Tuesday, June 09, 2009

Banning advance rents payment

THE move by the Lagos State Government to ban the collection of multiple advance rents from helpless tenants by landlords and estate agents is welcome. Prospective and existing tenants in many parts of Lagos State go through excruciating pain to be able to pay for accommodation. Some landlords even insist on old tenants paying advance rent of more than two years. Routinely, they raise rent and their excuse may be based on spurious allegations of sharp increases in the cost of building materials. Given the housing crisis in the state, tenants are left with no option but to succumb to the intimidation and blackmail of shylock landlords and unconscionable estate agents. Any official attempt to check this trend would be helpful.

The State Attorney-General and Commissioner for Justice, Mr. Olasupo Shasore, announced the Lagos State government's intervention in this matter while appraising the activities of the state's Justice Ministry in the past one year. According to him, a draft bill known as Tenancy Law 2009 has been forwarded to the State House of Assembly for consideration. The bill would criminalise multiple collection of rent in advance from tenants when passed into law. In that regard, the offending shylock landlords would be liable to stipulated jail terms. The bill, he added, will consolidate the existing tenancy laws in the state.

Without doubt, the proposed piece of legislation which seeks to strengthen the existing Rent Edict is long overdue. Other state governments should consider taking a similar step. All over the country, landlords and estate agents literally conspire to intimidate tenants. Tenants are compelled to make upfront rent payment in multiples of two, three or even five years! Estate agents also charge arbitrary consultancy fees. There have been many cases of advance fee fraud in the real estate sector. The experience is worse in urban centres. In big cities like Lagos, Abuja and Port Harcourt, the combination of exorbitant rent and multiple payments upfront puts housing beyond the reach of average Nigerians.

Unfortunately, this practice has been sustained for a very long time without corrective intervention from government. Consequently, tenants continuously groan under the heavy burden of sourcing for funds to pay rent. Nigerian workers in the public or private sector usually receive their remuneration not in advance but on a monthly basis. Why then should landlords and estate agents demand multiple rents in advance?

However, the Lagos State government should ensure that the new law does not become still-born like the Rent Edict that was introduced in 1997 without the force of implementation. Although the Justice Commissioner insists that the new law is not an invocation of the Rent Edict of 1997, it is certain that both laws seek to improve landlords-tenants relationship.

It is also important to appreciate the fact that the root of the problem is government's lack of commitment to public housing and the skewed demand and supply index in the real estate sector. Provision of affordable housing is one of the fundamental objectives outlined in Chapter II of the Nigerian Constitution, but governments across the federation have failed the citizenry in this regard. Even when state governments launch mass housing projects, they are often too expensive for the struggling masses, or the allocations are seized by greedy government officials.

It is therefore not enough to enact a strong tenancy law, government must demonstrate greater sincerity in providing mass housing. This is one reason why the additional proposal by the Lagos State Government to introduce a mortgage finance scheme aimed at facilitating the delivery of affordable housing especially to low-income earners through Public Private Partnership (PPP), is in order.

The government can also do a lot more to encourage access to land and housing. It is most contradictory that the same Lagos State Government which talks about mortgage finance schemes, and the interest of tenants imposes such charges on land-owners in the state which discourage real estate development. These include Land Use Charges which are based on arbitrary assessments; and approval charges per square metre which constitute an abiding source of frustration to prospective landlords. The processing of consent papers and building approvals is also rather cumbersome, despite the state government's advertisement of fast-track measures. Such obstacles which are imposed under the cover of officialdom restrict access to housing. The land use charge in particular is unpopular and is at variance with the government's advertised objectives. What the Lagos State Government should do is to incorporate housing into its larger state development plan, by placing greater emphasis on easier access to affordable housing.