Lagos Invests N5bn to Kickstart Monthly Tenancy Scheme
The Lagos State Government on Wednesday said that it had set aside N5 billion to kickstart the state’s monthly tenancy scheme in January 2022. Dr Rabiu Olowo, Commissioner for Finance, disclosed this during a panel discussion at the 2nd Lagos Real Estate Market Place Conference and Exhibition in Lagos.
The two-day event, organised by the Lagos State Real Estate Regulatory Authority (LASRERA), was tagged; Lagos: 21st Century Real Estate Investment Hub. Olowo said that the scheme, aimed at alleviating the difficulties experienced by tenants and fears of landlords in the event of paying rent.
He explained that the first set of beneficiaries would be drawn from the formal sector to minimise risks and access the workability. According to him, the second layer will cover the informal sector, while others will follow suit.
Olowo said, “Following a survey, we have been able to create a model that will be launched and known as the Lagos Monthly Rental Policy. The survey reveals that a large percentage of Lagos residents finds it difficult to pay their rent on yearly basis, hence the introduction of the initiative.
“You (stakeholders) have nothing to fear. You will get a better deal by joining the scheme. To start with, a N5 billion portfolio has been put in place to kick-off the scheme. We welcome more support from more financial institutions to raise the bar of the portfolio for the masses to enjoy from this policy, ” he said.
According to the commissioner, from the financial perspective, operational rule, legal rule and default rule were issues arising from the scheme.
In her remarks on the scheme, Mrs Toke Benson-Awoyinka, Special Adviser to Gov. Babajide Sanwo-Olu on Housing, said that the scheme was part of efforts towards growing the real estate industry and building the confidence of investors.
Benson -Awoyinka said that the scheme was synonymous with the Rent-To-Own scheme already operational in Lagos.
She expressed displeasure on the claims by some landlords that the government cannot dictate how they would collect their money because it is not the government that built their houses for them.
“Yes, there is a way we can dictate because we have the tenancy law that has prescribed that you cannot collect more than one year tenancy in some areas of Lagos State.
“We also know that because of the credit system in Nigeria, we cannot really enforce that monthly tenancy but to create enabling environment for people to also subscribe to the scheme.
“We have put about five components together as a state government, mid-wife the policy and making it seamless and easily accessible by the citizens of the state.
Benson-Awoyinka said that the state government had spoken to quite a number of financial institutions and trying to achieve a very good interest rate that citizens would be proud of.
She said that the scheme would work in a way whereby the tenant would be pre-qualified the same way the mortgage scheme and LagosHoms Scheme were pre-qualified.
“If pre-qualified, we know that the tenant can afford whatever rent he wants to pay but if he is having difficulty putting big funds together, we refer them under this scheme to the financier.
“The financier also does the needful in terms of pre-qualification and get to know who the landlord is.
“So, there are various components to this, we have the insurance, financier, the landlord, the tenant and the legal, apart from the administrative cost of the scheme,” she said.
According to her, a present tenancy who wants to get into the scheme, the government has a process where it would bundle such from being a tenant paying directly to the landlord to a tenant coming under the scheme.
“The scheme goes ahead to pay that yearly rent to the landlord but give such a tenant an option of paying that rent on monthly basis after pre-qualification,” she said.
Commenting, Mr Korede Adeyemi, General Managing Director, Nobles Serve Capital Management, described the scheme as a social impact structure designed for financial institutions to deliver through an interest-based market structure.
“We will do due diligence on the people on the platform and onboard people as fast as possible in order for them to access the scheme,” Adeyemi said.
In his comment, Mr Charles Philips, Managing Partner, Charles Anthony NLP, said that the greatest risk associated with the scheme from a legal and financial point of view is the default.
“Default to the landlord and the financier guaranteeing the tenant. We must examine that in the event of default, who bears the liability.
“Those who guarantee the tenant must be satisfied that he or she is in the position to pay these instalments that have been guaranteed,” he said.
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