Author(s): Ikechukwu Muomah
Agege is a well-known suburb in Lagos. Two years ago, it cost less than half of what is currently charged to rent an apartment there. Residents in the community, amongst others on the mainland, are now concerned about the spike in house rent. Certain factors are responsible for this hike, one of which is improved infrastructure.
By virtue of infrastructural development (on roads, schools, and commercial buildings), business activities and a steady influx of people have caused rents to go up. In Oke Afo near Lagos-Badagry Express Way, for instance, house rents and land prices have doubled over the last two years that the state government has been upgrading the highway.
Certain government policies have also contributed to the increase in house rents in the state. The first is the federal government’s fuel subsidy removal in 2012, which led to a rise in cost of certain goods and services. The second one is the state government’s introduction of its Tenancy Law. The Law prohibits landlords from collecting rent exceeding one year from new tenants and six months from existing tenants. Even though the Law ought to regulate house rent, in a sense, it does not because landlords and estate agents then charge more for the permitted six-month and one-year rents.
Governor Fashola during an inspection of an estate in Lagos
Babatunde Quadri, a senior official at the Lagos State Development and Property Corporation, buttressed this point recently. He said, “The rising [rents] are actually because of facilities put in place [in modern buildings and buildings that are being renovated]. Estate developers and landlords want to ensure their homes have all the basic things, such as water supply. All of these inevitably add to cost.”
House rents are also going up in the state because there is a shortage of housing when supply is compared to demand, experts say. Olajugba Oluropo, a top real estate executive, said investors in the industry are too few to build houses that would meet the demand for housing in Lagos, and so the available houses are not enough to meet this demand. He said, “Real estate is a capital-intensive venture and not many of the [estate] developers in the industry have the required capital. [House rents] are costly simply because the few in existence are not readily available,” he added. “The price of houses is simply a function of demand and supply. The moment there are [enough] houses in place, the cost will eventually come down and become more affordable, irrespective of the location or quality.”
Considering the state’s bursting population of over 17 million and the huge number of people migrating to the state yearly, housing is a primary challenge for the Lagos State government. The government needs to make more housing available and affordable for residents. It perhaps also needs to regulate not just house rent but accompanying terms and conditions in a way that will be fair to all including landlords and tenants.
Editor’s note: Adedayo Ademuwagun contributed to this report
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