Fashola’s one-year rent legacy sets standard for Lagos rental market

fasholaThe one-year rent legacy of the Babatunde Fashola administration in Lagos State is, increasingly, setting standard for the rental market in the state as over 80 percent of landlords in most locations in the state is not only accepting, but also asking for one-year rent.

When the Fashola government, in August 2011, came up with a Tenancy Law, the intension was to protect tenants from exploitation of landlords, providing that it was unlawful for any landlord or his agent to demand or receive more than one-year rent from a new tenant.

The law also stipulates that it is unlawful and criminal for a landlord or his agent to demand or receive from a sitting tenant rent in excess of six months in respect of any premises, which means that those who are already tenants are not expected to pay more than six months in advance to their landlords.

The law places a fine of N100,000 or three years imprisonment on any landlord or new tenant who pays in excess of one year and N100,000 or three months imprisonment for any landlord who fails to issue a receipt to a tenant for payment of rent.

BusinessDay investigation shows that more property owners are embracing the one-year rent in many parts of the state, including the low income areas such as Ojo, Ikotun, Okokomaiko, Egbeda, Satelite Town, Orile, Iyan Ipaja, Abule Egba, etc, and also some mid-income and up-market settlements like Ikeja GRA, Maryland, Ilupeju, Ikoyi, and a few locations in Lekki.

“I changed apartment just a couple of months ago and in eight out of the 10 residences I visited, the landlords asked for one-year rent,” Gbenga Adebanjo, who lives in a Lagos suburb, told BusinessDay.

Adebanjo said the search for a new apartment took him to various locations like Ejigbo, Idimu, Isolo and Oke-Afa, where he now resides, adding that though some landlords asked for one-and-half years, none asked for two years rent.

Contrary to arguments in some quarters that the new rent regime is driven by extraneous factors, the state government insists that the Tenancy Law is playing a role in changing the perception of landlords in the state, stressing that they have been enforcing the law.

Bosun Jeje, former commissioner for housing, disclosed that some people had been prosecuted and that some were being prosecuted under the law, noting that, “landlords in many parts of the state are voluntarily complying with the law and some are not; but on the whole, we have recorded considerable level of success.”

An analyst, who did not want to be named, points out, however, that as attractive as the one-year rent is, it comes at a cost, saying that the tenant stands the risk of being slammed an increase upon the expiration of the one year or a quit notice option.

“Some landlords are demanding for one year. Even where the tenant opts to pay two years, you see them saying no! But they are doing so to give them the flexibility of annual review of the rent,” said Robert Duru, a real estate vendor who operates in Satellite Town area of the state.

Francis Uba, a landlord with a property located at Abule-Ado, near the Lagos International Trade Fair Complex, told BusinessDay that he accepted one year payment from all tenants coming into his newly completed property to enable him study them within this period and determine who he would allow to stay beyond a year.

“Anyone of them who gives trouble leaves on expiration of the one year rent,” he said.

At the high-end property market, however, the story is slightly different, because here the landlords are compelled to accept one-year rent by market realities that have seen demand slowing and creating high vacancy rate, which Bismarck Rewane, CEO of Financial Derivative Company, estimates at 32 percent in residential apartments on Victoria Island.

Source:BusinessDay

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s