Landlords May Lose More Income As Lagos Reviews Tenancy Law

There are strong indications that landlords in Lagos may lose more rental income as the Lagos State government reviews its existing Tenant Protection Law to further empower tenants across the state.

Lagos rental market remains one of the most demanding in the country, with exorbitant rent charges and unjustified rent hikes spiralling far beyond affordability.

In Lagos, Abuja, Port Harcourt, and other major cities, housing costs now consume more than 50 per cent of residents’ monthly income, a figure that far exceeds the United Nations’ recommended benchmark of 30 per cent.

The Lagos State Tenancy Law of 2011 was the government’s first major attempt to regulate landlord-tenant relationships. However, with the state’s population now exceeding 22 million and growing at 3.4 per cent annually, coupled with weak enforcement and persistent inflation, there has been mounting pressure for reform.

In July 2025, the Lagos State House of Assembly introduced the Tenancy and Recovery of Premises Bill, designed to repeal and replace the 2011 law.

The new bill seeks to tighten rules on rent advances, streamline eviction processes, regulate agent commissions, and introduce digital dispute resolution mechanisms. Predictably, reactions have been mixed: tenants see a possible lifeline, while landlords and developers fear the bill could erode investment returns.

Estate agents, on their part, worry about shrinking margins and tighter regulation.

A major highlight of the proposed legislation is its protection of tenants from exploitative practices by agents charging between 10 and 15 per cent commission, often with hidden charges and ‘development levies.’

However, critics warn that unregistered informal agents may simply sidestep the law, creating a parallel unregulated market.

Under the new bill, anyone engaged as an agent, whether by landlord or tenant, must be duly registered under the Lagos State Real Estate Regulatory Authority (LASRERA) Law 2021 (Section 3(1)).

The bill further caps agent commissions at five per cent of one year’s rent (Section 3(4)) and criminalises dual collection, overcharging, or failure to remit funds, with penalties of up to N1 million in fines or two years’ imprisonment (Section 3(5)).

Stakeholders say the proposed reforms tackle one of Lagos’ most persistent housing problems, multi-year rent advances, where tenants are forced to pay lump sums upfront, often with hidden charges.

While some tenants have welcomed the move, others fear that monthly payments could embolden landlords to raise rents arbitrarily. Conversely, many salary earners argue that annual payments align better with their income cycles.

Speaking on the development, the Lagos State Commissioner for Housing, Moruf Akinderu-Fatai said introducing monthly or quarterly rent payment options will give residents more breathing space and reduce the stress of sourcing large lump sums for rent payments.

He disclosed that the government is engaging landlords, developers, and other stakeholders to address enforcement and payment system challenges before implementation.

Akinderu-Fatai added that the initiative is part of broader efforts to sanitise the real estate sector, curb fraudulent practices, and protect residents from unregistered agents and developers.

He further emphasised that all real estate practitioners, including agents, brokers, developers, and facility managers, must register with LASRERA or face legal consequences.

He also urged estate agents and associations such as the Estate Rent Commission Agents of Nigeria (ERCAN) to take a firm stand against quackery and arbitrary rent increases, while supporting the promotion of flexible rent payment models.

In his contribution, Principal Partner at Ismail & Partners, Gbenga Ismail, cautioned that while the proposed monthly and quarterly rent payment system may ease tenants’ burdens, it could also affect property availability across Lagos.

He warned that supply shortages could emerge, impacting the growth and stability of the rental market.

According to him, the government must complement the tenancy reforms with broader housing policies, including improving access to affordable land, promoting local building materials, and supporting housing finance schemes.

Citing the Advance Rent Section of the proposed law, Ismail noted: “It shall be unlawful for a landlord or his agent to demand or receive from a sitting tenant rent in excess of three months in respect of any premises; and it shall be unlawful for a sitting tenant to offer or pay rent in excess of three months in respect of any premises.”

However, he argued that the government’s approach appears more protective of tenants than of property owners, warning that without addressing structural issues such as land access, financing, and material costs, affordability will remain elusive.

In his reaction, Property Lawyer, Lawrence Ndukwe, highlighted that laws such as the Lagos Rent Control and Recovery of Premises Law, which regulates rental disputes, clearly state that no tenant can be evicted without a court order and due process.

‎“But in practice, this law is now being used by a small but growing number of tenants to game the system. These tenants, often called ‘professional tenants’ in real estate circles, know the law well and sometimes consult lawyers who advise them on how to stall lawful eviction, ” he added. ‎

‎He explained that years ago, landlords resorted to using touts or security operatives to throw out defaulting tenants, but those tactics now carry stiff penalties.

‎‎Anyone who tries that today risks jail or heavy fines, he warned.‎

‎Ndukwe noted that some of the lawyers working with such tenants are skilled at dragging out eviction cases. They file counterclaims, exploit technical loopholes, and threaten landlords with police involvement if any attempt is made to remove the tenant without a court order.

‎“As a result,” he said, “some tenants deliberately stay on after their rent expires. In extreme cases, landlords are left helpless, even when a new tenant has already paid and is waiting to move in.”

‎‎According to Ndukwe, “the legal protection intended for vulnerable renters most of the time ends up punishing those who have done everything by the book.‎

‎“Landlords, especially small-scale property owners who rely on rental income to survive, are the hardest hit. They are forced into prolonged legal battles, losing money each month the problematic tenant remains on their property.”