Lagos State is taking bold steps towards tackling the soaring cost of rent by introducing single-digit mortgage options and other housing interventions. With many residents struggling with skyrocketing rents, excessive agency fees, and challenge of huge advance payments, the state government, the state Housing Commissioner disclosed, is ramping up efforts to provide lasting solutions. IBRAHIM ADAM reports.
The conversation around rent regulation in Lagos is gaining momentum, with growing attention on the Lagos State House of Assembly. This follows a decisive move by Enugu State, which recently proposed a bill to rein in landlords’ and inordinate housing agents’ excesses. With Lagosians sinking under the weight of soaring rents and steep agency fees, many have been wondering if there is relief in the horizon. Will the government take the cue and come to their rescue?
Following Jubril Gawat, the Senior Special Assistant on New Media to Governor Babajide Sanwo-Olu’s X handle post: “LAGOS … Coming Soon. A very strong issue but must be well discussed and implemented after deliberation by the Lagos House of Assembly;” it might be in order to say something positive is in the offing.
As housing rents continue to climb, residents are eager to see whether these discussions will translate into meaningful policy changes.
Enugu’s bold step towards tenant protection
The Enugu State House of Assembly has put forward a bill seeking to revise the Landlord and Tenant Law, introducing measures to regulate rental practices. The proposed legislation aims to set a limit on agency and legal fees, capping them at 10% of annual rent, eliminate caution fees, and impose penalties of up to N500,000 or a six-month jail term for violations.
Additionally, the bill outlines a structured eviction process to curb unlawful removals and mandates that only accredited agents can operate within the state’s rental market.
Titled: “The Bill for a Law to Amend the Landlord and Tenant Law, CAP. 101, Laws of Enugu State, 2024,” the proposal, championed by Nkanu East State Constituency representative, Okey Mbah, had its first reading on Tuesday.
Speaking on the bill, Mbah emphasised its necessity: “The issues it seeks to resolve are widespread and have significantly affected our constituents.”
Life unbearable
For many landlords, the rising cost of rent is a necessary evil. They cite high cost of construction materials and economic instability as reasons for the hike. But are the increases appropriate or inordinate?
Our reporter found out that in areas like Agege, Surulere, Somolu, and Bariga, a room and parlour self-contained apartment goes for between N1m to N1.7m annually, with additional agreement, commission, damages, and legal fees ranging between N700,000 and N900,000.
Meanwhile, a single-room self-contained apartment costs between N700,000 and N1.2m, with agreement, commission, damages, and legal fees adding an extra N500,000 to N700,000.
However, many have queried the numerous attached fees. A resident, Adekunle Sawyer, who only just got an apartment in Surulere, wondered why extras are being added to housing costs.
“In the past, all people paid were the rent value and commission and agreement fees, which were usually just 10 percent; but now you hear all sorts like damages, legal fees; and on top of it, commissions are no longer 10 percent. Imagine renting a house and paying 200 percent of your annual rent as agent and agreement fees. It’s as if they just want to milk prospective tenants to death.”
And he put the blame more on housing agents. “They are the ones who tell the landlords, ‘this and this are the current rates; don’t worry they’ll pay’. Would you believe that I once met a housing agent who was telling the landlord to put up his 2-bedroom flat for N500,000, while he was paying just N200,000 for a similar apartment on the same street. When I accosted him, he said he was an old tenant.”
Abimbola, a prospective tenant, shared a shocking revelation.
“A shop rent at N500,000, agreement N250,000, commission N250,000, caution N50,000, agent fee N50,000. Just this morning, I asked the agent if he could pay such amount for that size of shop, he went cold.”
For many residents, skyrocketing rents have become unbearable. Landlords continue to raise rents in cahoots with agents arbitrarily, sometimes without prior notice.
In response to the outcry and especially The Nation’s feature last Sunday titled: “Rent crisis: Will Lagos follow the Enugu footprints?”, the Lagos State Government, has been reacting, assuring residents that action is being taken to address these concerns.
We’re addressing challenges of high rent and housing deficit – commissioner
The Lagos State Commissioner for Housing, Moruf Akinderu-Fatai, acknowledged the severity of the problem. He, however, made it clear that arbitrary rent hikes are not just a Lagos issue but a nationwide challenge.
According to him, the administration of Governor Babajide Sanwo-Olu has been proactive in addressing the housing deficit, which is a major driver of high rent.
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“The Lagos State Government is not unaware of this challenge. It is not peculiar to Lagos State, but also the federation. We have been up and doing from day one under the administration of Mr. Babajide Sanwo-Olu,” he said.
One of the key measures taken, he stated, is the completion of abandoned housing schemes across the state. According to Akinderu-Fatai, 21 housing schemes have been completed, with a focus on low-income earners.
“Not only have we concluded 21 schemes, but also the majority of these schemes are for low-income earners.
“Most of these schemes are sold far below market prices. The aim was to bring more people into the housing ladder,” Akinderu-Fatai said.
The commissioner is of the opinion that increasing the supply of affordable housing will help stabilise rental prices and reduce the pressure on tenants. However, challenges remain, including market forces that favour landlords due to high demand and limited supply, he observed.
Burden of multiple rental fees
Akinderu-Fatai also acknowledged the burden of additional fees such agreement, commission, damages, and legal fees, which significantly inflate the overall rental expenses.
