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How estate agents make tenancy difficult for Lagos residents

By Chijoke Iremeka
16 April 2022   |   4:14 am
For Mr. Chidi Chidubem, who just rented a residential apartment ahead of his wedding, estate agents, popularly referred to as agents, are making life miserable for many renters in the country.

Sincethe Lagos State government abolished two-year rent and directed that landlords should collect maximum of one-year rent, which it has furthered brought down to one month, estate agents have devised means of extorting tenants and landlords in fragrant breach of the law. Renters are appealing to the government to move against agents who are known for hiking the prices of property, collecting ‘double commission’ and absconding with rent collected on behalf of landlords. CHIJIOKE IREMEKA writes:

For Mr. Chidi Chidubem, who just rented a residential apartment ahead of his wedding, estate agents, popularly referred to as agents, are making life miserable for many renters in the country.

According to him, those seeking to rent or hire a property for different purposes across the country are currently at the mercy of these agents who fix their service charges and rents arbitrarily.

While prospecting for a three-bedroom apartment to be rented at Isolo area of Lagos State, Chidubem said he couldn’t imagine the influence wielded by the agents. To him, the agents constitute menace in the real estate sector.

“Agents fix the amount to be paid as a rent and the number of years you have to pay for before an apartment is rented out to you,” he lamented.

According to him, one of the most annoying practices of the agents is coercing renters to pay two-year ‘agent fee’ when the landlord who spent fortunes to build the house collects only a year rent.

The Guardian gathered that the practice contravenes Section 4(1) of the Tenancy Law of Lagos State 2011, which says: “It shall be unlawful for a landlord or his agent to demand or receive from a sitting tenant rent in excess of six (6) months from a monthly tenant and one (1) year from a yearly tenant in respect of any premises without prejudice to the nature of tenancy held at the commencement of the tenancy.”

Failure to comply with the above provision, Section 5 says, “Any person who receives or pays rent in excess of what is prescribed in this Section shall be guilty of an offence and shall be liable on conviction to a fine of N100, 000 or to three (3) months imprisonment.”

Chidubem, like others who spoke to The Guardian on the menace of the agents, called on the government to step in to enforce the above provisions and make a pronouncement on the matter, if its (government) policy on the ease of rent payment would be worthwhile.

The newly married Chidubem couldn’t comprehend why he should pay a landlord a year rent and the agent would be collecting agent and agreement fees for two years from him.

He said: “It’s not done. The government should look into this matter with a view to addressing it to end this exploitation of tenants by shylock agents if the government is really interested in ameliorating the afflictions of renters in this country.

“The same way the government made a pronouncement on monthly tenancy in Lagos and was supported by the Federal Government, there should be a pronouncement on the activities of these agents.

“We are not saying that the government should take them off the business because they are needed and useful in the chain too, but their fees and charges should be harmonised. Some of them insist on payment of registration fee of about N5, 000 or N10, 000 as the case may be before taking a renter out for house inspection.

“In some cases, they are so interested and glued to that registration fee to the extent that majority of them depend on the fees for their living. Others, after collecting the fees, would still make the house seekers to pay the transportation fare for the two parties involved in the house inspection.

“Unfortunately, when some of the agents collect these fees, they would call up the renters regularly to inspect all manner of houses below the standard they indicated in the form filled for the agents just to be seen as working hard.”

Chidubem observed that the agents are influencing the landlords to increase their rents arbitrarily so they can get higher commission because the higher the rent, the higher the commission paid.

While the law stipulates 10 per cent of the total rent as agent fee, some of them collect between 12 per cent and 15 per cent. Section 26 (11) (a-b) of the Lagos State Estate Agency Regulatory Authority Law stipulates that agency fee (s) shall be 10 per cent of the total rent collected on any transaction, but what they collect is far higher than what the law allows.

Chidubem narrated his ordeals with an agent recently: “I was called upon to inspect a house of N800, 000 rent per annum. I was to pay N150, 000 agent fee, N100, 000 legal fee and N100, 000 caution fee. When these are added to the main rent of N800,000, the whole thing totalled N1, 150, 000. The next day, I came to make the payment, but I was told that the rent had gone up to N1million per annum. The new total then became N1, 350, 000.

