Hardship: Rent Defaults Soar As Landlords, Tenants Clash

The inability of most tenants to pay rent, as a result of the current economic hardship, has caused strained relationships between landlords and tenants.

There are escalating court cases over issues of rent defaults, LEADERSHIP can authoritatively.

Residential tenants are significantly impaired by rent defaults which piled up as a result of setbacks to their businesses and economic hardship, thereby, forcing employees, artisans, self-employed individuals to pile up rent debts.

These have prompted property owners to make hard choices on the type of tenants to give their property. Some of the landlords have to deal with their own mortgage and insurance payments too.

Checks by LEADERSHIP showed that the most affected by these debts are commercial landlords of event centres, restaurants and clubs. Hence, some landlords are exploring eviction moratoriums from courts over certain residential tenants and small business owners who rent spaces.

The recent development is coming on the heels of rent inflation spike, escalating cost of living, economic hardship and price shocks which doubles majorly on food, market prices, utility and essential bills.

The hope of paying rents by defaulters dimmed completely as the prices of major building materials, notably, cement and iron rods, are rising persistently as more markets are shutting down, forcing low income families to struggle to eat for survival.

The cost-of-living crisis in Nigeria is escalating and, in more ways than one, it is impacting on health, finances and access to basic needs of individuals, organisations and families with expectations and obligations no longer being met.

On account of growing poverty among citizens, job losses and shrinking income arising from bad economy, defaulting tenants are now facing the risk of losing their accommodation anytime soon.

According to the past president of International Real Estate Federation (FIABCI), Mr. Chudi Ubosi, virtually every location and commercial development type are affected by rent default. ‘The fact is that the adverse effects is hitting every business, so all businesses are reviewing strategy on their operations as income is negatively impacted.’

Ubosi said there is no discrimination in the industry, rather, real estate professionals reject tenants that do not meet the ‘diligent standards’ of the property owner.

“That’s not discrimination. I think that’s just setting the bar for the kind or quality of tenant a landlord requires in his or her property. Whilst landlords are naturally finical about who they want to let their properties, this has not changed due to the impact of inflation crisis on businesses.

“As real estate professionals, we are not taken aback because this is normal in the industry and generally obtains for every level of property as landlords and estate agents engage in what can be called risk analysis of each prospective tenants.” he said.

A report on ‘The State of Real Estate Market in Nigeria’ compiled by Pison Housing Company gives a sense and dimension of this friction. The report says, Nigeria is one of the most active rental markets globally with about 80 per cent of its estimated 200 million population living in rented accommodation and spending over 50 per cent of their income on house rent.

“Frequently, landlords and tenants quarrel over sundry issues including inability to pay rents on the part of the tenants and/or landlords’ high-handedness and near-impossible demands. Some of these quarrels often lead both parties to court cases which, rather than improve their relationship, worsens it and leads to quitting the tenant from the house,” an estate agent and consultant, Henry Ezike stated.

A resident of Apapa in Lagos who spoke on the condition of anonymity, said his relationship with his landlord is no better than that of a cat and dog. They are always quarrelling over delayed, unpaid or rentincrease which he considers too exploitative on the part of the landlord.

“My landlord is insensitive; at a time like this in Nigeria when everybody is struggling

to eat, he is increasing my rent. What manner of man is that? Is he blind or deaf? Let him do his worst; I don’t have a dime to pay him,” he told our reporter who learnt from other tenants that the landlord has taken his case to a customary court.

Similarly, Ebenezer Okonjo, who lives in Ejigbo area of Lagos, is digging it out with his landlord over arbitrary and frequent rent increases.

“I rented this house from the father of my present landlord. He was living in London then. Now he has come back after his father’s death and the first thing he did was to increase our rent,” Okonjo told our reporter.

Continuing, he said: “When I told him I won’t be able to pay a second rent increase, he told me to relocate to my village; that Lagos is not meant for everybody. I felt insulted and told him to his face that he was a wicked man. He quickly gave me a quit notice which I refused to collect from him. Since then, it has been an uneasy calm between us.”

Beyond rent increases, attitudes, especially, in the case of landlords with exploitative tendencies, is also breeding friction in a landlord-tenant relationship as reflected in our findings which show that, generally, the plight of tenants range from unjustifiable rent increases, outrageous service charge particularly on power supply, and disturbance from the landlords.

An anonymous teacher in a Lagos private school, told our reporter that he and his family rented an apartment in the Ifako-Ijaye area of the state, but his three-year stay in that apartment was a tug of war with his landlord.

“I secured a 2-bedroom flat in that area so that I can spend less on transport fare as the house is close to my place of work. The landlord collected a year rent along with agreement and commission. My experience there was not rosy. The landlord made us pay for almost every damage/renovation of the house,” he revealed.

