Landlords and advance rent

MANY Nigerians should be concerned about the recent suggestion by the Federal Attorney-General and Minister of Justice, Mr. Michael Aondoakaa that steps need be taken to stop the collection of advance rent by landlords in the country. The Justice Minister was said to have pointed out that, no Nigerian, whether in the private or public sector, earns an income in advance. Even in the formal sector which is regulated according to certain principles, the Minister argued further, no one earns an income before doing the job. It is therefore anomalous and stressful to compel tenants to pay rents in advance of two or three years as is widely the practice, especially in urban areas.

The Minister has therefore urged the Attorneys-General of the states of the federation to facilitate the process of making it illegal for the practice to continue. Specifically, the Minister said that the meeting of the Attorneys-General would 'focus on legislation that would provide a positive and lasting impact on the lives of Nigerians'.

This is an interesting proposal, even if the major challenge lies in ensuring access to housing for all citizens, and providing a more enabling environment in the building and mortgage sectors. Advance collection of rent by landlords or their agents is a widespread practice. Nigerian landlords are wont to ask for advance rent payment for one, two or more years depending on the needs of the particular landlord in what is clearly a seller's market.

Apart from the rent, landlords through their agents add what they call agreement fees which vary between 20 and 30 per cent of the total sum as well as a percentage commission of the same rate. In some cases, potential tenants pay commission and agreement fees that are almost up to 50 per cent of the rent itself. Some callous landlords compel tenants who may have occupied the property for years to pay in advance or quit the property. In extreme cases, some landlords collect advance rents from tenants, which they then use to complete the building. No doubt, many Nigerians are having it rough with their landlords in the country.

Most landlords in the urban areas, including Lagos, Port Harcourt and Abuja, are particularly notorious for their aggressive and unorthodox methods. Because there is a housing crisis in the country, with desperate, prospective tenants looking for shelter, most tenants are at the mercy of their landlords. Even where the existing laws spell out the rights of landlords and tenants and the nature of tenancy agreements, many landlords have been tempted to resort to unusual tactics to humiliate their tenants. Such tactics include removing the roof of a building, hiring thugs to intimidate tenants, appearing before a magistrate with 'phoney tenants' and witnesses with a view to obtaining judgment against a 'defaulting' tenant. A tenant is therefore given the shock of his life when a document purportedly originating from a Rent Tribunal is presented to him asking him to vacate the property immediately.

The traumatic experiences of tenants are legion. In Abuja, the Federal Capital Territory for example, there is no connection whatsoever between the high rents that are charged and the economic realities of the city. Abuja is a phenomenal contradiction. Is this not one of the reasons why the level of corruption in the civil service is so high? Here as in other parts of the country, landlords choose to fix high rents, sometimes ironically pointing to the rising cost of building materials even if the property was built many years earlier.

A number of landlords are however compelled by circumstances to overreach themselves. Collection of advance rent protects the landlord against the possibility of the tenant failing to pay when the rent is due. Some landlords built their property with mortgage loans, and are required to pay high interests on the principal amount. The cost of maintaining the loan also invariably continues to rise. For this category of landlords, collection of advance rents seems to be the only way to recoup their investment, pay off their creditors and make ends meet.

Besides, there is a housing crisis in the country. The cost of building materials is high. Some of the housing estates built by the government for the poor or middle-income groups have been hijacked by the rich; too many people live in squalor in Nigerian cities. Sometimes right beside a posh estate, a slum develops. In such an environment the crime rate rises. A vicious cycle then plays itself out. Both the property owner and the tenant are in dire straits of some sort. The effect therefore is that the people get more desperate while the landlords appear more callous. What is to be done?

Government should encourage mortgage financing at affordable interest rates, possibly a single digit interest rate. It is possible to inject more funds into the mortgage sector with a view to boosting its performance. There should be more access to credit financing which can be repaid over a long period of time. In other parts of the world, building or acquiring property is a citizen-friendly process.

Although, there are existing laws, which regulate landlord/tenant relationships, the laws are mostly in favour of landlords, and at the moment, the Rent Edicts do not specifically prevent landlords from collecting advance rent. The Attorney-General of the Federation's proposal is people-oriented, but its workability will depend on the buy-in of the states. This is not an item on the Exclusive or concurrent Legislative list, it is a matter for the states which the Attorneys-General in the states should feel obliged to consider.