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Good day to you out there… how is everything?… Life, business and family? I believe fine. In today’s article, I want to share with you questions your landlord will wish you never answered!

Let me start by saying this: have you heard this expression-that a lot of people cannot afford what they want… and they don’t want what they can afford? Hmmm… what a tragedy!… and that has been the bane of many people remaining as tenants throughout their life time.

Well, in this article, I am going to present to you a set of questions which if well understood and appropriately answered, will enable you speed up your journey to becoming a landlord. How do I mean? These set of questions and answers will help you get real fundamentally. They will also help you identify what you can afford while leaving you with the choice of wanting it. Plus, I feel good within me because the fact that you are reading this piece suggests to me that you are already interested in seeing where you’ve missed it… so let’s move on.

In modern society, especially Nigeria, for you to legitimately own any property, you need to be above the age of 18(eighteen). This makes you an adult by law and I want to work on the assumption that I’m communicating with those that have legal right to own property. However, before I get into the nitty-gritty of today’s work, I would encourage you to get a pen and a pad to scribble down your answers because you will be needing those answers in subsequent questions that will come up as we go on. You will also need to do some minor arithmetic work in the process… so question number one goes thus:

Sorry, just before that again, I encourage you to provide your own real answers to the questions> I will use hypothetical answers to enable you better understand the questions and be able to provide your own real answers. Now,….

QUESTION 1: How old are you?

For the purpose of this article, let’s use 30 years as a hypothetical age to answer this question.

QUESTION 2: Where would you like to live?

Is it in Lagos State? If Lagos, where in Lagos… is it Ikeja, Okokomaiko, Ikorodu, Epe, Lekki, Orile, Agege, Surulere, Victoria Island,Ikoyi, e.t.c. Where exactly would you like to live?

QUESTION 3: What size of property would you love there?

Let’s say for instance, Isolo is the preferred location of my place of abode. What type of property would I like to live in there? Is it a flat, a bungalow or a duplex? What size of house would I really want? Is it a room, a room and parlour or a self-contained apartment? You need to specify the size of the house. Let’s say, for me, a flat in Isolo will do and mind you,… I am 30 years old.

QUESTION 4:(a)What do you think would be the cost of your type of house? (b)Are you going to buy or build it?

At this stage, you may need to do some research if you don’t have the answer at your fingertips. How do you go about this? Just go to the internet and log on to any property search engine such as: www.findnigeriaproperty.com, that’s one option. Another good option is a newspaper, preferably the Monday edition of The Punch or Guardian. On flipping through, you’ll see some property ads. On the other hand, your best bet could be a well populated property journal. If you can lay your hands on one, run through it and see what a flat in Isolo is being advertised for. This gives you an idea( and an idea is all you need at this stage) of what price it may go for if you are to buy.

Now, let’s assume that our hypothetical case of a 3-bedroom flat in Isolo is selling for N7.5m; this statement  portrays that I am buying the house instead of building it. And that answers question 4(b) and leads us to the next question which is…

QUESTION 5:What is your expected total earning this year?

Since this year is still running, let us use last year as our guide. This makes us rephrase our question to: What was your total earning last year?

Okay, say for example, I am a salary earner and in my case, my total emolument came to about N6m which is a total representation of everything that I took home from my salary last year as well as every other venture that I dabbled into. To answer this question correctly, you should be able to identify the other streams of income that you have and how much each of them fetch you annually so that you can add this up to your other sources of income and get a total inflow of what comes in for you every year.

With this said, let N6m be the answer to the question of what my hypothetical earning for the previous year was…

QUESTION 6:What is the 33% of what u have in question5?

Simply put, the question here is the 33% of my total income? Remember, we are working with a hypothetical case of  N6.0m per annum. Therefore, 33% of N6m is:

N(6,000,000 X 3)= N1,980,000

Having answered this, my next question goes thus:

QUESTION 7:How many years do you have left to work before you clock 60 years?

We are using 60 years for our analysis because that is the retirement age. Now at 30 years which is our hypothetical age as stated in QUESTION1, how many years do you have left to work before you turn 60?

These question is very vital because they will help determine certain things in this process.

Therefore; (60 – 30) years = 30 years

So, for instance, I am 30 years away from 60 and this answers QUESTION 7.

   QUESTION 8: Multiply what you got in QUESTION 6(N1,980,000) by the answer in QUESTION 7(30 years).

