When marketers of fast-moving consumer goods see that buyers cannot buy their products in big sizes, they introduce the sachet-sized pack that is easy to pay for because of the lower cash outlay.
Though the consumers know that they will ultimately pay the exact price, or even more, by the time they finally are able to buy the quantity or size that they would have needed a relatively high cash outlay to pay for.
Western economies seem to have perfected this template of paying in bits for a big buy. This idea is most manifest in the way they pay for big-budget products, like automobiles, in bits spread over a long period.
Mortgage plans that allow a homebuyer to spread payments for a home for upward of 20 to 30 years, or more, have helped many to own homes in Western economies. Many wouldn’t have had homes were there no mortgage plans.
Governor Babajide Sanwo-Olu wants to introduce this sachet, or piecemeal, payment plan for house rentals in Lagos State. If he gets it right, tenants in Lagos State will pay rent on a monthly basis, instead of bulk payment for one year, or more, in advance.
His Special Adviser on Housing, Barakat Odunuga-Bakare, recently announced, “We are doing what is being done in other climes; rents are collected monthly. Also, rent would be charged according to the tenant’s earnings.”
She added that the policy of monthly rent in Lagos State would be enforced before the end of 2024, or very early in 2025. She is probably aware that tenants in some parts of Lagos State pay rents monthly, weekly and daily.
One must, however, acknowledge that former Governor Babatunde Fashola had earlier mooted the idea of tenants paying monthly rent in Lagos State. He even encouraged the Lagos State House of Assembly to enact The Tenancy Law of 2011.
A summary of the relevant section 4 of the law is that it is illegal for a landlord or his agent to demand or receive rent in excess of six months from a sitting monthly tenant or one year from a yearly tenant.
The fine of N100, 000 or three months imprisonment shall apply to both the landlords and the tenants that breach the law. For inexplicable reasons, this Tenancy Law does not apply to upscale neighbourhoods of Apapa, Ikeja GRA, Ikoyi and Victoria Island– maybe because tenants in those places can look after themselves.
The law, as it is, may have to be reviewed to accommodate the renewed advocacy of Fashola and Sanwo-Olu. The fine is probably inadequate and those highbrow neighbourhoods may have to be included in the jurisdiction of the law.
Recently, Fashola observed that payment of rent for more than one year is overwhelming tenants in Lagos State, as their inability to raise the huge amount required to pay advance rent is leading to many houses in Lagos remaining unoccupied for long periods.
He submitted, “I’ve argued that we can look at housing, not only from (the point of view of) ownership but also, from rental… (Maybe) you do not understand how dramatic and painful that three, four or five years’ rent has become in our nation.”
The late Doyen of Nollywood, Hubert Ogunde, once sang about the difficulties of living in Lagos. The song, translated into English, goes, “Lagos is steaming hot for the poor/Lagos is cool for the rich/housing is expensive in Lagos/work is scarce in Lagos/stalls are expensive in Lagos/shops are expensive in Lagos/food is expensive in Lagos.”
Fashola asks, “Can we bring (the rent payable) down, from three years to one year? Can we, hopefully, bring it down to six months? Can we let it coincide with when people get paid at the end of the month?”
Brig. Gen. Mobolaji Johnson was actually the first governor to intervene in the class war between landlords and tenants in Lagos State. He introduced a Rent Edict to fix rents payable by tenants in Lagos State.
The late Apala music maestro, irrepressible, maybe irreverent, Ayinla Omowura, made hay with Johnson’s edict that provided for monthly rents payable to landlords, who were almost becoming shylock, in Lagos State.
With a view to encouraging Lagos landlords and tenants to embrace the provisions of the edict, Omowura reeled out the rents payable for each category of houses in the various neighbourhoods of Lagos State.
Omowura explained that Category A houses built of bricks or blocks would attract monthly rent of N16 in Obalende, Ilado, Maroko, Ebute Metta, Yaba, Apapa and Surulere. But in Ikeja, Mushin, Somolu and Ajegunle, Category A houses would attract N9 monthly rent.
While monthly rent in Category B houses that are rooming or face-me-I-face-you houses in Obalende, Ilado and Maroko will be N11, it is N10 in Ebute Metta, Yaba and Apapa. But in Ikeja, Mushin, Somolu, and Ajegunle, it will have to be N8.
Tenants in Category C houses built of mud or planks, in Obalende, Ilado and Maroko will pay N7 per month. Those in Ikeja, Mushin, Somolu and Ajegunle will pay N4 per month. Omowura was silent about rent in some areas, but you can get the drift. The focus of that edict was rent control.
Needless to say, the rent edict was not too successful. Many landlords cynically asked prospective tenants, who wanted to insist on the rates suggested by the Lagos State Government, to go look for houses built by Johnson to rent.
Those arguments may have informed the speed and dedication with which Second Republic Governor, Lateef Jakande, built many low-cost and medium-cost estates all over Lagos State during his short tenure.
Many Lagos landlords intended the houses they built for rent would serve as a provision for their retirement. And they just couldn’t understand why the Lagos State Government would like to interfere with their retirement plans. And they are justified in this argument.
Sanwo-Olu is marching on with a crusade on behalf of tenants in Lagos State. Like Fashola, he wants landlords to receive rents from tenants on a monthly basis, and not insist on yearly or even multiples of rent.
His idea, “In Lagos, we operate a robust rent-to-own programme of five percent downtrodden and six percent single interest rate, payable over 10 years. (In addition), we are working on another product, which is a purely rental system, where residents will pay monthly.”
Note that, unlike Brig. Johnson, who ran a military government, Sanwo-Olu has wisely avoided fixing rent payable in any part of Lagos State. It is better to allow the landlords and their tenants to figure it out on their own.
It seems the surveyor in Sanwo-Olu is appropriately looking at a mix of options that will encourage tenants to own their properties through the rent-to-own plan, and thus persuade landlords to collect monthly rents for now.
But he must urgently include the “Jakande Estates” option to encourage landlords to accept monthly rents in the face of credible rent-to-own housing options that tenants, who can afford the plan, can adopt.
To be able to achieve his monthly rent plan, Sanwo-Olu must first firm up the housing estates and mortgage plans. He can’t legislate monthly rents. It won’t work.
