Tenancy and the burden of agency fees

Lagos, Abuja, Port Harcourt, Enugu, Kaduna, Ibadan, among others are, understandably, the melting pot for estate agency practice in Nigeria. Rising urbanization and the quest for economic empowerment pushes a lot of people, especially the youth, to these cities, piling pressure on existing facilities including housing.  Poverty, high cost of land and  building materials, a good number of Nigerians can neither build nor buy their own houses, hence the hyper-activity in the rental market where transactions are neither fair nor free from sharp practices.

 Until ongoing attempts by the Lagos State government and the Nigerian Institution of Estate Surveyors and Valuers (NIESV) to regulate the practice, estate agency has been an all-comers affair. There are almost as many estate agents as there are tenants in a given location, each carrying on according to his understanding of the ‘business’. The high patronage of these practitioners arising from high demand for rented accommodation, land for residential and commercial developments and even finished houses for sale, has led to high agency fees, differing in degrees from one agent to another.

 Fees are as high as 10 to 20 percent of the rent for low end properties and 3 to 5 percent for high end properties depending on the parties involved, thus placing Nigeria 50 to 100 percent ahead of countries like Ghana and Kenya where agent’s commission (fee) is as low as 5 percent and 1.25 percent respectively. In other countries like Uganda, the fee is between 5 percent and 10 percent and it is paid by the buyer; in the UK, it is between 2 percent and 3.5 percent; in France, it is between 3 percent and 10 percent while in Germany, it is negotiable between 3 percent and 6 percent.

 These and more are the reasons we join the rest of concerned Nigerians, particularly Lagos State government, in calling for low and uniform fees to enhance access to shelter which is the second need of man according to Maslow’s hierarchy of needs. According to the ‘State of the Housing Market in Lagos Report’ published by the Pison Housing Company, about 65 percent of Lagos state’s 18 million residents live in rented accommodation, spending over 50 percent of their income on house rent.

 We are in tune with the state government’s plan to ensure a uniform standard for estate agency fees. We commend its efforts to protect the residents who are at the receiving end of the estate agents and their principals’ exploitative tendencies. We share the opinion of Ade Ipaye, the state’s Attorney General and Commissioner for Justice who says “it is in the interest of all stakeholders in estate agency practice to agree on an average standard as this facilitates doing business and creates confidence in the housing industry”.

 The plan by the state government to identify quacks in the agency practice through the creation of a uniform advertisement platform and a roll out of approved bill-board advertisement for properties is commendable just as we applaud their plan to set up  Estate Agency Academy to deal with issues of housing management and maintenance, modern approach to fixing rents on various categories of properties, collection of rents with minimum default, when and how to issue quit notices and how to carry out tenant eviction legally. It should align Nigeria, now the largest economy in Africa, to global best practices. 

Easing the registration property would be welcome. Whereas registering a property in Nigeria takes an average of 12 procedures, lasts nearly four months and costs about 15 percent of the property value, in Ghana, five procedures, 34 days and 1.3 percent of the property value is all it takes. In New Zealand, property can be registered online in two days at a cost of 0.1 percent of property value. And this is the way to go!