“One thing that got me irritated was the landlord’s habit of reminding me that my rent would soon be due as if I didn’t know my responsibility. In my third year, he increased my rent by 30 percent. I couldn’t cope because my salary could not carry it. I left the place,” he added.

Akeem Baruwa, who resides in Ojokoro area of Lagos state, poured out her frustration with her landlord’s exploitative tendencies, explaining that, the man was fond of hiding power bill from tenants in order to make them pay for what they did not consume.

“The landlord lives with us. We are five in number. We hardly see power bill, yet we would be asked to pay as high as N50,000, which is shared among five of us. We have complained to him on several occasions, but he is adamant; he often tells us to leave his house if we are not pleased with the rules,” he lamented.

Ezike advised that there should be a chicken and egg relationship between landlords and tenants because they are or should be mutually beneficial to each other. But most times, especially in the cities where demand for housing far outstrips supply, there seems to be a master-servant relationship with the landlord assuming the position of a master.

‘With the difficult economic situation Nigerians find themselves, cases of rent default are on the increase and so is the friction between the landlords and their tenants,’ he stressed, pointing out that, while the tenants are complaining of rising food prices, energy and transportation costs, the landlords are adding to their burden with rent increase.

“But if you look at the case critically, you find that it is difficult to apportion blame, because the landlords, especially, those who live on rent from their houses, are also affected by the high cost of living in the country. They too buy from the same market and have to maintain or renovate their houses at a time when building material prices, especially cement, have hit the roof-top,” he said.

Titus Ijalade, an estate broker, agrees, noting that, most of the landlords are retirees and elderly individuals, who rely wholly on rent for their livelihood. “If you take a survey on the employment status of landlords in Nigeria, you will realize that about 60 percent are retirees or out of job, who rely on their property to survive. So, their behaviour is not intentional,” Ijalade said.

Though the friction between landlords and tenants is more pronounced in low-income settlements where most tenants are struggling with meagre income, the middle and high-income areas also have their own version of the friction, usually arising more from default in paying service charge than rent.

Serviced estates have also been hit-hard by rising costs, especially energy, which has seen managers of these estates mark-up power tariff and also reduce hours of power supply down to 12-14 hours.

The price of diesel has jumped to N1,300 per litre due to oil subsidy removal which has affected prices of consumer products coupled with the naira devaluation and the high inflationary trend.

Managers at serviced estates are, expectedly, pushing the increase in the diesel price to the residents who are also battling rising food prices, children’s school fees, increased transport costs and other service charges.

An anonymous estate manager, told the residents that it was getting pretty difficult providing power to the estate because proceeds generated from the purchase of electric token could not cover the cost of their monthly power expenses.

He, therefore, served the residents notice of tariff increase from N195.00/kilowatt to N250.00/kilowatt, citing a market survey showing a few estates that supply 24-hour power where tariff is now N350.00/kilowatt, which is about 79 percent increase from N195.00 per kilowatt.

Group CEO, Global Properties and Facilities International (PFI), MKO Balogun confirmed to LEADERSHIP that , “yes, power cost has gone up as well as other costs, including employees, materials and consumables. All these are impacted by the current inflationary trends as well as changes in the cost of living.”

President, Nigerian Facility Managers Association, Olalekan Akinwunmi also affirmed that the situation was challenging, such that, every fabric of services has really gone up, saying, ‘the diesel cost and general mains supply are not encouraging service apartments and the occupants are not happy with their managers.’

In all these circumstances, mediation and conflict resolution experts advise that landlords and tenants should conduct themselves maturely by not going to court to settle a dispute or disagreement over house rent or poor attitude of one towards the other as has been the case over the years.

They said parties to such disagreement or dispute should settle it within themselves, noting that, some landlords normally take their tenants to court to recover their property and/or outstanding rent while some tenants visit the court to seek protection from unjust treatment from landlords.

“As much as practicable, landlords should not take their tenants to court and vice versa; there are more viable options for settling any dispute or disagreement between these parties. Landlords and tenants should always see their relationship as those of husbands and wives and therefore, should not take one another to court,” a property lawyer, who pleaded anonymity, advised.

Similarly, Chairman, Royal Institution of Chartered Surveyors (RICS), Nigeria, Gbenga Ismail, said the rent default has been high, noting that; “What we have experienced is restructuring, paying in instalments or monthly. We have also experienced rent reduction from existing levels in both commercial and residential sectors.

“Right now, the landlord can’t even be picky. Priority is to rent out at a lower rent so that quality tenants could be attracted. You will be surprised that those that have the ability to pay are not always those that you may want to rent your properties. But with the economy, one cannot really afford to be over bureaucratic.