That is:-

N(1,980,000 X 30) = N59.4m

Now, this is where we are going…

By these simple steps, I have just determined the limit  I can achieve in terms of property by any legal and reasonable means currently. That is to say that even if I can access mortgage and borrow to the maximum limit that I can, and that maximum limit is a figure that would not take more than 33% of my earnings to pay for my loan over the rest of my estimated work life before I retire,… now note that we’ve not worked in interest here, because if we work in the interest element, of course, the total figure will increase.  But the limit of N59.4m that we got is really the cap and so interest must be inclusive in such a price for it to fly.

What this simply says now is that the property I can buy with my earnings if I have to take a good mortgage now should not have a loan repayment that is more than N165,000 per month. Otherwise, I won’t be able to pay within my present means. The 33% limit is because the internationally accepted expenditure on property is put at a maximum of 33% of an individual’s income.

Overall, these calculations and deductions translate to say that getting a 3-bedroom flat for N7.5m in Isolo(which was our hypothetical case) should be child’s play. I should be able to achieve it with my eyes closed!

I am quite sure you found our discussion interesting and very simple, however, the value must not be lost in its simplicity. The earlier you settle down for what you can afford, the better for you because as you advance in years, your age determines your chances… and where your earning potential is not increasing at a progression that is higher than the rate which you add on years, then your affordability rate may be dropping. A lot of people reach a peak in their earning at a particular age; and if they’ve not secured property at that particular age, it implies that as they’re going forward age-wise, what they can secure as property using any possible legal means will be diminishing in value.

I have written a mini book on this and the questions are actually 12. The book gives you more detail and puts you in a better position to achieve result or better understand what your position and what to do thereafter. You can pick your copy from SDE Bookshop.

I hope and wish that you study and apply these steps sincerely as these are questions that your landlord is praying to God that you do not have to answer. Why? The answer is simply because if you can and start to answer these questions, you have started on your part to SACK YOUR LANDLORD ^TM. This is why this question and answer procedure is called the SACK YOUR LANLORD TEST. It is the first stage of your house ownership dream…SEE YOU IN YOUR OWN HOUSE!!!

Dear reader of my blog, I owe you this apology and I sincerely wish you understand and forgive me. I have been absent for a little over a month now due to some technical issues with my host company. I don’t know what they did to my postings from January to July that everything went off in a single moment and they could not get it retrieved.

Well, I have decided to move on with my life and business since they have not being able to resolve the issue till now.

Kindly expect my new posts in an average of 2weeks as before. I will start from next week.

 Till then, see you.

2009 is gone but I really don’t know whether it’s been forgotten or will be in a long time to come. However, forecasting what 2010 may turn out to become is no small task. This is so particularly because of the way 2009 played out. The degree of economic challenges we are witnessing now can be said to have sneaked in unnoticed. At this moment, I wish I had a crystal ball to consult, but I don’t.

Well, market indications at this moment in the real estate market informs that the depression  is still very much there and worsening as the credit crunch persist. Property stock list continues to increase as new ones join the existing edifice available on offer. The little money left in the system continues to enjoy the overtures of numerous property options. Buyers continue to set the pace and prices continue to plunge.  A lot of real estate firms are having to re-strategise seriously to remain in business.

In my own opinion, much of these will continue well into 2010. This is expected to be further fuelled by the spate of retrenchments especially in the banks. With recent developments, the re-emerging middle class seems to be an endangered specie. Both commercial and residential real estate are expected to remain flat and may even worsen except the following happens:

• The Country takes a decisive step about the problem the ill health of Mr. President has caused and is capable of causing before it gets really out of hand. 
• The debt management operation instituted to mop up toxic loans from the banking system and Capital Market Makers takes off effectively
• The 2010 budget is a spending budget and it is implemented. Government remains the biggest spender in our economy and the fiscal policy in the new year will determine the path direction the economy will tow. 
• Being the year preceding an election year, politicians and their cronies are expected to put a lot of their  real estate interests out for sale as they unleash all arsenal towards raising funds to fuel their campaigns. The implication of this is that the glut may continue for a little longer.

It is not all gloomy though as rental property is expected to stabilise within the middle to low income properties due to anticipated increase in demand.

New town and emerging market developments will still provide the attraction investors require to play in the real estate sector. To this end, government sustained infrastructural development will further boost trade.  I fore see a situation where must investors and property market stakeholders will head for the bottom of the pyramid. Finding marketable real estate solutions for the poor with strong fundamentals to support business interest must be the crave of every discerning investor this year.

Sincerely, 2010 is the year every entrepreneur MUST put on his/her thinking cap to remain in business. There is need to diversify concentrically or otherwise.

