, Olugbenga Nubi, pointed out that all over the world, rent is being paid monthly. “Ours is abnormal; reason why life is miserable here.  It’s going to be a struggle but we shall get there one day,” the university lecturer said.

Another estate surveyor and valuer, Mr Sam Eboigbe, described it as “a brilliant move’ that should be embraced by stakeholders and practitioners.

“We can’t continue to operate in isolation as Nigeria is part of the global community. Much as we want to upscale and upgrade to benchmark international best practices, the strategy must be seen to be holistic.

“We have been announcing that in our seminars and workshops, among others, change has become inevitable,” he said.

Going down the memory lane, Eboigbe said the fact that early agency’s practitioners made it through bulk collection of rent in years and massively profited from that arrangements cannot be sustained in the 21st century.

“Though Legislations out there lack political will to enforce but only in the interim as a serious government in due course may achieve breakthrough in enforcement at all tiers.

“We can look at the proposal as an institution, fine-tune it and run with the idea as the author.”

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