Landlords, house agents and tenants ignore Lagos State Tenacity Law which prescribes monthly and quarterly house and office rent payments, but instead, sticking to annual and 18-month rent payments, LEADERSHIP learnt.
The monthly and quarterly rent system explores new ways to reduce the pressure of yearly rent payment as it provides housing affordability and accessibility in the state.
The introduction of a monthly rent payment system is expected to ease the financial burden on tenants and create a more flexible and inclusive rental market as opposed to the yearly rent payment that puts rent burdens on residents and prospective tenants.
Checks by LEADERSHIP revealed that landlords, facility managers and some tenants prefer an annual payment system on leased property. This is because annual rent payment allows the landlords and facility managers to recoup their returns on investment and also guarantee stability of cash flow.
Stakeholders believe that, while annual rent payments have been the norm in Lagos, there’s a clear trend towards monthly payments gaining popularity and the Lagos State government is actively working to implement policies that support this shift.
This move is expected to benefit tenants by making housing more affordable and manageable, and it also encourages a more competitive and equitable rental market.
The Lagos State government reiterated that the regulation of annual rent payment to monthly payment will ease rent burden across LCDAs and make the rental market more attractive to residents.
Checks revealed that some tenants prefer annual rent payment as it gives them relief to manage household budgets and bills.
Analysts argued that, Monthly Rent payment gives room for financial flexibility to allow tenants to better manage their finances and avoid the burdens of large upfront annual payments.
They equally stated that it reduces financial strains and burdens of saving up a large sum for annual rent while stressing that monthly payments make renting more accessible, especially, in a competitive market like Lagos.
On the other hand, Landlords historically prefer annual payments to ensure a steady income stream and reduce the risk of tenants defaulting the rent payment structure.
Speaking to some Landlords in Lagos, they cited the high cost of property development as a reason for preferring annual payments to quickly recoup returns on their investment even as they believe that annual payments provide more stability and predictability in rental income.
Earlier, commissioner of Housing, Moruf Akinderu-Fatai posited that, monthly or quarterly payment options will give people more breathing space and reduce the stress associated with sourcing lump sums, to pay rent.
He added that the government is currently consulting with landlords, developers, and other stakeholders to resolve potential challenges related to enforcement and payment systems before rolling out the initiative. He noted that many residents find annual rent payments difficult and that the new system is expected to provide relief.
He further affirmed that the move is part of ongoing efforts to sanitise the industry, curb fraudulent practices, and protect residents from unregistered agents and developers.
He stated that, real estate practitioners including agents, brokers, developers, and facility managers are now mandated to register with LASRERA or face legal consequences.
Hon Akinderu-Fatai also encouraged estate agents and similar bodies to come out strongly against quacks who encourage property owners to increase rent arbitrarily and create fees unknown to real estate transactions law of Lagos State. He further advised ERCAN members to help spread the promotion of monthly, quarterly, and yearly rent among its members.
Also speaking, the president of Estate Rent and Commission Agents Association of Nigeria (ERCAN), Godwin Aleke, stated that its members are committed to rent affordability and will assist the Lagos State government to promote monthly, quarterly, and yearly rent systems.
He pledged the association’s readiness to work in synergy with other professional bodies and stakeholders to sanitize the real estate practice in Lagos State henceforth.
Meanwhile stakeholders are divided on the proposed shift to monthly rent payments. While some favour it for aligning with monthly salaries and reducing the burden of large upfront payments, others raise concerns about potential impacts on property supply and the need for legal clarity and infrastructure support.
Speaking in a media chat, Real Estate developer, Olawale Babatunde said, monthly rent payment will introduce staggered payment of rent on lease apartments adding that this would directly impact the housing sector as many landlords and property owners won’t be able to recoup their investment.
Babatunde stated that, returns on investment will be low with the introduction of monthly rent payment while buttressing that defaulting tenants will destroy the rental structure with staggered rent payment.
He alluded that paying rent annually can save money, provide peace of mind, strengthen landlord relations, and lock in rates, but requires a large upfront payment and may be risky if you move early.
On his part, principal partner, Ismail & Partners, Gbenga Ismail said the proposal and implementation of monthly and quarterly rent payment could affect the availability of rental properties across Lagos State.
He equally added that property supply issues would arise and it could directly impact the growth of the rental market sector.
Commenting on the cost of properties and rentals in Lagos state, Ismail remarked that the government can help the situation by introducing robust policies to improve access to affordable land, affordable building materials, among others.
The Advance Rent Section under the Lagos Tenancy Law stipulates that, “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; It shall be unlawful for a sitting tenant to offer or pay rent in excess of three months in respect of any premises.”
“Any person who receives or pay rent in excess of what is prescribed in this section shall be guilty of an offence and shall be liable to a fine of N100,000 or to three months imprisonment or any other non-custodial disposition,” it stated.