It is a year clients will further scrutinise offerings before they part with their hard earn money. For example, I have a client who has not been able to make up his mind on what to buy for about a month now even though he has inspected almost all we and some other companies have to offer, asked numerous questions and gotten answers to all of them. When it’s time to pay, he comes up with another thing that may take us back to where we started from. Things that ordinarily would not matter or be an hinderance in a booming economy but can drag sales because it is a buyer’s market right now and may remain so for a longer time to come.

One last thing, please watch your cashflow very closely in the coming year. As it is said, cash is the life/blood of any business. You may want to do periodic appraisal of your cashflow to ensure positivity is maintained always. If you can get it, do all that is in your capacity to establish an overdraft line now especially if your projections suggest the need may arise sometime soon.

This is the much I have to say for now and I hope it will prepare you for the challenge ahead. Seasons greeting!

To your success!

A national stakeholders’ conference was organised by Real Estate Developers Association of Nigeria (REDAN) with the support of Federal Ministry of Works, Housing and Urban Development in the second week of November 9, 2009. Great resolutions were reached and these are supposed to be conveyed in a communiqué to the appropriate authority.

Honestly we have had forum after forum on this and similar topics in the past with great communiqués but necessary follow through has been lacking. I only hope that same will not be the case about this recent event. That said, to my mind I believe we came up with some germane issues and solutions. For example, the question of whether housing should be an entirely PPP issue was thoroughly discussed.  Also, questions whether the banks are doing well or enough as regards project financing and other concerns relating to foreclosure and our titling were brought to the fore.

Below are some of the recommendations made by the Committee on Finance For Housing Development in which I participated:

• When it comes to project financing, the projects being financed should serve as collateral
• We need to look critically at creating construction loan as well as mortgage loans.
• Banks should not be allowed to own construction companies so that they can focus on creating loans and mortgages needed to drive the sector and not constitute themselves into unnecessary competition.
• Pension fund custodians should be allowed to invest a healthy percentage of their fund in mortgage creation. 
• Encourage entities like REDAN to sponsor/promote Mortgage Banks, Construction Banks, REIT Companies
• A NAREIT (National Association of Real Estate Investment Trust) should be formed to serve as a pressure group for the purpose of promoting and establishment of REIT in Nigeria

These few are the ones my space can allow for here, expect to hear more update on the conference later. I just hope and pray that the bill to reform the Land Use Act that was said to have passed first and second reading of both houses should speedily go through the 36 states of the federation so it can be concluded in good time.

That is one agenda the current administration will never be forgotten for if concluded  during their term apart from solving the power(electricity) crisis.

To your success!

“Growing up in my small, beautiful village of Ubaha in the eastern part of the country and seeing how my uncles and other kinsmen in the hood used to build houses of their own with ease, I developed an early passion for house ownership. “One day, I will buy a bottle of dry gin and some kola nuts and present to the oldest man in our compound and he will show me the plot on which to build my own house”, I would always tell myself.

Little did I know that I could ever change the idea of building my first house in the village with that of building it in the city, neither did I know that acquiring a plot of land could be such an onerous task, until I graduated, did my National Youth Service and came to Lagos in search of greener pasture. I got a job in a private firm and rented a self contain apartment at Idimu, Egbeda. This achievement gratified me a lot because I cherish privacy. But alas, my landlord never allowed my joy to last! The first signal he gave that jolted me was that prior to the expiration of my two years’ rent, he approached me and demanded that I should top up my rent with at least six months as he was in dire need of money. I struggled and gave him three months, in addition to the nine months that was remaining of my two years rent. That did not go down well with him and from then, he began to harass me at the slightest opportunity. Anytime he heard any sound of music from my apartment, he would shout that it was too loud and whenever I shut my door, he would ask me whether I wanted to break down his house.

One day, I narrated my ordeal to one of my colleagues and he advised me to aim at building a house of my own; disclosing that himself had bought a plot of land and was already saving towards developing it. I told him that I had some savings but that I was actually saving towards building in my village. The first question he asked me was whether we didn’t have a family house in the village and when I answered in the affirmative, he advised me to jettison the emotion of building in the village first, if I wanted to settle down and form a solid financial foundation that would enable me build even a better house in the village in future. “How many days do you spend at home when you travel? Lagos is where you live and work and unless you have your own roof, you will apparently be working for others”, he concluded.

While I was still pondering over the words of my colleague, my landlord increased my house rent from three thousand naira a month to five thousand and that was the last straw that broke the camel’s back. The following weekend, I set out to look for land. The man I was directed to meet took me to another man who volunteered to drive us in his car to the site. As soon as we drove to the main road, he veered into a petrol station and demanded a thousand naira from me for fuel. I gave him and he bought and we drove off. On getting to our destination at Badagry, he stopped over at the house of the agent he said was directly in charge of the land but he was not at home. His wife directed us to a certain bar where we met him guzzling some beer. He was already drunk and that nearly put me off. To add salt to injury, the man asked me to pay for his drinks before he could take us to site. Reluctantly, I paid for the four bottles of beer he had taken and we proceeded to site somewhere around Igbesa.

