Pay Rent Monthly in Nigeria

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Can Monthly Rent become a Norm?

 

MONTHLY RENT PAYMENT IN NIGERIA – THE EMERGING TREND WE ARE PREDICTING

Real estate has continued to catch people’s attention and a lot of people consider an investment in residential real estate to be synonymous to discovering a treasure chest. We are yet to meet a person who doesn’t crave a roof over his or her head, be it his own house or a leased apartment or even one with which he “manages” with someone else.

We have repeatedly mentioned that we expect monthly rent payments to be an emerging trend in some parts of Nigeria as the economy evolves due to the COVID-19 Pandemic. Surprisingly after doing some digging around we found a few companies that are already carving out a niche in this area.

But let’s first take a peek at how it works in other countries where this is the norm.

 

Renting an apartment in Canada – How it works.

Following a bit of digging around, we found out that unless otherwise agreed, prospective tenants pay rent monthly (in a few cases weekly) but are required to sign a lease for a fixed -term of one year. After one year, the term may be renewed for another year at the expiration of the initial lease term.

Challenges experienced by landlords in Canada

The most obvious and biggest challenge landlords’ face is a tenant that defaults on rent payments. Other challenges include:-

·         Constituting a nuisance in the premises/neighbourhood

·         Subletting the premises in breach of the tenancy agreement signed

·         Overcrowding the premises

·         Defacing the landlord’s property

 

So, how does a landlord mitigate these challenges?

Landlords run background checks on prospective tenants and request for documents such as

1.       Reference from previous landlord(s)

2.       A letter from current or immediate past employer indicating the prospective tenant’s annual income

3.       A Bank statement showing that the prospective tenant has enough savings to cover subsequent rents.

If tenants breach their contract with the landlord, there are legal steps the landlord must follow to resolve the issue. The landlord cannot kick out or lock out a tenant for not paying rent. An eviction process set out by authorities must be followed.

·         The landlord has to ask for a change in payment date, either in writing or verbally

·         Involve the police if such breach is in violation of local laws

·         File a complaint through the local rent authority if the breach is still not addressed by the tenant.

In most Canadian cities, tenants can only be legally evicted after going through a hearing with a landlord-tenant tribunal, where the landlord has to have compelling evidence and reasons for the eviction, a process that is time consuming, stressful and involves spending money.

Tenants don’t want to find themselves in this situation though. Records are kept and future landlords will not want to rent their property to individuals that have a default record

Back to Nigeria. – Can Monthly rent collection work?

We already know the challenges landlords face in Nigeria. Some are similar to the examples cited above for Canadian property owners. The big difference is an effective legal and judicial system in the event of a tenant defaulting on rent payments and having to evict the tenant.

This makes yearly upfront payments more attractive in Nigeria, but entrepreneurs have taken on the challenge. Here are a few of them.

Rent Small Small

The first company we found is called Rent Small Small. They sign on interested landlords on the monthly rental plan and basically take over everything from getting them tenants, ensuring rent payments are received and eviction of defaulting tenants.

What we find most interesting is that their rents are paid by automated direct debit from the tenants account and the package includes an insurance scheme that guarantees the landlord gets paid if the tenant defaults. Really cool if you ask us, but will landlords feel the same way?

Fibre

Another company is Fibre and surprisingly they have been around since 2016. Fibre acts as an agent between Landlords and tenants but enables the tenant to pay monthly, quarterly with 6 months or 12 months contracts. You need to sign up with them by going through their verification process. Membership payments include your rent, service charge and booking fee.

Spleet

These guys deal in premium properties and allow you to pay either monthly or quarterly. Spleet also caters to people who need to stay just a few nights – Short lets - and also offer co-sharing options. Service charge is paid as at when due

Muster

Muster allows landlords to rent anything from a single room in their home to entire apartments and houses. Minimum period tenants can rent for is 3 to 6 months and payments are made by direct debits. Landlords need to sign up with them to enjoy their service.

 

While we are sure not all landlords will want to use these agencies, landlords that self manage can definitely learn some tricks from these guys to successfully charge rents monthly.

This could also be a strategy for property developers to make returns on their developments

Could this really be the new normal?

 

Lets us know what you think?