More People In Court As Rising House Rent Defaults Burden Nigeria Amidst Economic Challenges

As inflation soars and economic indicators falter, house rent defaults are on the rise across various market nodes in Nigeria, leaving both landlords and tenants grappling with financial challenges.

The surge in building materials prices, triggered by galloping inflation, high interest rates, unstable exchange rates, and petrol price hikes, has resulted in an increase in construction and maintenance costs. Consequently, landlords are finding it difficult to cope with their tenants’ growing inability to meet rent obligations, leading to a backlog of arrears spanning months or even years.

Many landlords, who heavily rely on timely rent payments for their survival, are facing dire financial straits. Simultaneously, tenants are struggling to make ends meet amidst shrinking incomes.

According to a landlord in Lagos’ Ojo area, named Adeduro, some tenants are genuinely facing financial difficulties, while others are deliberately neglecting rent payments, prioritizing personal needs over their responsibilities to landlords. Rising costs of necessities like food and building materials have compelled landlords like Adeduro to pass on the burden to tenants to avoid jeopardizing their own livelihoods.

Olalekan Akinwumi, President of the International Facilities Management Association (IFMA), Nigerian Chapter, has confirmed the trend of rent defaults. He attributes this to the prevailing adverse economic conditions, particularly inflation, which has diminished individual and household income.

Akinwumi also points out that Nigeria’s tenancy laws are weak and favor tenants, providing little recourse for landlords to recover rent in the event of defaults. The lack of strong enforcement and government support for real estate leads to a situation where tenants may owe rents for years without consequences.

To address the rising cases of defaults, Akinwumi suggests that tenants should be aware of the repercussions and urged organizations to pay rents for their employees and deduct them from their monthly salaries.

CEO of Northcourt Real Estate, Ayo Ibaru, predicts further surges in rent defaults due to harsh economic conditions, with households prioritizing spending on groceries and energy over rent obligations. The recent increase in petrol pump prices has also impacted transportation and commodity costs, further straining tenants’ ability to pay rent.

In the absence of efficient government intervention, Ibaru believes that purchasing power will continue to decline, potentially leading to project delays for real estate projects relying on installment payments from subscribers.

As the country grapples with economic challenges, addressing the issue of rising house rent defaults becomes paramount for sustaining stability and balance in the real estate sector.