As we were entering the site, I saw a wide and neatly cleared path with the inscription; “Warning, natural gas pipeline. Keep off!” I quickly drew the attention of the men to the gas pipeline but they dismissed it, saying that it didn’t matter but I knew that it did. They showed me a plot of land and told me that the last price was N200,000. The land was good – upland and the price was okay, but I couldn’t pay because of the gas pipeline. On our way home, the men demanded their consultancy money and I paid them N1,000 each and they promised to continue with the search.

Sometimes, they would call me that there was a land somewhere but on getting there, it would be a swamp or an area very close to a canal. At a time, I began to feel that Lagos land was exhausted. To add to my frustration, each fruitless search meant some money out of my pocket as the agents were ever demanding. Then one day, they took me to a certain plot of land at Sango Otta. The plot was okay, though a wet land, it wasn’t swampy and the size was standard too. They said that the last price was N 300,000. I didn’t have up to that amount in my account so I begged the owner to collect the money in two installments which he accepted. The following day, I paid N200,000 to him in the presence of some witnesses and he issued me a receipt. By the end of the month, July 2007, I completed the payment and set out to clear the site.

Suddenly, some stern looking men emerged from nowhere and started asking me questions on how I managed to enter the land which they said was their family land. I told them that I bought the land from Mr. Dele whom they said was their younger brother. They even disclosed that they authorized him to sell the land on behalf of the family but that he never remitted any money to them. When I tried to contact Dele, I discovered to my chagrin that he had bolted away. Later, one of the men told me that the family empathized with me and decided that if I was interested in a peaceful resolution of the matter, I should pay them N200,000 and go ahead with the development of the property. After much persuasion, they agreed to accept N100,000 which I rallied round to pay. By then, my account had gone red and I could not do anything on the land until after two months. Then gradually, I started the clearing and fencing of the property. The first day I took men to the site, nothing happened but on the second day, the dreadful omo-oniles came calling; threatening fire and brimstone. It was then I learnt that they went for the burial of one of their colleagues the previous day. After much negotiation, I paid them N20,000 and they left and work continued. By the time we were through with the fencing, the building plan and building approval were ready.

However, my architect advised me to fill the plot before building so as to avoid flooding. I bought ten tipper loads of laterite, at six thousand naira per tipper load and with that, the ground level of the entire plot was raised to a reasonable level. We did the foundation and I went back for what I call; financial hibernation for three months. By the time I came back to continue building, prices of building materials had increased tremendously. A bag of cement that was hitherto sold for N1,300 had gone up to N1,500; sharp sand had moved from N11,000 per tipper load to N12,000 etc. The building contractor advised me to buy cement in tones so that I could get it cheaper, about N1,485. That I did and the advice paid off. At the advice of the contractor also, I bought roofing sheets long before the building got to the roofing stage. By then, aluminum roofing sheet, Stuco mill – white, 0.05 was N800. By the time we were roofing, it was N950 per sheet. Immediately the omo-oniles heard the sound of hammer, they came rushing. That day, I pacified them with yet another N20,000 and some drinks and they left. Having roofed the house, I went for another financial hibernation until 2008 when I put finishing touches to the three bedroom bungalow and moved in. It was not an easy task but I thank God for everything because, just as my colleague said, I am now in a better position to build a befitting house in my village. You are never settled, until you are in your own house.”

I trust you have been extracting and learning all you can from the true life stories and experiences of young first time landlords I have been sharing since in this column? I urge you to make good effort in applying the lessons from these stories toward owning your own house.

To your success!

This is a special edition for the AFRES Conference and I just want to welcome the delegates world over. We appreciate your coming and participation in this conference and wish you a very jolly stay and harvest of applicable knowledge and new networks. Welcome to one of the world’s most blessed Nation!

I personally can’t wait for the conference to start, although I am out of town now I will be arriving with other delegate just in time not to miss any action. I have gone through the conference programme and outline of Papers to be presented and all that just makes me not to be able to wait.

We all attend conferences like this for various reasons but key amongst them is usually NETWORKING. Places like this give you the most opportunity to get and cultivate new contacts. While we are set to do that, I do like to share a tip or two about networking that I think will help you with the contacts you make at this conference.

Follow through. Yes, follow through, networkers spend lots of energy making initial contacts without a proper cultivation down the line and the link goes off naturally. I use to be very awful with that. I have loads of call cards and personal details of promising contacts that I either never followed through at all or enough.

