Workability of the new Lagos tenancy bill

BY PAUL OJENAGBON

For all the good intent and purpose enshrined into the new Tenancy Bill that was passed recently by the Lagos State Governor Babatunde Fashola, I have fears about its workability and implementation.

The somewhat hasty enactment of the bill appears to be nothing short of playing to the gallery. While the writer identifies fully with the teeming masses of suffering (but happy) Nigerians who would want rents and property prices to come crashing and for Landlords to accept maximum three months rent for new tenancies(!) the situation on ground does not permit such optimism. In the days ahead, we shall all see how things will work out. At best, scapegoats would be made of some unlucky landlords and that would be all. Nigeria is a country governed by many laws most of which in practice are not being executed; this new tenancy bill is not likely to be an exception. The courts are already clogged with myriad of cases; it would be a major challenge.

Governor Fashola is trying hard to exert control over a commodity the production of which he either has no control or has ignored for a long time. The forces of demand and supply like an Albatross are patiently waiting to make pooh-pooh of the new bill. It could become a major disincentive to build new accommodations leading in the long run to a point of acute supply and hence higher rents. It is regrettable to note that housing has remained one sour point in the Action Congress of Nigeria (ACN) administration in Lagos since the present democratic dispensation which started in 1999. Under former governor Asiwaju Ahmed Tinubu, housing provision was left to the commercially driven apron strings of its agency, the Lagos State Property Development Corporation (LSDPC).

It is true that the agency developed a couple of estates during this period but its houses were competitively priced just as those of any private developer. Importantly too, as was the dictates of the property market then, it paid to sell outright instead of renting out the developed houses. LSDPC took full advantage of the market mood ensuring that it only developed to sell and hardly to rent which was more affordable to a vast majority of the people. Besides, most of its houses were in the premium category and not low cost housing as was the case under ex-governor Lateef Jakande. Therefore, this policy under the Tinubu administration which was inherited by the Fashola government is a marked departure from the way things were those “good old days” culminating in the popular “Jakande houses” of the early eighties which were allocated to people on soft mortgages just as houses in the Festac Town among other estates in the country. The governor, his executive members and indeed the generality of ACN fold should set the ball rolling by showing good examples on their private estates for the implementation of the new law. Potential tenants should first look in their direction before going elsewhere.

As a young estate surveyor who managed (for my firm) a portfolio of LSDPC-owned housing estates and shopping complexes in the early nineties spread across various locations of the Lagos metropolis, I recall that the rents passing on the LSDPC houses then were highly subsidized in the sense that the rents charged on them were below the market rates because it was in tune with the policy of the government at that time. For example, while the rents charged on Doctors’ Flats at 17/19 Boyle Street, Onikan was in the region of N100,000 for the two-bedroom flats at that time, similar apartments were going for as much as N300,000 rents annually. Similarly, while the rents passing on a shop at the popular Falomo Shopping Centre at the time was N25,000 the market determined rent then for similar properties was well over N100,000 per shop. Ironically, these government-owned properties were often times rented by the high and mighty that make up an “A” list of society people who could afford to pay several times the prevailing rents because they were well endowed with the means.

The policy of the government (even though military) at that time was to make housing “affordable” for teeming ordinary Nigerians, never mind that such houses ended up in the “wrong hands”. To make matters, the privileged tenants some of whom would always tell you how they played golf with the governor yesterday (to put off request for rent) never saw reason why they should pay rents at all as they saw their occupation as their own share of the “national or state cake”. Some of them sublet without consent and yet would not pay the subsidized rent. The fall out of accumulated bad debts could have informed the drastic change in policy to full commercialization in subsequent years. The present Fashola administration which has done quite well in several areas has not shown much commitment in the area of housing. LSDPC has also been very quiet of late which may indicate that it is not as busy as it used to be. Probably, the main reason why the Lagos Government has not ventured much into housing development is the obvious fact that it is not profitable as it could involve the government biting more than it can chew.

This is very understandable just as the government would realize that why landlords decide to collect two or more years excess rent is because they are helpless as far as the issue of cost of construction is concerned. With the price of cement nearing the N2000 mark per bag and the cost of other materials prohibitive, the prevailing high interest rates, what does the government expect the average landlord to do? With all the variants of multiple payments factored into the land acquired through the government, the land would end up being expensive and any rational developer would want to recoup quickly so as to reinvest or go into another development. What are the Lagos Government and indeed the Federal Government doing about bringing down the high cost of construction in general? Could Lagos government let go of some of the excessive taxes on land? That should be another good starting point. Come to think, it is not just housing that is expensive and requires several years payment in advance. For all the statistics reeled out, the inflation index in Nigeria has no comparison with any in the entire world. Within two weeks a tin of Titus sardine rose from N110 to N250 and it has been so scarce then. Any reasonably sized orange now sells for at least N50.00.

Everything in the market is so expensive, service fees are being increased on daily basis. Manufactured goods are either increasing in prices or reducing in quantity. Why is the landlord singled out? The governor should also put a peg to prices of commodities in the market. Every time you visit your drycleaners, Satellite TV provider, eateries and other such service places, it is new price regimes all the time. At any given time, there are always many people needing accommodation especially in the lower category. Any one in the long queue would be “stupid” if they insist on paying the legal one year rent to the landlord instead of two years. They would be losing out to those who are ready to pay two years. We may have a reign of black market in the Lagos property market shortly.

We may just be heading for an era when the landlord would no longer issue official rent receipt but would request prospective tenants to accept it that way or look for another accommodation. It is about demand outstripping supply. If the governor is really interested, he should work hard to increase the housing stock in Lagos and also work very hard to remove all bottlenecks standing in the way of potential landlords especially in the area of land acquisition. It is only then that the new Lagos Tenancy Bill would get the pass mark, at least from me.