About seven in 10 Nigerian workers spend 40 percent or more of their annual salaries on rents and housing-related matters.
This was one of the findings of the recently conducted BusinessDay Talk Exchange polls on the ‘State of Housing in Nigeria.’
The poll shows that 72 percent of respondents spend between four and six months of their annual salaries on house rents, amounting to about 40 percent of their incomes.
The findings raise questions around sustainability, as many households have to grapple with other basic necessities such as feeding, clothing, and transportation costs.
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Speaking about the issue during the Talk Exchange on X (formerly Twitter), Samuel Ajiboyede, CEO of Rowvar Property & Finance, stated that with almost 60 percent of building materials still being imported, there is little possibility of rents dropping in Nigeria.
“Speculation doesn’t drive real estate. Demand and inflation drive it, and with a deficit of over 29 million housing units in Nigeria, rents may keep rising. Without corresponding increases in income, salary earners will be spending higher parts of their income on rents,” Ajiboyede said.
Many turn to mini-flats, self-contained units
The BusinessDay Talk Exchange poll also shows mini-flats and self-contained units as the most commonly rented spaces, with 39 percent choosing the former, and 34 percent going for the latter.
The poll received responses from residents in Lagos, Rivers, Cross Rivers, Edo, Plateau, Anambra, Gombe, Osun, Oyo, Kaduna, Nasarawa states, and FCT Abuja.
Most of the respondents were within the 25 to 44 years age range, and in full-time employment or self-employed.
The reasons for their current choice of housing and location mostly revolve around affordability, and about 40 percent of respondents have been forced to relocate due to high rents.
About 70 percent described their current housing as overpriced, while 25 percent thought their house rents to be fairly priced.
The findings also reveal that the average rents differ from one Nigerian state to the other, with Lagos state and Abuja recording rents as high as N1 million for mini-flats and self-contained apartments.
While affordability guides current choices, over 60 percent of respondents said that if they could afford it, they would prefer to pay higher rents to enjoy a shorter commute time to work.
A legal perspective to increasing rents
Some common challenges highlighted by respondents include: the poor housing quality despite high rent, excessive agent fees, and hidden charges, as well as the sudden and sharp increase in house rents, some as high as 70 percent.
Read also: Landlords, tenants, and the silent struggles
But is this legally acceptable?
Speaking on the issue, Ejovi Erebor, a legal and compliance professional, told BusinessDay that while the law spells out the rights of tenants and property owners, it is silent on rents.
She explained that the law only restricts the property owner from imposing unreasonable increases in house rents but fails to define what ‘unreasonable’ means.
“Whenever there is such an increase, there can be a conversation or negotiation around how reasonable the rate is. If the tenant does not want to move out, he can challenge it in court and argue that the increase is unreasonable. The court will decide how unreasonable the rent is by considering several factors such as the condition of the property, and the average price of rents in the neighborhood. But this largely leaves the reasonable rent exposed to several interpretations and that is why there have been calls for reforms,” She said.
The quality of the houses comes down to the compliance with the National Building Code. Ayomide George, principal architect at OddSpace Consults, noted that Nigeria’s National Building Code was last reviewed in 2006 and has since been overtaken by environmental and climate realities.
George pointed out that the enforcement of the said code has been ‘laissez faire,’ leaving room for property developers to cut corners.
“On the policy side of things, we first need the government to update the National Building Code to reflect today’s environmental and climate realities, and the enforcement should be taken more seriously,” he stressed.
How lack of capital compounds the problem
Speaking as a real estate investor and developer, Ajiboyede, earlier cited, noted that the absence of a central land ownership database in Nigeria makes it difficult to access the needed funds.