Following through takes persistence but really starts with a good conversation. You listen generously and are seriously curious to find out what’s on your conversation partner’s agenda. As it is commonly said, the best Follow Through is based on the other person’s Agenda, not yours.

Suggest another meeting during that first conversation with your new contact. You should try to have a series of between 6 to 9 encounters to establish a networking relationship. Avoid having to initiate every meeting though.

Getting back with your new contact will be easier if these three parameters are in place:

Chemistry, Commitment and Commonality.

So, watch out for the these things in your networking effects at the conference.  

I will be looking out to meet you in person.

To your success!

I got talking to a friend of mine over the festive public holiday as to what the present banking and economic situation holds for our beloved country Nigeria. Sometime about the middle of the year he had course to seek for some vacation on the premise that nothing is happening in the bank where he works and in the sector generally as everything has suddenly quite. He happens to be in a credit related unit of the Bank and granting of credit is going extinct in most of the banks now. So in his innocence he initiated a discussion with the “Oga” as to allowing him for his vacation at this time. You want to know what the “Oga” said I am sure. He was told a lot is happening in the banking world at the moment contrary to his judgement. He was told must banks are working extra hard to shore up their position in preparation for the common year end in December 2009 and that if a bank can do without a staff during this time, they may never need such staff again.  

My take is, if that was the thinking before “tSanumi” then you can imagine what it is now. It means the economy may remain in this state of paralysis for a long time to come. Foreign investors are yet to bring back their investments, the serious and developed economies of the world are just about now to resolving their global melt down challenges, the effect of all these has eaten deep into the fabric of our fundamentals as a nation. And now, the Banks need to deal with  common end of year and the effect of “tSanumi”. The question I ask myself is, where and when will businesses now get funding with all these occurrences?

This is why I must appreciate the innovation the Real Estate Developers Association of Nigeria (REDAN) body is bringing into the funding of the 400,000 housing units annual project. Funding is recognised as a critical part of the project and plans are being worked out on how to achieve it. If truth be told, mass housing is not an attractive venture for any businessman because it is more of sweat than sweet especially without rebate or other forms of support from the Government. The good thing in REDAN’s case is that the Government of the day at the federal level is committed to supporting it. Recently I read about a frontline developer in Lagos say he cannot go into mass housing because he is not Government or a philanthropist. He listed what the Government must provide to make him think about going into mass housing development to include single digit loan, access to affordable expanse of land or free of charge, provision of basic infrastructure, etc. Sincerely, it makes a lot of sense. Businessmen world over demand and obtain such incentives when and where they have gone ahead to develop mass housing.

I know a couple of states especially in the north have risen to the occasion and her giving good support to members of REDAN in their respective state. Let’s hope the whole country will burn with this passion because we need such to reduce our ever escalating housing deficit. I hope the banking and economic mess will clear in good time too so that end users can be better empowered and the level of our effective demand can become meaningful for business to thrive once again.

Did you make the free seminar of September 26, 2009? If you didn’t, then get on the phone and call Seun 07028023008 for download of what transpired at the session. I bet you don’t want to miss it if  you are interested in housing yourself and family in no distant future. We focused on How To Qualify for & Access NHF For Your Building Project. The intension is to empower you Sack Your Landlord! ^TM as soon as possible.

If you think it’s time you Sack Your Landlord^TM , so do we at Realty Point Limited. And we can make it happen for you. Take a simple step now, join Prime Estate Housing Co-operative Multipurpose Society Limited. That’s the platform designed to make you a landlord starting with just N5,000 joining fee. This is a friendly advice, take it, call Miss Gloria James on 08035181138, 07028023009 or email primecooperative@yahoo.com for more information.

To your success.

I and other members of REDAN (Real Estate Developers Association of Nigeria) executives particularly in the South-West have had to round around a little bit in the last two weeks for the general good of the house called). And if I must say, I am impressed with all that is being put together towards the actualisation of the 400,000 housing unit project Nationally.

 All hands are on deck in the zones and the South-West consisting of Lagos, Ogun, Oyo, Osun, Ondo and Ekiti States with 10,000 units voted per state is not an exception. REDAN recognise that it will take the involvement of all the stakeholders to achieve success, so the decision has been taken to incorporate quality representatives from the various sectors into the implementation committee Nationally and in the States.  

 A working document has been produced to serve as guideline for the execution and the train is now moving from State to State. Some states especially in the north have been very cooperative to the extent that they have given large expanse of land to developers at no cost and have also promised to undertake infrastructure within the proposed estates once developers move to site.

