Pros, cons of the proposed Federal rent legislation
Concerned stakeholders have expressed divergent views on the proposed law to regulate rent payment within the Federal Capital Territory (FCT). These voices were amplified during a public hearing on a bill sponsored by Senator Smart Adeyemi (APC Kogi West) to that effect.
The aim of the bill is principally to regulate house rent in Abuja. The bill sought to reduce advance payment for new tenants to three months and thereafter, proceed with the monthly payment scheme.
The bill, among other provisions seeks to protect low-income earners from any form of oppression by homeowners, as well as to provide a safety net for landlords against erring tenants.
The private member bill is an improvement on the Lagos Tenancy Law, which under Section 4 on Advance Rent, outlaws the payment of rent in excess of six months and one year.
The bill, some analysts argued, is in tandem with the rent regime in most parts of the world, especially as it obtains in contemporary African countries, including South Africa and Kenya. The sponsor of the bill, Adeyemi said the bill was to cushion the effect of outrageous property rent on residents in the FCT.
Senator Adeyemi had lamented that, “Some of the landlords have even started threatening me to do one or two things against me if I proceed with the bill and I just laughed.
“When you take up this type of job, it is between you and your God. We shouldn’t be afraid of what anybody could do to us.”
Despite the outside opposition, he said, the bill has been largely supported by other senators. Senator Aliyu Sabi Abdullahi (APC, Niger) described the proposed law as a people-centred legislation and urged his colleagues to support its passage. Senators Ibrahim Gobir (Sokoto) and Bala Ibn Na’Allah (APC, Kebbi) also supported the bill.
Also in support of the bill is the Nigeria Labour Congress’ (NLC) President, Ayuba Wabba. He said in a statement: “Nigerian workers welcome this legislative initiative by Senator Adeyemi, who is also a Comrade as a former President of the Nigeria Union of Journalists (NUJ), an affiliate of the NLC.
“We also recall that the issue of high rent in urban places like Abuja was raised during the recent NLC National Roundtable on Social Protection Cover, where Senator Adeyemi, was represented by the chairman of the Roundtable, Senator Ibrahim Shekarau.
“It is heartwarming that Senator Adeyemi took to heart the concerns of Nigerian workers on the asphyxiating trauma occasioned by high rent, hence this bill.”
Wabba noted that Nigerian workers are paid on a monthly basis, and so, it would be “inconceivable, callous and wicked to expect them to pay rent on a yearly basis.”
He said the crisis of house rent in Abuja, in particular, was so problematic that it has become the enabler for all manner of social dislocations, such as official corruption, prostitution, and violent crimes in urban centres, particularly the FCT.
He said as a result of the problem, most Nigerians are put under economic pressure to make a lot of money to afford a roof over their heads.
“We hope that the passage of this bill will rescue many Nigerian workers and ordinary people from the rent siege,” Wabba declared.
However, it was not all endorsement for the bill. At the floor of the senate, opposition voices also exist. Senator Chimaroke Nnamani (PDP, Enugu) opposed the bill, arguing that market forces like the cost of acquiring land and building materials determine rent.
Some lawyers have argued that rent control will not be effective in Nigeria and globally, except maybe in communist and socialist countries. According to them, it won’t be effective in countries where market forces determine the real estate market and the private sector is the main driver for housing delivery.
The legal experts explained that market forces such as demand and supply ought to regulate rents, insisting that where there are shortages in supply, demand will increase and ultimately raise prices.
They suggested that for rent control law to work and be effective, government needs to be a major player in housing supply, adding that the government can’t control the prices of building materials, land and its values.
An Abuja-based lawyer, Ephraim Akamihe said: “Advanced Rent (Residential Apartments, Office Spaces, etc) Regulation Bill 2022, was one of the bills read for the first time during the Senate plenary on Tuesday January 18, 2022 to reduce the practice of advance payment of rent.
“The intent was to reduce the advance payment of rent from one or two years by tenants to three months and subsequently, monthly payments. It also includes the intention to make it an offence for any landlord to demand for payment of rent above the prescribed period.”
Akamihe noted that the reason cited by the Senator in bringing the bill was the difficulty in getting accommodation within Abuja City Centre due to its high cost and the fact that those who seek are asked to make advance payment of up to two or three years, at times.
He pointed out that high accommodation cost is the reason most civil servants whose offices are in the city centre choose to live in the satellite towns like Nyanya, Kubwa, Lugbe and Kuje, among others.
“Whilst welcoming the bill as well thought out, it is my submission that its passage in its present form will not provide much relief to Abuja residents for whom the bill was intended.