To address this, the state government established the Lagos State Real Estate Transaction Authority (LASRERA) to regulate housing activities and ensure fair dealings in real estate transactions.
“The authority not only regulates transactions but also resolves issues within real estate transactions between landlords and tenants.”
Additionally, the government introduced a rent-to-own scheme that allows tenants to own their homes by paying an initial 5% and then spreading payments over 10 years.
This, according to Akinderu-Fatai, is one of the government’s major strategies to protect tenants from exploitative fees.
“There is a rent-to-own programme, which allows you to pay just 5 per cent and pay monthly over the next 10 years. All these and other actions, including collaboration with private investors as well as keying into the Renewed Hope Housing Scheme of the President Bola Ahmed Tinubu Administration, have been what the Sanwo-Olu administration has been taking to address housing deficit in the state.”
Push for monthly rent gaining momentum
For many, especially low to medium income earners, a most controversial aspect of renting homes in Lagos is the challenge of having to pay one and a half to two years’ upfront rent. The worst part is that even after the initial rent, landlords still expect tenants to pay one year upfront subsequently, which usually put the tenant under serious psychological strain once due date is approaching.
A N500,000 per annum rent, if permitted to be broken down and paid on a monthly basis, will come down to just over N41,000, a far easier scenario, even for a middle-income earner.
Akinderu-Fatai said: “The state government has been working on this challenge. It is an aberration to demand yearly rents from tenants in a country where workers earn their salaries monthly.”
He attributes this practice to supply and demand forces, emphasising that the high demand for housing, coupled with limited supply, allows landlords to dictate rental conditions.
“This practice is thriving because we have a very huge demand and a very low supply of affordable housing.”
To address this, he said the government is engaging real estate developers, estate agents, and financial institutions to explore ways of reintroducing monthly rent payments. The state is also facilitating access to affordable mortgages with interest rates of no more than 10% over 20 years.
“This government has been discussing with the general real estate practitioners, such as developers, realtors and estate agents. We are engaging their leadership to first work out how we can go back to the era of paying rent monthly.
“We are also encouraging developers to do more in low-income areas. Some financial institutions are also working with us to build affordable mortgages of at least 20 years at highest 10 percent interest.
“We recently signed a memorandum of understanding (MoU) with Access Bank Group. We are also helping some developers access loans to build houses purely for low-income people.”
Private sector collaboration for affordable housing
Given the scale of Lagos’ housing demand, the government has turned to public-private partnerships to accelerate the provision of affordable housing.
“The public-private collaboration is very good. We have an enabling law that gives a lot of confidence to investors.”
However, Akinderu-Fatai noted that the cost of funding remains a major challenge, making it difficult for developers to invest in low-cost housing.
“The cost of funding has been a major setback, as it makes it difficult for the investors to invest in low-cost housing. So, much attention has been on the high-end part of the market.”
Despite these challenges, Governor Sanwo-Olu remains committed to providing low-income housing. Projects in areas such as Ajara, Egan, Sangotedo, Ibeshe, and Itamarun Epe are nearing completion.
“Governor Sanwo-Olu is giving us full support to complete these projects. He has been leading us in making sure collaboration with the private sector gives us better outcomes.”
Regulating the real estate market
To curb exploitative practices in the real estate sector, the Lagos State Real Estate Transaction Authority has intensified efforts to regulate real estate agents and developers.
“It is a major duty of the Lagos State Real Estate Transaction Authority (LASRERA) to regulate this sector. They have been doing that for over five years now,” the commissioner further stated.
According to the commissioner, LASRERA has resolved numerous disputes, assisted residents in retrieving their investments, and taken legal action against fraudulent agents.
“Many unscrupulous people have been charged to court. Some are serving jail terms while others have refunded.”
The future of affordable housing in Lagos
With Lagos’ rapidly growing population, the state must adopt long-term strategies to meet the increasing demand for affordable housing. Akinderu-Fatai believes that sustainable solutions include increasing funding for low-cost housing, encouraging research on cost-effective building methods, and training more artisans to support construction.
“We must have to get funding at a low cost of less than 10 percent. We must encourage more research to build more cheaply and at a faster rate.”
Additionally, the commissioner stressed the importance of going vertical—building high-rise residential structures to maximise space and accommodate more people.
“Lagos must make a determined effort to go vertically and subsidise.”
Rent-to-Own Scheme: Successes and Challenges
The state’s rent-to-own scheme has been widely embraced, with thousands of beneficiaries. However, challenges persist, particularly with some beneficiaries attempting to resell their allocated units illegally.
“The state’s rent-to-own scheme has majorly achieved the intended purpose. Thousands of people are currently on the scheme.”
Akinderu-Fatai revealed that the government has revoked allocations of those found violating the policy.
“We have caught some beneficiaries selling their units. We have revoked so many allocations.”
Despite these challenges, the commissioner remains optimistic. He cited the Oba Hamzat Housing Estate in Mushin, where allottees have successfully completed their payments after 10 years and now own their flats outright.
“This is to show that the programme is alive and working.”
While challenges remain, Lagosians can take solace in the fact that the government is making moves to create a fairer, more sustainable rental system. Whether these measures will be enough to ease the burden on tenants remains to be seen.
