For long, rent payment default and its associated legal challenges are pain in the neck of property owners and their tenants. However, experts in the property market have weighed in on the matter, recommending a mixmode in rental payment to allow some tenants pay monthly while others yearly, as opposed to the prevailing upfront payment. According to them, this option is a win-win arrangement for both parties, as it will deliver value to property owners and reduce tension between them and their tenants. It will, on the other hand, guarantee convenience and ease of payment for tenants. Assistant Editor OKWY IROEGBU-CHIKEZIE examines the option.
For landlords, the fear of recalcitrant tenants,particularly those who default in paying their monthly or yearly rent, is, perhaps, the beginning of wisdom.
This is more so because rental laws, according to some industry operators, appear to be skewed in favour of tenants, as court processes to resolve a stand-off between a landlord and a tenant drag for years, allowing the later stay almost indefinitely without payment, to the detriment of the landlord.
In view of the foregoing, experts are canvassing an option of mixmode in rental payment, which allows some tenants a more flexible option of paying monthly while others yearly. They believe, for instance, that a mixmode in rental payment is a win-win arrangement that will solve the recurring problem of rent payment default by tenants and its legal challenges.
Report of a survey
And it took a survey inaugurated by Proptech Platform’s new product, Rent Small Small, a property technology platform to improve home-seekers’ rental experience and increase home-owners occupancy rate, to push this option to the front burner.
According to the survey, 88 per cent of Nigerians prefer to pay their rents monthly. Proptech Platform co-founder and Chief Executive Officer (CEO) Tunde Balogun said eight out of 10 Lagosians would rather pay their rent monthly as opposed to yearly payment.
The survey, which was accessed by The Nation, polled 1,389 adults about their renting patterns and preferences. It found that 851 of these people who are between 20 and 40, are working class professionals seeking to occupy one bedroom, two bedroom and studio apartments.
“Naturally, it is easy to assume that Nigerians would like to pay their rents upfront for one or two years in some cases as it has always been the pattern, considering that it is what the landlords want,” the survey said.
Balogun, however, said: “This time, it is amazing to see that a lot more Nigerians want something different from the norm. In Nigeria, where it appears to be commonplace for families to experience pressures ranging from sourcing annual house rent, paying annual/quarterly school fees to footing basic bills, it is not surprising that this cycle is not one that millennials want to continue as adults.”
The Proptech chief brought the reality of the survey nearer home, when he said: “I do not believe that funds that have not yet been worked for should be tied up as rent for a year. When people can rent monthly, it makes it easier for them to pay their bills, make investments, take vacations and make plans for long-term projects.”
Since its launch in 2018, Rent Small Small survey has been revolutionising the property rental industry by eliminating discrimination, which renters face and provide flexible payment plan, including monthly plans. It is a proof that the property technology platform is on the right track towards reorganising the rental market.
Indeed, since its inception, the platform has remain focused on providing ease of access and affordable housing units for youths, providing flexible payment options which resonate with young professionals and organising the rental market to create a level-playing field for stakeholders.
Balogun confirmed this much when he told The Nation that the platform’s model is unique as it allows verified tenants to find property on-the-go within their budget, and pay rent flexibly. “We provide first of its kind rent insurance for property owners against rent default,” he added.
Rent payment default, which Balogun’s Rent Small Small, appears determined to eliminate, or at best, reduce, is, arguably, one of the knotty issues in the rental market. It has continued to pitch landlords against their tenants, sometimes resulting in protracted court cases that appear to leave landlords with the short end of the stick.
This is because the rental laws in the country, according to some operators, are skewed in favour of tenants. Court processes to resolve disagreements over rent payment defaults between landlords and tenants drag for years, allowing the later stay almost indefinitely without paying.
Some of the cases drag in courts, forcing some landlords to resort to illegal means of quitting their recalcitrant tenants by obtaining illegal court rulings through the backdoor. This gave rise to what is commonly called Jankara court rulings in local parlance, where tenants are served court papers to quit their apartments without their knowledge.
