Lagos Caps Commission At 5% In New Tenancy Bill To Rein In Estate Agents

The Lagos State government has unveiled reforms aimed at sanitising the real estate sector, with strict regulation of estate agents and a new 5% commission cap emerging as central features of the proposed Lagos State Tenancy and Recovery of Premises Bill 2025.

The bill, which updates the state’s Tenancy Law of 2011, is designed to address long-standing abuses in the rental market, particularly the activities of unregulated agents, excessive agency fees, advance rent demands and arbitrary eviction practices.

At the heart of the proposed law is a decisive clampdown on estate agents and intermediaries, long accused of exploiting tenants through inflated commissions, fraudulent listings and double-renting schemes.

Under Section 3 of the bill, all real estate agents operating in Lagos must be registered with the Lagos State Real Estate Regulatory Authority (LASRERA). The legislation further introduces a uniform ceiling on agency fees, capping commissions at 5 per cent of annual rent, regardless of location or property type.

Agents are also required to remit all rent collected from tenants to property owners within 7 working days and to issue proper receipts for each transaction. Violations attract stiff penalties, including fines of up to “N1 million”, a prison term of up to “two years”, or both.

For years, Lagos tenants have complained of rampant abuses by unlicensed agents, including inflated charges and outright fraud. In one widely reported case in 2019, a newly married couple reportedly lost N900,000 to fraudulent house agents. The government says the new framework is intended to enforce transparency, protect tenants and restore professionalism to the sector.

The bill also places firm limits on advance rent payments, another major pressure point in Lagos’ housing market. Landlords are prohibited from demanding more than “one year’s rent” from new tenants, while existing tenants paying monthly rent cannot be asked to pay more than “three months upfront”.

Tenants are equally barred from offering rent beyond these limits, a provision aimed at discouraging bidding wars that drive up rental prices. Breaches of this rule carry penalties of up to N1 million in fines or a prison term of up to three months.

While the provision has been widely welcomed by renters, housing experts caution that enforcement may prove challenging in high-demand areas such as Lekki, Ikoyi and Ikeja, where supply shortages remain acute.

In a major shift, the proposed law criminalises illegal eviction practices. Sections 10 and 43 expressly prohibit landlords from removing roofing sheets, disconnecting utilities, blocking access to premises or seizing tenants’ belongings without a court order.

Such actions, which have become commonplace in tenancy disputes across Lagos, would attract penalties of up to “N1 million in fines” or “six months’ imprisonment”. The provision is expected to significantly strengthen tenant protections and curb landlords’ use of self-help measures.

Although the bill stops short of imposing rent control, it introduces a legal mechanism for tenants to challenge rent increases they consider unreasonable. Section 33 empowers courts to assess rent hikes by comparing prices in similar locations and reviewing relevant evidence.

Importantly, landlords are barred from evicting tenants while such disputes are pending, offering renters a layer of protection against sudden and sharp increases.

The bill also seeks to streamline the resolution of tenancy disputes. Eviction cases may now be initiated by originating summons; hearings must be scheduled within 14 days; and courts are permitted to sit on weekends and public holidays. Mediation is capped at 30 days.

Landlords will be required to issue biannual statements detailing service charges, while security deposits must be refunded unless verifiable damage is established. Tenants are also guaranteed explicit rights to privacy, peaceful occupation and access to common areas.

The Lagos State Tenancy and Recovery of Premises Bill 2025, passed its second reading in July 2025, is currently before the House Committee on Housing. Although it has not yet become law, its provisions have already reshaped conversations across the state’s real estate sector.

For tenants, the bill signals potential relief from long-standing exploitation. For estate agents and landlords, it marks the beginning of tighter regulation, clearer rules and significantly higher accountability in Lagos’ housing market.