 In the light of the foregoing, I don’t think that it will be asking for too much if we expect that our own people – Government, Land Merchants, Financiers, Clients etc give their maximum cooperation towards the success of this initiative.

 We are addressing all the issues that can help in delivering affordable housing to the masses. The tripartite issue of design, material and financing are being looked into and ideas and technologies will be imported where and when necessary.

 This is a clarion call and I expect that it will be answered. Let us join hands together in solving the hydra headed problem of housing shortfall in our country. It is very possible, yes we can like Obama said but only if we dutifully apply our resources to solving the problem without allowing ourselves to be dissuaded. In my honest opinion, REDAN is set for the task and we crave your support.

 Let me use this opportunity to remind you of our housing for all session on Sunday September 20, 2009 by 3pm. The venue is our office and the idea is to offer you an housing opportunity you can’t resist. Make it a date with us as I will be there personally with our financing/mortgage partners. We plan to focus on – How To Qualify for & Access NHF For Your Building Project. The intension is to empower you Sack Your Landlord! ^TM as soon as possible. Expect exposition on how to use the instrumentality of the Co-operative in building your own house. I won’t miss it if I were you.

If you think it’s time you Sack Your Landlord^TM , so do we at Realty Point Limited. And we can make it happen for you. Take a simple step now, join Prime Estate Housing Co-operative Multipurpose Society Limited. That’s the platform designed to make you a landlord starting with just N5,000 joining fee. This is a friendly advice, take it, call Miss Gloria James on 08035181138, 07028023009 or email primecooperative@yahoo.com for more information.

To your success.

Question:

What is this about houses on sale with multiple Estate Agents’ board on them. Is it really professional to have upward of two surveyor’s board on a property?   

Answer:

 The sixth edition of Barron’s Real Estate Guides Dictionary of Real Estate Terms define an Agent as one who undertakes to transact some business or to manage some affair for another, with the authority of the latter.

The same dictionary define Agency as the legal relationship between a principal and his AGENT arising from a contract in which the principal engages the agent to perform certain acts on the principal’s behalf.

One of my mentors in a says Agency is a situation where a person or party holds himself out to a third party on behalf of the owner, that is, the agent steps into the shoes of the owner.

The law of Agency deals not just with one legal relationship (that of principal and agent) but all three.

The multiple board issue is usually a result of multiply type of agency.

There are four types of agency and multiple agency is such that a Principal enters into an agency relationship with more than one Agent over the same property. It is an all comers affair and a game of chance. This usually result in the agent’s trying to outdo one another in closing the deal.  Although there are regulations and policy statements by concerned professional bodies discouraging this practice, the result has not been commensurate and the industry still needs to be better sanitised that way.

Note however that it is first a creation of the Principal who thinks he stands to close his deal faster that way. Whether it works out to his advantage or otherwise is a talk for another day.

A story was reported on the NEWS PAGE of Prime Assets Plus issue No. 28 dated  June 8, 2009 on this matter. It was tacked: Lagos Bans Advance Rent Payment. There, the Commissioner for Justice and Attorney General of Lagos State, Mr. Olasupo Shasore was quoted as saying that the criminalisation of multiple, collection of rents in advance is one of the aspects of the Tenancy Law of 2009 proposed by the state government now before the Lagos State House of Assembly adding that the new law is not an invocation of the Brigadier General Mohammed Buba Marwa’s Rent Edict of 1997.

The so-called Tenancy Act proposes to outlaw the unpopular practice, which excludes many people from the rental market due to the difficulty of paying such a large sum of naira in advance. The bill builds on existing tenancy legislation in the state, namely the Rent Control and Recovery of Residential Premises Edict of 1997, which is largely unenforced.

The practice by landlords of charging rent upfront began in major cities such as Lagos and Abuja but is now the norm in many parts of the country. It is also not the prerogative of Nigeria but is a common practice in many cities in Africa

I think the Attorney General of the Federation and Minister of Justice, Chief Michael Aaondaka, S.A.N.,  started it all when he expressed an intention to pursue the enactment of a law that would make it illegal for a landlord to demand, or require a tenant to make, a two-year advance payment of rents before he could be offered an accommodation on the landlord’s premises.

I intend to share an article by Vitus Nnamaka Okpara, a lecturer in the Faculty of Law, Madonna University, Okija, Anambra State  titled “The Economic Reality of Rent Control in Country” in Daily Independence of sometime in February 2009. The article fully represent my thinking on this subject pretty and simple. Read on:

“…….The learned Senior Advocate of Nigeria gave as his reasons for this line of thinking that it was not only inhumane but also bestial for any person to demand such an outrageous sum of money as rent simply because the other party might be in dire need of accommodation. He further posits, that in these hard days and times, tenants who are largely civil servants and low-income earners do not receive their salaries in advance, much less in two-year advance. And so they can hardly afford to fulfil the harsh conditions for securing accommodation. Besides, to him such dastardly practice is never obtained in the civilised world.

