Experts explain why govt control is not solution to rent increases | Prestige Real Estate News 

Rent increases are about the most topical issue in life and living in Nigeria today, especially in the country’s big cities, where renters contend with shocks from their landlords and their penchant for raising rents almost every month.

One of the solutions frequently suggested to check landlords’ excesses is for the government to put them in check by controlling rent increases. But experts argue that control is not an effective solution to the rent problem.

This is because of what the experts call ‘black market effect,’ contending that rent control is one of the biggest mistakes that the government makes. “You cannot control what you do not produce. So, controlling rent would only drive getting accommodation into the black market,” Chudi Ubosi, Principal Partner at Ubosi Eleh & Co, explained recently.

Ubosi argued that, if the government comes up with legislation that pegs rent for 2-bedroom apartment, for instance, at N350,000 per annum, whereas the market rent for that property is between N500,000 and N750,000, a renter can only get that apartment through the ‘black market.’

“When you go to take up that property, the landlord will give you an official receipt for N350,000, but you will pay N500,000 or N750,000, which is the market rent. That payment will not be reflected in your receipt. At the end of the day, the control will be counterproductive; it does not work,” Ubosi explained

Sola Enitan, an estate surveyor and valuer, and a lawyer, agrees, stressing that the government cannot legislate on what it does not own. He explained that such legislation can succeed only when there is a government alternative.

“If there are government houses for rent in large numbers, then the renter will have the option of renting from the government when landlords refuse to accept government prices or come up with the black market tactics,” he noted, adding that where the renter has no option, he has to settle for the whims and caprices of the landlord who, after all, is not Father Christmas.

Continuing, Enitan said, “don’t forget that a rental property is someone’s investment, and he needs to recoup his investment. It is his business, and he is not into it to lose, but to make profit.”

For the government to effectively control rent, Ubosi suggested that it should review the obsolete Land Use Act, which was promulgated in 1978 by Olusegun Obasanjo, who was the military head of state at the time. He added that the government should also provide infrastructure.

He explained that the review of the Land Use Act is something that has been talked about over and over again in many forums, saying that it will make access to land a lot easier, just as it will reduce the cost of transactions, plan approvals, and Governor’s Consent.

“Give people easier access to land title. Before now, we had talked about ‘Dead Capital’, which is something that we have been very passionate about even in our practice, and it is something that we emphasise whenever we have the opportunity.

Nigeria has a land mass estimated at 927,000 square kilometres, and less than 10 percent of that is titled. Imagine if we can title 50 percent of the whole land area in Nigeria and bring up 50,000 square kilometres of land into play,” he stated.

According to him, there is so much to do that will bring development, like residential developments. The more of these things that we have, the more the certainty that there will be more properties coming into the market, and rents will begin to go down, and the housing crisis will also begin to reduce or will disappear completely.

The government needs to provide more infrastructure. The high rent in the cities is because everybody wants to be in the centre. With better infrastructure, people can stay in their hometown or live in Ikorodu and come to work in Victoria Island in Lagos.

Again, everybody wants to stay in urban areas because they don’t want to live too far from where there is economic opportunity or economic activity. But if there were efficient transportation that could, within 30-40 minutes, take people from rural to urban centres, they would be glad to stay in that area.

– Culled from BusinessDay NG