In December 2021, the Lagos State Government announced a social investment scheme that would allow tenants to make payments for their accommodation monthly, instead of annual payments that have been subscribed to by many.
According to the state government, the social initiative is aimed at easing the burden of yearly payment of rent following a rental experience survey that shows 88 percent of Lagosians would rather pay rent monthly.
The disclosure of the scheme was made by the Special Adviser to the Lagos State Governor on Housing, Mr. Toke Benson-Awoyinka.
“She stated that tenants who want to take part in the initiative would need to fulfill certain requirements such as proving that they have the capacity to make payments on a monthly basis, which implies that the scheme would begin with individuals in the formal sector with the capacity to make monthly payments after then the informal sector would be given a chance to come onboard.”
Although there are still ongoing deliberations on how this would play out, lots of stakeholders are contributing to the discussion, this is ranging from the tenants to the landlords and even investment firms.
Our Take On The Scheme.
With these questions in mind, we hosted a Twitter Space session titled ‘Pros and Cons of Monthly Rental Payment’, where we spoke with Mr. Korede who is a realtor, property manager, and managing partner at Landlord Hero.
During the session, we were able to get opinions about the social scheme. Mr. Korede stated that the scheme is long overdue and is glad that it has finally been brought to light. He also stated that the scheme is great for individuals who don’t find the annual tenancy system flexible enough to live with.
Based on his experience relating with tenants, Mr. Korede stated that it differs from one tenant to another, some believe the monthly payment system works best while others would rather stick to the annual payment system. He went further to ask if it is even visible for individuals to make monthly payments in the first instance. He stated that what is paid as rent shouldn’t be more than 30% of their annual income but the current statistics is 60%.
The question of if houses would even be available for individuals to take part in this scheme was raised, and it was agreed that for this to be visible there has to be massive encouragement of infrastructure development.
Based on the conversation, Mr. Korede stated that based on this scheme the Landlords do not have much to worry about because the Government is assuring a win-win situation where they get the rent directly from the Government annually, while the Government is in-charge of getting the rent from the tenants.
Facts About The Scheme
- Landlords get their annual payment of house rent upfront, but that responsibility would be taken off the tenants.
The Lagos government announced the allocation of ₦5 billion to kickstart the state’s monthly tenancy scheme from January 2022.
A monthly tenancy subscription would not be imposed due to the lack of a substantial credit system in Nigeria.
What are your thought on the rental scheme?