Going by the reasons advanced by the Honourable Minister for this proposal (or in a manner of speaking, his “pet project”), one cannot but notice the altruistic if benevolent motive apparent therein, in view of the plight of our people over non-availability of decent accommodation in most of our cities.

However, since the Honourable Minister mooted the idea, it has prompted some informed discussion on the necessity or desirability of rent control in this country. Indeed, this is not the first attempt (by the authorities) at influencing rent charges in some parts of this country, and with the benefit of hindsight, it is less difficult to come to terms with the futility of undue interference by the government in the freedom of the landlord and tenant to contract.

Besides, it must be asserted in limine that public servants and policy makers in this country should be properly advised to desist from introducing ideas that are specious, or policies that merely commend themselves to sentiments, simply to attract the fancy or admiration of the largely uninformed Nigerian populace. They should rather always strive to design and formulate policies and programmes which are devoid of political undertones, and which will in real terms tackle and uproot, or at least minimize the socio-economic problems that confront Nigerians everyday. Government policies and programmes should always be practical and sustainable. They should not be pragmatic, or obviously simple, on-the-spot solutions, lacking in essence. Above all, government policies relating to housing and accommodation should be imbued with some intellectual content in order to meaningfully address the problem of housing in this country. Given the foregoing background, it is intended herein to approach the issues raised by the Honourable Ministers proposal from both the legal and socio-economic perspectives.

Legally speaking, rent is a compensation paid to the landlord by a tenant for the use of his land demised. The obligation on the part of the tenant to pay rent or the corresponding right of the landlord to receive same has been traditionally regarded as an integral part of the tenurial relationship of landlord and tenant, and in fact it has been considered a normal incident annexed to the landlords reversion in the and. (See Kevin Gray & Susan Gray, Elements of Land Law, 4th edn., London, Butterworths. 2005, p. 441).

This “modern” definition of rent was adopted by the Court of Appeal in Olaniyan v. Shokunbi (1997) 6 NWLR (Pt. 509) 447,467 (per Uwaifo, J.C.A), and it is clear from the contractual or commercial attribute of rent, which has been judicially emphasized that it essentially provides the economic attraction or as it were, the commercial incentives for property developers to direct their investment into the provision of housing accommodation in response to demand.

Admittedly, rent is strictly speaking not an essential part of a lease or tenancy and this is indeed ancient law (See Knight’s Case (1588) 5 Co. Rep. 54b at 55a). In other words, a lease or tenancy may be created in the absence of rent. (See A.P. Ltd v. Owodunni (1991) 8 NWLR (Pt. 210) 391. But in the real sense, it is beyond dispute that in modern times leases or tenancies, at least for the landlord’s purpose, are essentially an instrument for the commercial exploitation of land. Most leases or tenancies are granted expressly in consideration of money or money’s worth. Besides, the courts in recent times seem to be more readily disposed to according more relevance to rent payment in leases or tenancies. (See in this regard the opinion delivered by Lord Templeman in Street v. Mountford [1985] 2 All ER 289).

It is correct to say that must people build to earn profits therefrom. And that, apart from charitable organisations, no one sets, out to erect buildings merely to give them out to people to live in free. That being so, investment in the housing sector is profit-oriented and where the marginal cost of developing houses for commercial purpose exceeds the marginal benefit accruable therefrom, then investment in such a venture will hardly make any economic sense.

It thus goes without saying that in a profit-driven, pseudo-capitalist economy such as Nigeria, there are certainly several competing investment opportunities available to any willing and able investor to choose from. Obviously, the investment choice of every businessman usually gravitates towards the sector or business with a very high potential to deliver a quick return on investment. And so, where, owing to some over-bearing restrictions or excessive governmental control, a particular sector of the economy or a given business becomes economically unviable or unattractive, investment in such sector or business will usually be low if not minimal.

This is particularly true of the housing/property sector of our economy, especially the residential accommodation aspect thereof, where so much unpredictability in the availability and cost of building materials, low return on investment, coupled with undue if unnecessary governmental control constitute a remarkable disincentive for investors. For instance, where one is considering the possibility of ploughing funds into a venture that will be substantially profitable in Nigeria today, he would rather opt for the oil and gas sector, the banking/insurance sector, or even the transportation sector of the economy, rather than hazard the risk of plunging his hard-earned money into the housing accommodation sector, which is more or less prone to harsh realities and debilitating vicissitudes.

