Rising rent arrears, skyrocketing housing costs: real estate professionals sound a dangerous alarm – Nairametrics


… The owners of Lagos are not smiling… but neither are the tenants.

Real estate practitioners in Lagos have decried the growing trend of rent defaults in the state amid astronomical increases in house rents by landlords.

Conversations that Nairametrics has held with several realtors, tenants and owners of residential properties in the state not only confirm this to be true, but also strongly point to a further increase in rental prices for residential properties in different parts of the state then. as the year draws near to a loved one.

What the owners say

Several landlords who participated in our survey lamented the growing inability of their tenants to meet their rent obligations, resulting in a backlog of arrears that spanned months and sometimes years. The situation has put many of them who depend on the punctual payment of these rents for their survival, in a desperate situation.

“The situation has been further aggravated by the pandemic, which has resulted in job losses and wage cuts, making it difficult for many households to meet their financial obligations,” Alhaja Mogaji told Nairametrics.

The septuagenarian retiree who owns three blocks of 4 apartments each in the Iyana Ipaja district of Lagos expressed her dismay at the turn of events in the country, citing that many of her friends were also experiencing similar situations with their tenants.

“While some of these tenants have been in dire financial straits, some have just chosen to be downright mean to us landlords, putting all of their personal needs before paying rent, forgetting that we landlords are also dependent of these rents for our survival.

I am currently involved in an eviction proceeding to get rid of two of my tenants. Once they are gone, I will do some renovations, revise the rent upwards and put the house back on the market ”, she added.

Another respondent, Mr. Kolawole, owner of a building with four rental apartments in the Festac axis of Lagos said:

“Almost everything has gone up in price, from food to building materials. For a landlord like me who lives on rent paid by tenants, I have no choice but to transfer this high cost to them, otherwise my survival may be in jeopardy.

When asked if his tenants defaulted on rent payments, he said his tenants knew better than to owe him rent since he had his own private means of dealing with defaulters. He declined, however, to comment on these “private means” but said he was not “wasting his time” with courts and eviction proceedings.

The story was not much different for Raheem, an owner from the Alapere area in Lagos State.

“My 2 bedroom apartments cost 650,000 naira and for the amenities and furnishings I have provided in the apartments it is more than a reasonable amount to charge as rent. However, two of my tenants have not paid the rent for almost two years, citing economic difficulties.

The worst part is that although I have served them with eviction notices they have failed to vacate the apartments as they claim they cannot afford the exorbitant amount required to get a new apartment especially with the fees additional fees that accompany rents such as agency fees, bail fees and legal fees.

I have no choice but to charge my lawyer at great personal expense, to take the case to court ”, he lamented.

When asked if he would revise the rent upwards after successfully evicting tenants, he said: “Of course! The price of everything is skyrocketing in the economy so why not the rents? It would cost me almost double the amount it would have cost me two years ago to renovate the apartments after the tenants left. . Who will bear the cost if I don’t increase the rents? Me? “

Tenants respond

As landlords continue to bemoan their losses in lost annual rental income, several tenants have accused landlords of being shylocks who take advantage of poor economic conditions and a largely unregulated industry to mow tenants. .

“Some of these owners are quite heartless,” Emeka Ejiofor, a parts trader, told Nairametrics.

“It’s understandable that landlords are asking huge rents for newly developed properties because no one is blind to the effect of inflation on building material prices lately, but what about houses that were built 15 years ago when things weren’t so bad in the country?

“What is the reason why owners of such homes price their properties at about the same rate as new buildings?” It’s totally unfair, ”he added.he complained.

Hassan Ibrahim, an IT expert and entrepreneur also expressed his grievance against the actions of some owners in Lagos. Ibrahim questioned the justification for the rental fee for a 3 bedroom apartment up to N 550,000 in Alagbado where he lives; an area which, according to him, can in no way be classified as a learned part of the metropolis of Lagos.

“With the way things are going in the country, the prices of everything reaching astronomical levels, it is no wonder that some of us can no longer save to pay our rent”he added.

For John Oju, who told Nairametrics his salary has stayed the same for over four years, landlords in Lagos should be more sensitive to the plight of their tenants.

“Everything is increasing, but my salary has not increased since I joined my organization four years ago. My landlord is too strict; he should be more considerate ”,John moaned.

Some state residents have also become more daring, challenging what they see as misconduct by landlords indiscriminately raising rents on short notice.

“My landlord, who wanted to increase the rent, encountered strong resistance from tenants. Rather than contacting us at the start of the year, he decided to inform us 8 months after the start of the year, so we rejected his plan ”,Olusola Asogbon told Nairametrics.

Real estate agents intervene

ESV. Dr Abiodun Bewaji, of Abiodun Bewaji Consulting, confirmed the wild rises in rents to Nairametrics, warning that the trend could continue at the end of the year. He said:

“One of the fallout from the covid pandemic is our inability to get tenants to pay their unpaid rents. Many real estate agents are currently facing multiple cases of rent default, especially among low and middle income earners. In conclusion, the rental default is more pronounced for residential properties than for commercial properties.

He noted that new homes would cost more than older homes due to the high cost of building materials, stating that while professionally speaking rents are expected to be increased every 3 years, many landlords have become shylocks, always looking for opportunities to increase rents.

“Renters should expect higher rents as the year goes down; the economy is not friendly. The effects would drive up apartment prices ”,he predicted.

Steve Dovizia of Doviziano Properties Ltd also confirmed to our analysts that tenant rent compliance this year has been very low compared to previous years due to the current economic situation.

“Home rents are also expected to increase towards the end of the year due to the rising cost of building materials. However, I have advised my clients for 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% tenant compliance for properties managed by his firm.

“Timely rent renewals are every homeowner’s dream, but the economy has the final say on it. For the projects that I am currently managing, the respect of rent renewals has been good; only one defaulted out of 8 tenants whose rents expired in the past four months.

He did confirm, however, that some of his colleagues in the industry had not had it so easy, saying that “Defects and evictions have increased this year across the board as the poor economy caused by the Covid-19 lockdown and clunky government policies have reduced the purchasing power of citizens, plunging further into poverty.”

On the issue of rent increases at the end of the year, Obi predicted:

“As the year draws to a close, rents are expected to increase by at least 25% and this could trigger a massive relocation of tenants to areas where rental costs are lower. With the increase in remote / online working, many tenants may move to neighboring states where rents are more affordable.

Ugbaja Abel of International Real Estate Consultants (IREC) believes that the percentage increase in rents at the end of the year could reach 50% compared to previous years.

“Rents have already gone up due to inflation and the depreciation of the value of the naira. The dollar rose and the prices of building materials rose. Thus, before the end of the year, it will reach an increase of up to 50% compared to previous years. “

He noted that some tenants have moved to the suburbs in search of cheaper accommodation and revealed that his company has resorted to authorizing tenants of the properties they manage.“pay in installments to allow them to save on each payment.”

To close the deal …

While many landlords we spoke to called on the government to intervene by stabilizing the economy to restore the purchasing power of tenants, many tenants have called on the government to create and enforce laws that prevent tenants. landlords take unfair advantage of tenants, especially in the area of ​​rent increases.

“There should be laws that allow tenants to pay rent quarterly or even monthly, to ease the burden of having to collect a gigantic amount for an annual payment,”Hadijat Bamidele, a customer service agent, said.

From realtors, this is a fair warning to tenants to tighten their belts, as many landlords may not back down on rent increases this year.


About Gene Schafer

Check Also

Should I sell my rental property or spend the money renovating it?

I am a 71 year old single low income female with no children or dependents. …

Leave a Reply

Your email address will not be published.