There are ongoing discussion around the Rent-to-own programme as a reliable option to reduce housing deficit among Nigerians. DAYO AYEYEMI reports.
As Nigeria’s housing deficit is increasing in figure on a yearly basis without corresponding efforts to arrest the situation due to high price tags on ‘affordable’ houses and low-income nature of people in need of accommodation, there have been conversations around Rent-to-Own as a better option to address homelessness among Nigerians.
Leading the pack, Managing Director, Legrande Properties, Mr Babajide Durojaiye, who doubles as the developer of Alexandra Court Coastal City in Ibeju Lekki, Lagos, said that rent-to-own is the solution to housing problem in Nigeria, going by high costs of land, building materials and housing construction in major cities in the country.
Justifying his stand, the developer explained that the low-income group, which constitutes the population of the people that need houses but cannot afford the cost due to their low-earning power, can fulfill their dream of becoming home owners through rent-to-own scheme.
With this arrangement, Durojaiye said that more low-income earners could become home owners, thereby reducing the huge housing gap in the country.
He hinted that his firm has entered into partnership with the Lagos State government in the development of Alexander Court Coastal City, adding that such investment in the rent-to-own scheme would unlock potentials, add values, enhance urban renewal efforts and solve various challenges thereby providing affordable housing for citizens.
The developer called on government at all levels and Nigerians to key in to the rent-to-own scheme to address the accommodation problems and housing deficit of over 22 million units in the country.
Rent-to-own, according to Wikipedia, is also known as rental purchase or rent-to-buy. It’s a type of legally documented transaction under which tangible property such as furniture, consumer electronics, motor vehicles, home appliances, and real property is leased in exchange for a weekly or monthly payment, with the option to purchase at some point during the agreement.
Describing the uniqueness of the innovation in his housing development advocate network’s platform, Festus Adebayo said “Rent-to-own is a unique avenue toward home ownership. It allows you to rent a home with the option to buy it after a set amount of time.
Another expert, who identified himself simply as “Abdulmalik M,” explained that rent-to-own option described a real estate property that is leased in exchange for a monthly payment, with the option to purchase the property during or at the end of the agreement.
Another professional, Fonanhanmi Idris, said the model is great, but needed to be encouraged in Nigeria.
Buttressing his point, he said “Developers can’t afford to tie down capital at excruciating interest rates and unregulated/unreasonable fees burden for so long.”
For this reason, he urged that government; regulatory authorities, parastatals, private sector developers, banks, mortgage brokers/lenders and corporate organisations must be on same page and buy into the laudable model.
“Developers are not innovative in Nigeria because there are no laws to ginger them. I know an estate in Eleko, Ibeju Lekki Local Government that has been vacant for close to 15 years now. There are properties along Airport Road in Abuja opposite Kushingoro that have been vacant since 2001. Government must make laws against abandoned properties before options like this can work. It is a crime to tie down hard-earned capital,” he said.
Explaining rent-to-own further, another expert, Olufemi Emma, said that it’s more like paying a relatively higher amount as rent over a period of time which, when paid accordingly, cumulatively translates to purchasing or owning the property.
“There’s a paper on targeting family income earners of at least N700,00 monthly who may not be able to put together a lump sum but can pay about N250,000 monthly rent over 120 months of living in there, to own a three-bedroom apartment thereafter.
“Total is N30milion. This is eating your cake and still having it. The major impediment to this is the value of the currency,” he said.
Differentiating between rent-to-own and mortgage, estate surveying and valuation practitioner, Mr Femi Oyedele, said that no interest payment in rent-to-own.
“You don’t pay interest but rent. You pay interest in mortgages. In rent-to-own, you can decide to pay a lump sum at anytime after the beginning of your rent which is the balance of the capital value of the building minus the rent you have paid.
“In mortgages, you are not encouraged to offset before the end of the tenure of term of the mortgage. Mortgages have two different rates: first timer rate and investor’s rate, whereas rent-to-own does not have classes. It is noteworthy to state that rent-to-own is different from “right of first refusal (ROFR) on tenanted houses.
“Right of first refusal is the right a tenant have to buy the property in which he or she is a tenant from the owner first except where he or she decides not to buy. It is very common in government houses and council flats. Right of first refusal is a way of making housing affordable. In UK, it is enshrined in Landlord and Tenant Act 1987,” he explained.
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