“I later got to know that after I had gone, another person met with the agent and was ready to take the house for N900, 000. The reason the agent told me N1million was to know if I would pay the amount. If I was keen on paying that amount, the agent would have collected the money and instead of N800, 000 as rent, it would have gone up to N1million. I lost the house.

“The landlords, sometimes, are not aware of these sharp practices by the agents but some of them would not reject a rent higher than what they penned down for the property. If the landlord had offered his house for N800, 000 rent and at the end, an agent brings N1million, the landlord will not reject it.”

This is one of the reasons real estate agencies in Nigeria are being regarded as a finger-snap moneymaking domain for every dick and harry. The practice, until recently, was very loose, largely unregulated and did not require serious professional qualification or expertise to become a practitioner.

Estate agency in the conventional form is not practised by only those trained in property business but also people from other backgrounds.

The Oxford Dictionary Companion to Law defines estate agents as “persons who act as agent for selling or letting of land and houses, aided by advertisement and other means to find a corporate body, or someone who is willing to buy or rent parcels of land or houses.”

According to a secondary school teacher and father of four, Mr. Chamberlin Amaiwe, agents are like middlemen and their activities will have the same impact middlemen have in the distribution chain, that is, standing between the buyer and the manufacturer/seller. They will affect the prices of the products.

“In this case, agents stand between the owners of the property and buyers/renters, thereby affecting the final price of the property or the rent as the case may be by advising landlords to allow them fix the amount. This is the reason a renter will know the property owner but the owner will decline to deal with the renter directly, rather he will refer the renter to the agent,” he said.

In the case of Amaiwe, the rent for the space where he has been living for the past 12 years, a three-bedroom apartment for which he has been paying N350, 000, was hiked to N450, 000, and is causing ripples among the renter, agent and landlord. According to him, while the old tenants are still paying N450, 000, new ones have started paying N600, 000 for similar apartments in the neighbourhood. He said the agents influenced the landlords to jerk up the rent to N600, 000.

“I went to the landlord and tried discussing with him but he insisted on the amount. I had thought that when I visit him, he would change his mind. It’s sad. I don’t like talking to his agent because he’s so unreasonable.

“I am not saying they shouldn’t make their money but they should do it reasonably. This country is hard for everybody. I struggled to raise N100, 000 after payment of my four children’s school fees. I will raise the difference later. It was so sudden. I will start looking for another house. How would he increase my rent in that manner and regardless of the fact that I’m the oldest tenant here? It’s not done. There was no single renovation on the building. We do all the maintenance work here. Everything remains the same.”

In his reaction to some of the issues, the Lead Counsel at Sowers & King LP, Ikenna Amadi said no landlord or his agent has the powers to increase rent without tenant’s knowledge and acceptance.

According to him, where landlord wishes to increase a rent, he should invite the tenant to discuss and agree on the new rent, taking into consideration the prevailing rental rate for such apartment at the time in question and other relevant conditions.

“Where your landlord has increased your rent without your consent, it is advisable for you to write him through a lawyer first, explaining the position of the law and any other reason which makes the rent increase unreasonable. You can then suggest a suitable new rent.

“Should the landlord refuse to change his mind about the rent, the law permits you to proceed to court and apply in the required form for an order of declaration to the effect that the rent increase by your landlord is unlawful, arbitrary and unreasonable.

“In Lagos, where a landlord of residential building refuses to accept the existing rent from you, you may proceed to court and apply to the court to allow you pay the rent to the court’s registry. The curious fact is that where this occurs, your landlord may not receive the full rent again. The court reserves the right to retain 10 per cent and pay him the remainder.”

But the above position may not apply where you have agreed that the landlord can increase rent without your consent in your tenancy agreement. This is the reason you should be meticulous while signing a property agreement.

“It is, however, advisable to check the respective tenancy law applicable to your jurisdiction in each case. There may be some peculiar variations in the conditions or processes with regard to the tenant’s right of consent to the landlord’s decision to increase rent,” Amadi added.

Another lawyer, Nnaemeka Uzunwezea Eze, said while a landlord or his agent and a tenant are at liberty to fix what would amount to rent, in some states like Enugu, the manner in which a landlord can increase his rent is regulated by the law.

