Stakeholders divided over moves to control rent in Abuja

by DailtTrust
(18/4/16)

The recent moves by the FCT authorities to control rent in Abuja, to check arbitrary increment by landlords, have elicited mixed reactions from stakeholders


Stakeholders divided over moves to control rent in Abuja
Apartment blocks at Guzape phase 1, Abuja
Mixed reactions have continued to trail the statement credited to the Minister of the Federal Capital Territory, Muhammad Bello that the administration is contemplating enacting a legislation to bring down house rents in Abuja.
Rent payment in Abuja over the years has been an uphill task for tenants due to yearly arbitrary increases by landlords and developers.

Tenants pay N250,000, N350,000, N400,00, N500,000, N700,000, N1 million and above for one-bedroom, two-bedroom and three-bedroom apartments respectively, depending on the location.
Stakeholders and tenants, who spoke to Daily Trust on the issue, are however divided as some believe the legislation is long overdue in view of the high rents in the city. Others said such legislation would not work without addressing the real factors leading to such high cost in house rents in the territory.
The minister of the FCT had during a courtesy call on him by the Abuja chapter of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), said FCT may come up with a legislation to bring down the cost of accommodation.
He said, “Why should we pay rent annually in Nigeria; why should we pay two, three years in advance? All the people you see here, including the minister get their rent allowance on a monthly basis, only very few organisations in Nigeria pay rent allowance annually in bulk. Why can’t we start asking our tenants to pay rent monthly even if they are in Asokoro, Maitama or wherever?
“As a body, NIESV must take deliberate steps to bring down the cost of accommodation through reduction of your charges and commissions. I know that you charge between 10-15%; but I think that rate needs to come down or else at some point in the future, legislation will force you to bring it down.”
However, a tenant, Muhammed Suleiman, who pays N300,000 for two-bedroom apartment at Dutsen Alhaji, said the law on rent control in Abuja was long overdue due to arbitrary rent increases by landlords and developers.
“I paid N250,000 for a two-bedroom apartment last year, this year it has been increased to N300,000 and by next year they may increase it to between N350,000 and N400,000 because increment has become a yearly activity,’’ he said.
He said it was necessary to come up with a rent control policy that would compel estate owners and landlords to bring down rent because houses abound in the city without occupants.
“The residents would be very happy if the law is enacted,” he said.
Another tenant, a civil servant, who only gave his name as Christian, told Daily Trust that if that was the only achievement of the minister residents would be very happy.
Christian, who lives in Lugbe, said the law was necessary because low income earners are finding it difficult to afford the high rent being charged by Abuja landlords and developers.
“I live in a one-bedroom apartment in one of the federal housing estate in Lugbe at the cost of N300, 000 but now, they are asking me to pay N400, 000. They have turned the rent issue to yearly increment so it would be better for the people if the minister can do that,” he said.
On his part, FCT chairman, Abuja Chapter of the Nigeria Institution of Estate Surveyors and Valuers (NIESV), Emmanuel Alao, said the law if enacted would not work because rent is dictated by demand and supply.
He said though the minister has good intention to reduce rents but rents control in most countries had not worked, because factors leading to high cost of rents had not been addressed by the government.
According to him, inasmuch as there is bureaucracy in acquiring land and developers buy land from land speculators, which increased the cost of house production, there must be high rent as long as the cost of building was high.
“For instance a developer may need a plot in Garki but the land is not readily available because there is no allocation for him. But there are land speculators and people in positions who have gotten those lands and want to sell so the only option left for the developer is to buy from them with bank’s loan, and they are selling for between N300 and N400 million and the developers would also put up structure with another N100 million. And you now ask that person to reduce the rent or be collecting monthly rent, then when will he pay the bank loan when commercial bank interest on loan is about 23 per cent,” he said.
He added that the period for repayment of loan by commercial banks is three years while that of government or mortgage institutions is 15 years, saying because of this developers, as soon as they completed their buildings, must have formed opinion that they would charge high rent in order to be able to pay back the loan collected.
“Even if the law is enacted I don’t see it working in the near future unless the government does something that will reduce the cost of production by removing administrative bottlenecks, provide infrastructure, and make land available to people according to the intent and dictate of Land Use Act, and decongest the city center by moving some parastatals, ministries and agencies to area councils.
In the same vein, a developer, Yomi Falegan, said legislation alone cannot bring down rent in Abuja and any other city because rent is determined by demand and supply.
“Legislation on rent was put up in Lagos during the administration of Brigadier Gen. Buba Marwa , but it didn’t bring down the rent. The only aspect of the law that succeeded then was the payment of one year rent advance by tenants. So when supply is lower than the demand the rent would definitely go up. If we have about 17 million deficit, then the price will go up,” he said.
He stressed that the only antidote to high rent is to have supply outweigh demand which would naturally bring down the rent.
The Chairman Senate Committee on FCT, Senator Dino Melaye said in order to control rent increase in Abuja the Senate was working towards enacting a law that would introduce rent control system.
“We are planning to organize a public hearing on that soon and already we have communicated to the Senate President Bukola Saraki on it. We are waiting for his response,’’ he said.
‘‘We will bring together stakeholders including landlords, tenants and government to review the housing and rent laws. We are looking at the possibility of coming up with a rent control system. For instance if you fix rent now you can’t change it until after five years,” he said.

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