…Lagos landlords aren’t smiling… but neither are the tenants.
Real estate practitioners in Lagos have decried the growing trend of rent defaults in the state amid astronomical increments in house rents by landlords.
Conversations held by Nairametrics with several realtors, tenants and owners of residential properties in the state not only confirm this to be true but also point strongly to a further rise in rental prices of residential properties across different parts of the state as the year draws to a close.
What homeowners are saying
Several homeowners who participated in our survey lamented the increasing inability of their tenants to meet up with rent obligations, leading to a backlog of arrears running into months and sometimes, years. The situation has put many of them who rely on the timely payment of these rents for their survival, in dire straits.
“The situation has been further compounded by the pandemic, which led to job losses and pay cuts, making it difficult for many households to meet up with their financial obligations,” Alhaja Mogaji told Nairametrics.
The septuagenarian retiree who owns three blocks of 4-flats each in Iyana Ipaja area of Lagos expressed dismay at the turn of events in the country, citing that many of her cronies were also experiencing similar situations with their tenants.
“While some of these tenants have truly been thrown into deplorable financial situations, some have just chosen to be outrightly wicked to us landlords, placing all their personal needs above the payment of their rent, forgetting that we landlords also depend on these rents for our survival.
I am currently embroiled in an eviction process to get rid of two of my tenants. Once they leave, I will do some renovation, review the rent upwards and put the house back on the market,” she added.
Another respondent, Mr Kolawole, owner of a block of four rental apartments in the Festac axis of Lagos stated:
“Nearly everything has increased in price, from foodstuff to building materials. For a landlord like me who lives off rents paid by tenants, I have no choice but to transfer this high cost to them, else, my survival may be threatened.”
When asked if his tenants were defaulting on rents, he stated that his tenants knew better than to owe him rents since he had his own private means of dealing with defaulters. He however declined to comment on these “private means” but stated that he does not “waste his time” with courts and legal eviction procedures.
The tale was not much different for Raheem, a landlord in Alapere area of Lagos state.
“My 2-bedroom apartments go for N650,000 naira and for the amenities and furnishing that I have provided in the apartments, it is more than a fair amount to charge as rent. Two of my tenants have, however, failed to pay the rent for close to two years, citing the hardship in the economy.
The worst part is that although I have served them eviction notices, they have failed to move out of the apartments because they claim that they cannot afford the exorbitant amount required to obtain a new apartment especially with the additional fees that accompany rents such as agency fee, caution fee and legal fees.
I have no choice but to instruct my lawyer at great personal cost, to take the matter to court,” he lamented.
When asked if he would review the rent upwards after successfully evicting the tenants, he stated, “Of course! The price of everything is shooting up in the economy so why not rents? It would cost me nearly twice the amount it would have cost two years ago to renovate the apartments after the tenants leave. Who will bear the cost if I don’t increase the rents? Me?”
Tenants respond
While landlords continue to bemoan their losses in terms of annual revenue loss from rents, several tenants have accused the landlords of being shylocks who are taking advantage of a bad economic situation and a largely unregulated sector to fleece tenants.
“Some of these landlords are quite heartless,” Emeka Ejiofor, a spare parts trader told Nairametrics.
“It is understandable when landlords request huge rents for newly developed properties because no one is blind to the effect of inflation on the prices of building materials in recent times, but what about houses that were built as far back as 15 years ago, when things were not this bad in the country?
“What is the rationale behind landlords of such houses pricing their properties at nearly the same rate as those of new buildings? It is grossly unfair,” he complained.
Hassan Ibrahim, an IT expert and entrepreneur also expressed his grievance with the actions of some Lagos homeowners. Ibrahim questioned the justification for rental fees for a 3-bedroom apartment being as high as N550,000 in Alagbado where he lives; an area which he said cannot by any measure, be classed as a highbrow part of the Lagos metropolis.
“With the way things have been going in the country, prices of everything rising to astronomical levels, it is no wonder that some of us can no longer save up to pay our rent,” he added.
For John Oju who told Nairametrics that his salary has remained the same for over four years, landlords in Lagos should be more sympathetic to the plight of their tenants.
“Everything is increasing, but my salary hasn’t increased since I joined my organization four years ago. My landlord is too harsh; he should be more considerate,” John lamented.
Some residents of the state have also grown bolder, challenging what they see to be misconduct on the part of the landlords who indiscriminately jerk up rents on short notice.
“My landlord, who wanted to increase rent, met with strong resistance from the tenants. Rather than communicating with us at the beginning of the year, he decided to inform us 8 months into the year, so we rejected his plan,” Olusola Asogbon told Nairametrics.
Realtors weigh in
ESV. Dr Abiodun Bewaji, of Abiodun Bewaji Consulting, confirmed the wild rent hikes to Nairametrics, warning that the trend could continue as the year winds down. He said:
“One of the fallouts of the covid pandemic is our inability to get tenants to pay up their outstanding rents. Many realtors are currently dealing with multiple cases of rent defaults, particularly among the lower- and middle-income earners. Conclusively, rent default is more pronounced for residential properties than for commercial properties.
He noted that new houses would cost more than older houses because of the high cost of building materials, stating that although professionally speaking, rents should be increased at 3-year intervals, many landlords have become shylocks, always fishing for opportunities to increase rents.
“Tenants should expect higher rents as the year goes down; the economy is not friendly. The effects would put apartment prices on the rise,” he predicted.
Steve Dovizia of Doviziano Properties Ltd also confirmed to our analysts that rent compliance from tenants this year has been very low compared to previous years because of the current economic situation.
“House rents are also likely to go up towards the year’s end because of the rising cost of building materials. However, I have advised my clients for the properties that I manage not to increase rents for now until the economy is stable,” he added.
Pascal Obi, Project Manager at Olist Homes has a slightly different experience, citing nearly 90% compliance from tenants of properties managed by his firm.
“Timely rent renewal is the dream of all landlords, but the economy has the final say over that. For the projects I currently manage, rent renewal compliance has been good; only one defaulted out of 8 tenants whose rent expired in the last four months.
He however confirmed that some of his colleagues in the industry have not had it so smooth, stating that“Defaults and evictions have increased this year across board as bad economy caused by covid-19 lockdown and clumsy govt policies have reduced the purchasing power of citizens, plunging more into poverty.”
On the issue of rent increments as the year wraps up, Obi predicted:
“As the year winds down, rent is bound to go up by at least 25% and this could trigger massive relocation of tenants to areas with lower rent costs. With the rise in remote/online work, many tenants may relocate to neighbouring states where rents are more affordable.”
Ugbaja Abel of International Real Estate Consultants (IREC) thinks the percentage increase in rents at the year’s end could soar as high as 50% compared to previous years.
“Rents have gone up already due to inflation and the depreciation of the value of the naira. The dollar has gone up, and the prices of building materials have gone up. So, before the year runs out, it will hit an increase of up to 50% compared to previous years.”
He noted that some tenants have moved to the suburbs in search of cheaper accommodations and disclosed that his firm had resorted to allowing tenants of properties they manage “pay in instalments to enable them to save up for each payment.”
To conclude the matter…
While many of the landlords we spoke to called on the government to intervene by stabilising the economy to restore the purchasing power of tenants, many tenants called on the government to create and enforce laws that prevent landlords from taking undue advantage of tenants, particularly in the area of rent increments.
“There should be laws that allow tenants to pay rents quarterly or even monthly, to ease the burden of having to gather a mammoth amount for an annual payment,” Hadijat Bamidele, a customer care agent said.
From realtors, it is a fair warning to tenants to tighten their belts as many landlords may not back down on rent increments this year.
source: Nairametrics