And what does this translate to? Certainly, the result is shortages in and scarcity of housing accommodation currently faced by Nigerians, especially those leaving or working in the cities. Indeed, excessive control or restriction in a sector that is naturally under the influence of the market forces constitutes a major draw back on the development of that sector. In this regards, Furmston, writing in respect of a similar situation in England notes: “It is apparent . . . that restrictions on freedom of contract in regard to residential tenancies have led to a dramatic reduction in the amount of residential accommodation available for rent in the private sector and in many ways have exacerbated the problems.” (See M.P. Furmston, Cheshire, Fifoot & Furmston’s Law of Contract, 14th edn. (2001) p. 20).

This is practically the problem being faced in the housing sector in this country today. And government intervention in resolving this problem cannot come by way of further control or restriction on the freedom of contract between the landlord and the tenant. It cannot also come by the imposition of rents and related charges by fiat. Any meaningful intervention by government must be by way of a target-oriented and achievable policy of providing decent accommodation in abundance. The government should either directly or indirectly literally “flood” the whole place with rentable accommodation. Responsible and responsive governments the world over usually design policies whereby the construction and distribution of a given number of houses to the citizens each year is almost a rule without an exception. In Libya with a population of less than ten millions, the yearly minimum is ten thousand houses.

In essence, therefore, rent is a profit earned by a landlord which must be certain, or capable of being reduced to a certainty by either party, and must issue out of the property granted. In the case of C. H. Bailey Ltd. v. Memorial Enterprises Ltd. [1974] 1 WLR 728,732, Lord Denning, M.R. citied with approval a passage in Holdsworth, A History of English Law, Vol. VII (1900) p. 262, which was referred to by Evershed, L.J. in Property Holding Co. Ltd. v. Clark [1948] 1 KB 630, 648, to the effect that “. . . in modern law, rent is not to be conceived as a thing, but rather as a payment which a tenant is bound by his contract to make to his landlord for the use of his land.” (See also United Scientific Holdings Ltd. v. Burnley B.C. [1978] AC 904, 935).

In our own context, it is now more or less clear that government is not a good manager of business in this country; so rather than involves itself directly in the provision of houses, government should simply create the enabling economic/business environment for the private sector operators to drive the engine of development in this sector. This it could do by providing financial assistance in the form of venture capital or soft loans directed solely to property development, which would enable developers to embark on extensive and expansive provisions of accommodation in this country.

One cannot claim to be solving housing problems by simply making the provision of houses unattractive to those with the wherewithal to do so. The smart thing to do in this context is simply to allow the forces of demand and supply to play themselves out until the desired equilibrium is achieved.

It may nevertheless be admitted that the free operation of the forces of demand and supply in the housing sector will be to a great disadvantage of the consumer (tenants in this context), as the demand for houses or accommodation in this country far exceeds supply; and that being the case, an untrammelled freedom of the providers of houses to charge as much as they could extract from hapless tenants will indeed result in grievous social disequilibrium. (Cf. Furmston, op. cit, at p.20, note 18)

But truly, this is not the problem which could be solved simply by fiat or by the imposition of undue restriction on rent charges. As has been noted, any meaningful solution to the problem can only come by undertaking positive measures that would practically push up the supply of this highly essential commodity – housing accommodation – in Nigeria.

Once supply gives demand a real fight, high rent charges will definitely drop, and the housing sector will certainly cease to be a suppliers (or landlord’s) market as it is presently in Nigeria. Government should therefore build houses and sell or rent to Nigerians at affordable prices, or in the alternative, provide adequate incentives to developers to build affordable houses for the people. The housing policy of Libya is highly recommended for adoption and application in this country. And rather than spend over N600m or N700m to build a house for the Senate President or for the Speaker of the House of Representatives (each being for only one family), such sums could deliver decent accommodation for between 500 and 1000 households.

Indeed, our governments, their policy markers and managers of the affairs of this country should do well and stop all their pretences. They should wake up, before it is too late, to the stark reality that most of their policies and programmes are anti-people. Rather than solve problems they end up creating more problems. And this is particularly true of the proposal by the Honourable Attorney General of the Federation to place restriction on rent charges or the mode of rent payment in this country.”

This attempt by the Federal and State government is not the first at controlling rent in this way but all past efforts have always been met with failures. From General Mobolaji Johnson’s era, I think it is only Alhaji Lateef Jakande that did not attempt to do this.

Anyway, for tenants, the lasting way out of this mess is to build your own house. Using our words – Sack Your Landlord ™ !