Towards an Inclusive Rental Code for Nigeria

Inclusive growth is one of the recent concepts in development parlance. A drive for inclusive growth focuses on creating productive opportunities while ensuring there is equal access by all to those opportunities. Therefore, if growth is to be inclusive, it must consider the participation of every segment of society particularly the marginalized and vulnerable.

Nigeria’s real estate sector has continued to grow at an impressive rate within the past decade. According to the National Bureau of Statistics, the value of Nigeria’s real estate market has grown from N1.4 trillion in 2011 to N6.5 trillion in 2015. Notably, the residential real estate sub-sector’s contribution to GDP increased from 7.7 per cent in 2012 to 11.1 per cent in 2014.


With over 80 per cent of Nigeria’s adult population living in rented accommodations, the sub-sector hold tremendous potential for growth. The Managing Director of The Infrastructure Bank (TIB) alludes to this in a report that projects the real estate sector’s annual growth rate at 10 per cent over the next decade.

From a development economist’s perspective, I observe that the impressive growth of the real estate sector is not creating meaningful improvements in the welfare of average Nigerians.
Consider that in most Nigerian cities, tenants are required to pay a yearly lump sum rent. The payment of a mandatory minimum 1 year rent for most salary-earning Nigerians is very burdensome. Without prejudice to landlords with rent houses, I think this practice is highly exploitative and perpetuates inequality. It favours availability of reinvestment funds to real estate owners while making living difficult for low income and middle income tenants, most of whom are monthly wage earners or retirees.

Even in developed countries where living standards are higher, only monthly rents are charged.  To this end I have a dream, that someday very soon it will be illegal to charge yearly rents on rent houses in Nigeria. That any prospective tenant will only have to pay one month’s rent at a time. This will bring great ease to living conditions and grant increased access to shelter and housing opportunities for all.
The discussion continues…

Comments

Femi Oladele said…
That'd really be inclusive albeit I have a mild fear especially with Nigeria's present mentality. It may be effective for tenured salary earners who can tie deductions directly to house-owners' account, but how about irregular income earners. There might be a leeway for legal default.
There may be growing interests in legal, policy and economic circles.
30 August 2015 at 12:37
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