According to him, Section 3 (b) of the Landlord and Tenant (Amendment) Law 2008 of Enugu State replaced the provision of section 109 of the principal law (Landlord and Tenant Law, Cap 101, Laws of Enugu State 2004) in 2008 by providing that: “With effect from the commencement of this law and notwithstanding the provisions in any other enactment, rent chargeable for letting of any accommodation within the state shall be as agreed between the landlord and the tenant, and may be reviewed by the parties after every second anniversary of the tenancy. Such review should take into account the prevailing economic circumstances in the building construction and real estate markets in the state.”

The law stipulates that the difference between the new and the existing rent shall not exceed 15 per cent of the existing rent.

According to Eze, the above provision is to the effect that a landlord can only increase rent for a tenant on an agreement with the tenant. Before any review of rent would be effective, a tenant must have stayed for, at least, two years in the premises.

Also, there is confusion being thrown up by the agents where they intend to collect commission from both tenant and landlord against what the law allows.

Eze said: “The most important right of an agent is to receive a commission or remuneration for his services from his principal. While there is no doubt that a landlord’s attorney is an agent of the landlord (his principal), it could be difficult ascertaining who actually the principal of some real estate agents is in order to arrive at who the agents are to claim their remuneration from.

“Is it the landlord who commissioned an agent to look for tenant(s) or a prospective tenant who commissioned an agent to help him look for an apartment or office space as the case may be? One would be tempted to answer that he is an agent of both the landlord and tenant and thus should get his commission from both parties as many of them would do, especially when selling a property.

“Section 26 (5) of the Lagos State Estate Agency Regulatory Authority Law (LSEARAL) is to the effect that a licensed agent shall not act for two (2) principals (clients) on a transaction, but this is the order of the day in the country.”

The Guardian gathered that whatever challenges that exist in construing who an agent is serving has been laid to rest by the definition section of the Tenancy Law of Lagos State 2011. Section 47 of the law defines an ‘agent’ to mean any person usually employed by the landlord in the letting or leasing of the premises or in the collection of the rents, or a person specifically authorised to act in a particular manner by writing under the hand of the landlord.

The issue of real estate agency or agent, whether licensed or not, is one that requires regulation in all states because fraud is constantly perpetrated in the sector.

In May 2021, the Special Adviser to the Governor of Lagos State on Housing, Mrs. Toke Benson-Awoyinka, said the LASRERA had in the previous year, retrieved about N50, 000, 000 through mediations between landlords, estate agents and tenants.

LASRERA, according to her, mediated in about 55 of 150 petitions/complaints among property developers, landlords, potential tenants and tenants.

“People are taking advantage of the shortage of housing in Lagos to hoodwink their would-be-tenants. The people who went to LASRERA must have gotten to legal practitioners somehow who are in the know of the existence of LASRERA,” Eze said.

Meanwhile, the uniformed have continued to fight their battles against Lagos estate agents, especially unlicensed ones, with thugs, police and soldiers. In some cases, the fight has resulted in breakdown of law and order, even death.

A real estate agent and lawyer, Emeka Ndukwe, said one of the challenges faced by the professionals is that some agents exploit their clients because of their ignorance of the real estate business.

For instance, a real estate agent can mislead a property owner on the actual worth or price of a property by presenting to the owner a value below what is actually obtainable in the open market.

Such an agent will convince the property owner to permit him to sell at the lowest value, and when the owner agrees, the agent sells the property for the actual price, even higher, in the open market and takes the difference.

The sharp practices by some real estate agents have made the public to distrust them. Also, some of these agents disappear with the rent after collecting them.

Lagos State government’s advice
Advising potential and actual renters, Benson-Awoyinka said 10 per cent agent fee is permissible by law, nothing more.

According to her, the 10 per cent could further be negotiated down, especially when big figures are involved.

“We tell people not to talk to those practitioners who are not registered with the state government. It is a buyer-beware thing and buyer-beware is mainly in real estate. Now, it has moved away from just the buying and selling to leasing and the agency business where a lot of people are falling victims of fraudulent practitioners.

“We advise everybody in Lagos that, before you deal with that real estate practitioner, make sure he is registered with the state government. We issue them permits, which have numbers. They can call any of our officers to check if they cannot find the names of any agent on our website.

“It could be that such agent is still in the process of registration. We are there to give all that information. Our website will be populated with that information as well. For every person in Lagos, do not deal with that person that’s not registered.

“We would tell them to pause before they pay that money. Make sure that that person is actually registered and has been permitted by the state government to practise.”