“Reason being that mere reduction in the arrears of rent paid in advance will not enhance the economy of the average civil servant on a minimum wage of N30, 000 per month to enable him/her get accommodation in the city centre where his/her office is located. Neither will it bring down the rent of the houses in the city centre most of which have remained unoccupied for years because the owners are looking for those that will pay them millions to rent the properties.
He argued that a reduction of the duration of rent paid without reducing the amount payable would not achieve the desired result. According to him, that will not be the solution to high rent in Abuja.
He suggested that the National Assembly should rather enact a law, making it an offence and imposing a tax on any completed building that is left to lie fallow or unoccupied within three and six months of its completion. The law he proposes, he said, should in very extreme case authorise the FCT Administration to rent out the house for the owner, where the owner fails to give it out to any available tenant within a given time.
“The law should in addition, prescribe a reasonable rent for houses of different categories in different areas of the Abuja Municipality. Lagos has a Rent Control and Recovery of Premises Law of 1997, which assisted in the control of rent in Lagos at that time, though the property owners eventually worked against it. A similar law in FCT will serve the interest of the generality of Abuja residents more than what is being proposed by Senator Adeyemi. My opinion, I think, will serve the interest of Abuja residents more than what the distinguished Senator is recommending. He is, however, highly appreciated for standing for the masses,” the lawyer said.
Jerry Aondo, also a lawyer, said section 2 of the Rent Restriction Act defines tenancy as a relationship that exists where one called the landlord lets out his premises to another called the tenant for a monetary consideration called the rent.
He citing the case of Mobil Oil (Nig) Ltd. v Johnson (1961) 1 All NLR 93; Umezurike v. George (1973) 3 CCHCJ 62; and A. G. F v Onipede (1963) 2 All NLR 139 to buttress his explanation.
The lawyer explained that in reality, payment of rent is meant to be an agreement between landlord and tenant. According to him, it presupposes the consideration for the enjoyment of exclusive and peaceable possession of premises by the tenant for a term.
However, he pointed out that as a product of an agreement entered between parties to a lease or tenancy agreement, it is susceptible to the old concept of freedom of contract based on demand and supply in an open market with the intervention of the State.
Explaining further, he said, since the end of World War II, state intervention in housing matters has become imminent due to shortage of accommodation, increase in population in big cities like Lagos and Abuja and rural urban migration.
He said: “The 20th century ushered in a new era of contractual relations following a shift of emphasis from contract to status, followed by the international crusade against exploitation and inhuman treatment of a party to a contract of no equal status.
“International Conventions on the Right to Fair Treatment in the area of accommodation addressed this. Interestingly, the United States of America and many countries all over the world have brought in the idea of rent control as a form of social security and welfare mechanism to cushion the economic hardship on the less-privileged.
“So, it is the responsibility of the State to assist the less-privileged tenants and protect them against the greed and cut-throat world of landlords, who might want to exploit their weak bargaining power to extort unfair rent.
“However, it is disheartening to note that the regime of rent control in Nigeria has proved to be an ineffective tool against the crushing effect of excessive rent. The rent control legislation in various states of Nigeria came with paraphernalia of the Austinian theory, backed by threats, but subsequently failed the test of time and collapse on the threshold of social realities.”
Aondo said lack of commitment of the government to underwrite building cost to encourage private investment in housing, and low yield from residential property as a result of straight, jacket rent control, motivated landlords to disinvest in housing provision.
The lawyer further noted that rent control is an area that has created lots of concern in Nigeria, pointing out that landlords increase rents arbitrarily, demand two to three years advance payment of rent and pay reckless disregard for the obligations they owe to tenants.
The government, he stressed, plays a vital role in checkmating excesses of the landlords. “The lawmakers equally owe a duty of curtailing these excesses through the instrumentality of a sound legislation. This, therefore, justifies the move by the National Assembly to control advance demands of rent by landlords.
“The objective of rent control laws like the present proposal by the National Assembly are to control and regulate the mode of increase of rent, pattern of payment of rent, protect and prohibit unlawful eviction of a tenant,” he stated, adding that the explanation for the objectives would be appreciated in Nigerian Construction Co. Ltd. v. Olowoyele (1988) 4 NWLR (PT. 90) 588.
The bill specifically proposes a three months initial payment for rent in the case of a new tenant and thereafter monthly payment in advance. The bill is predicated on the need to ameliorate the hardships majority of residents within the FCT, who are compelled or made to pay one or two years advance rent by landlords before they are given keys as tenants.
The bill, if it becomes law, will make it an offence for any landlord or property owner to demand rent in advance from tenants.