Will states’ tenancy laws rein in rent hikes, abuses?

As the cost of housing continues to rise, making affordable options increasingly unattainable for many Nigerians, several states are taking steps to implement tenancy laws aimed at regulating rents, defining landlord-tenant relationships, and curbing abuses by real estate agents. While experts view these initiatives as a positive move to combat fraud and safeguard tenants, they caution that overly stringent regulations could deter investment in the housing sector. They urge a balanced approach that protects renters while respecting the rights of landlords, as reported by VICTOR GBONEGUN.

The surge in rents, arbitrary increases, and disputes between landlords and tenants are exacerbating Nigeria’s housing crisis, prompting state governments to adopt tenancy legislation to regulate rental transactions and protect tenants from exploitative practices in the property market. These laws are designed to tackle long-standing grievances such as excessive rent demands, arbitrary evictions, exorbitant agency fees, and the lack of clear agreements governing landlord-tenant interactions.

In urban areas, escalating accommodation costs are compelling low- and middle-income families to move to remote suburbs or endure overcrowded living conditions. Tenancy laws are increasingly viewed as mechanisms to enhance transparency, clarify the rights and responsibilities of both parties, and offer legal avenues for resolving conflicts.

However, the effectiveness of these measures is often undermined by weak enforcement, limited public knowledge, protracted dispute resolution processes, and the presence of unregistered estate agents. In major city centers, the cost of a self-contained apartment ranges from N800,000 to N2 million annually, while one-bedroom flats typically cost between N2.5 million and N3 million. Larger apartments, such as two- or three-bedroom units, can demand rents between N3 million and N5 million, depending on their location.

Landlords frequently require tenants to pay two to three years' rent in advance and may evict them without following proper procedures. Real estate agents often impose high fees for their services without providing receipts, and some even pressure landlords to increase rents to enhance their commissions.

In recent years, states including Abia, Ebonyi, Kogi, Lagos, Ogun, Anambra, and Enugu have passed or are in the process of developing tenancy laws to regulate the rental market. While efforts to implement rent-control measures in the Federal Capital Territory have not yet resulted in legislation, the House of Representatives has previously urged the government to take action on this front.

Reports indicate that some states are considering measures to limit agency fees to 10 percent and cap advance rent payments at one year. Other proposals suggest capping legal fees at 5 percent, establishing mandatory notice periods, and creating special rent tribunals to expedite dispute resolution.

Common elements in the proposed laws include restrictions on advance payments, protections against arbitrary rent increases, and bans on unlawful evictions. Additional proposals would mandate notice periods for ending tenancies, criminalize harassment and utility disconnections to force tenants out, and require landlords to issue written receipts for rent payments.

Other initiatives aim to regulate agency and legal fees and require property practitioners to register with state regulatory bodies. The legislation also defines landlords' responsibilities regarding property upkeep and establishes processes for recovering possession of properties.

In Kogi State, the anticipated Tenancy Law 2025 aims to manage rent hikes, agency charges, and tenancy arrangements while safeguarding the interests of both landlords and tenants. Similarly, the Ebonyi State House of Assembly recently approved the Bill Regulating House Rent, Agent Fees, and Scrap Trade, which caps agency fees at 2 percent of the total transaction value for both professional and non-professional agents.

In Abia State, the House of Assembly has passed the Abia Property and Tenancy Bill, which seeks to regulate property transactions and ensure the protection of both landlords and tenants. This legislation proposes the establishment of the Abia State Property and Tenancy Regulatory Authority, pending the governor's approval, and mandates that property agents register with this authority. It also sets agency fees at 5 percent of total rent and imposes significant fines on unlicensed agents, along with severe penalties for those convicted of defrauding clients.

However, some professionals express concerns that certain proposed provisions may undermine the authority of the Estate Surveyors and Valuers Registration Board of Nigeria (ESVARBON) by not exempting estate surveyors and valuers from these new requirements. Mr. Yemi Stephens, Chairman of the Faculty of Estate Agency and Marketing at the Nigerian Institution of Estate Surveyors and Valuers (NIESV), noted that state governments are responding to sharp rent hikes and excessive tenant charges with clear regulations on rent increases, payment arrangements, notice periods, and tenancy renewals.

Stephens emphasized that the government has a duty to ensure that basic needs, including housing, remain accessible and affordable. He pointed out that the rapid rise in rents is a key factor driving states to enact tenancy laws. In addition to safeguarding tenants from arbitrary evictions, he stated that the laws should also regulate the processes by which landlords can recover possession of properties, including required notice periods and procedures before legal actions can commence. However, he cautioned that addressing the shortage of affordable housing is essential for achieving lasting solutions to the ongoing housing crisis.