Now, Balogun and indeed, other experts believe that a mixmode in rental payment would reduce or eliminate the frictions between landlords and their tenants over rent defaults.
The founder, Tenants and Landlord Rights Initiative, Valentino Buoro, said some landlords are not careful enough to observe that the rents they set for their property, which might appear high, are not attainable by employees, but business men or corporate executives.
He observed that there are tenants who have a penchant for changing accommodation like their dresses.
“Their reasoning is: ‘We have been in one apartment for too long, fed up and wants an upgrade. But they fail to realise that it is an upgrade in some other person’s property and not theirs. So, they move from a two-room apartment into a three-bedroom apartment in a choice environment or perhaps even move up to a duplex,” Buoro said.
He, however, said economically, such tenants were unable to sustain this, though they might be able to pay at the beginning.
According to Buoro, a lawyer, in this scenario, the landlord would be left with no other alternative but to evict the tenant, though the processes of for doing so are not easy. “You have to give the requisite valid notice to quit, go to court and go through the entire process,” he said.
The expert cautioned landlords to be circumspect in the kind of lawyers they hire as, according to him, not all lawyers know much about landlord and tenant rental matters. He warned that if the case was bungled in the trial process and it went the other way and the court gave a judgment, the defaulting tenant might not be evicted easily.
“In this case, the court can order the tenant to pay the rent and he may still not be able to do so. The only option that will be left for the landlord is to continue with the lawyer to find alternative avenues to get his money,” Buoro said, cautioning that any option must be legally backed.
He advised that the best thing to do is to ask the lawyer representing the landlord to either go peacefully or by any steps available. He said: “From my experience, it will appear that a lot more tenants will be able to pay their rent if it’s paid monthly. When you ask for yearly rent in advance, what you are asking a tenant to do is to live his economic life in advance.”
Bruno maintained his position that monthly payment is best for the landlords and the tenant. According to him, if monthly rentals payment is embraced, landlords can also plan and save.
In his words: “It’s not fair that a landlord cannot save to meet their needs, but they expect a tenant to pay in advance, particularly when he is on salary and you want him to pay in advance. It doesn’t look alright. Let there be options. In the worst case scenario, let the tenant confirm if he will be able to pay in advance or monthly.
“l will advocate a mix-mode in a sense that some tenants will pay monthly while others will pay yearly since all fingers are not equal.”
Buoro, however, stated that before this could work, there must be a buy-in by the government and the corporate world. He explained that the government could set up an agency to which landlords who demand yearly rent would encourage their tenants to pay by monthly instalments so that by the end of the year that agency would give them the lump sum.
He explained: “More appropriately, what l have in mind may not be a government agency, but a private initiative either by way bank or insurance organisation that has this kind of portfolio where tenants will pay into monthly, then the landlords, in turn, will make their claims yearly with commission or sums being paid to that financial organisation or agency for keeping that money in store for the landlord.
“Banks can easily do this. It is just to brand it, however, they want it and the landlords will ask their tenants to pay their rental into it so that at the end of the year he gets his annual sum.”
But, Buoro asked: “What will likely happen when the tenant dies and the family prefers to relocate or if the tenant loses his job and wants to relocate? How many landlords will be ready to refund such sums?”
He said if a landlord took a monthly tenancy, he would ensure that the tenant paid him before he left. Even if it is one month advance rent, he said it was easier to manage than one year. “It is also possible that quarterly advance rent may make more sense than the one year.
“We know that there are so many needs competing for attention in the life of a man and that one year looks like six months, especially when it comes to savings. Before you know it, a year is gone and you are supposed to fish out a sum that you don’t ordinarily own,” Buoro added.
NIESV PRO’s position
Although the National Publicity Secretary, Nigeria Institution of Estate Surveyors & Valuers (NIESV), Saheed Makinde, he believes in yearly rental because it aids real estate investments and security of occupancy to the tenants, among others, he notes that monthly rental, on the other hand, discourages real estate investors and puts tenants in a state of insecurity in terms of occupancy or tenancy among others.
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