Investors find new way to ease tenants’ rent burden
As house rent continues to hit the roof in most Nigerian cities including Lagos, Abuja, Port Harcourt, Enugu and Abeokuta in Ogun State, investors and property developers have devised new strategies to ease tenants’ rent payment burden.
Nigeria is an active rental market where a report by Pison Housing Company estimates that 80 percent of the country’s 200 million population lives in rented accommodation, spending over 50 percent of their income on house rent.
Whether on Lagos Island or Mainland, or in other Nigerian cities, tenants are increasingly finding it difficult to pay rents and, apart from the ill-feeling this is generating between landlords and tenants, it is mounting intense pressure on household income.
To lighten the burden placed on these tenants by landlords who ask for two years advance rent payment in a country where salaries are paid per month, rent products like Rent4Let and Co-habit are now there in the property market.
Rent4Let, which is being promoted by Alpha Mead Development Company (AMDC), a subsidiary of Alpha Mead Group, offers prospective tenants the opportunity to pay monthly rent as against one or two years advance rent, which most landlords demand.
“We came up with this product in order to take the burden of having to look for a whole year or two years rent off tenants shoulders. We rent the apartments, pay the two years advance rent and let them out to tenants who pay per month. The default rate is low and it is convenient for the tenants,” Damola Akindolire, managing director of AMDC, explained to BusinessDay.
According to Akindolire, the product is doing very well in the market and quite a lot of people have leveraged that opportunity to rent decent apartments in good locations.
Co-habit, which is a form of crowd-funding for home ownership, is also in the rental market for young company executives who pool funds to rent an apartment in a good location which, as individuals, they cannot rent. They share the rooms and use the sitting room in common.
“This is very common on the Island and popular among company workers who would like to live close to their workplaces but cannot on their own afford an apartment, hence the decision to co habit with others who have similar desires,” MKO Balogun, group CEO, Global PFI, said.
Balogun noted that many people who invested in large-size developments were giving out their apartments for this class of tenants, thus saving themselves the headache of maintaining empty houses.
He pointed out, however, that most investors today favour small apartment units like one and two-bedrooms, which are in high demand. “About 60 percent of those looking for homes to buy or rent today are looking for these house-types,” he said.
Similarly, many property developers have devised ways of marketing in order to stimulate demand. These strategies are already paying off in a market which, unlike the rental market, has seen low activities as a result of economic downturn that has reduced consumer purchasing power significantly.
Buyers now enjoy discounts and instalment payments and even daily, weekly and monthly payment plans. In some cases, subscribers are allowed to pay as low as N1,500 or N2,500 daily. There are even after-sales services as offered by Sterling Homes Limited.
Other notable developers that have adopted these strategies include Realty Point Limited, Adron Homes and Properties, Revolution Plus and TobyKemsworth Properties Limited, which unveiled a new estate in Ijegun recently with a 15-year mortgage plan.
Realty Point, a real estate investment company with a popular slogan, ‘Sack Your Landlord,’ is offering subscribers the opportunity to own houses for N2,500 instalment payment at its Bersama project.
The project, comprising two-bedroom bungalows, which can be expanded to three-bedroom, with spacious living rooms, are located at Prime Estates in Phase II, Mowe/Ofada, Ogun State; Prime Estate, Igbesa, Ogun State; Roseberry Estate, Alapoti (near Agbara), Ogun State; Prime Estate, “Abuja,” New Karshi, among others.
“Subscribers have the opportunity to pay N2,500 per day or N75,000 per month. Instalment payments came into being because developers and suppliers want to solve the problem of affordability. It gives opportunity to many people, especially those who are not qualified for mortgage loans,” Debo Adejana, the company’s MD/CEO, explained.
He added that the purpose of the low subscriptions was to draw attention for further enquiries, stressing that such low subscription amounts to scam when the terms and conditions are not declared to the subscribers upon enquiry before they go into the contract.
Adron Homes is another developer offering one of the lowest payment plans apart from instituting what they call Lemon Friday sale. The plan offers a 40 percent discount on all its estates in Ikorodu, Epe, Atan-ota, Ibeju Lekki, Badagry, Ijebu Ode, Shimawa, Abeokuta, Osun, Abuja, Nasarawa and Keffi.
The company offers subscribers as low as N1,500 daily at its Grandview Park and Gardens as well as N3,833 daily for Treasure Park and Gardens. “This strategy is in line with our dedication to continuously give our customers opportunity to be homeowners through discounts, royalty rewards and friendly payment plans,” Ayodeji Ojo-Omoniyi, the company’s group executive secretary, said.