The Lagos Tenancy Law 2011: The Effects In Real Estate Development In Lagos State

Introduction

The Lagos State Tenancy Law is criticized by many scholars to be a property law instrument with sectionalism, favoritism, and most of all quite a number of loopholes that defeat its purpose of enactment. This is why the law was described in an online newspaper as an easy avenue for landlords to evict tenants.

This article would examine the effects of the Lagos State Tenancy Law in real estate development in Lagos and further would expose areas where the law has either victimized the poor and weak, or to a reasonable length, favored the upper class in the society.

To begin with, the Lagos State Tenancy Law 2011 was enacted to cater for the lacunas established by the preceding laws especially with respect to the right of repossession of a landlord whose tenants had defaulted in the payment of rent. The law came to force in 2011 and is encapsulated in the Laws of Lagos State 2015.

Since then, the law has brooded mixed feelings of delight and anguish. But it must be noted that the sector of people who bear the bigger brunt of the law is the real estate developers, valuers and surveyors.

Major Provisions enshrined in the Lagos State Tenancy Law 2011

The Lagos state Tenancy Law covers all premises located within the territorial boundaries of the state. It however exempts specific premises like the social and public health facilities (section 1(1) of the Law). Locations like Apapa, Ikeja, Ikoyi, and Victoria Island are further exempted from the applicability of the law. (section 1 (3) of the Law).

The jurisdictions of the applicable courts are detailed and mostly encompasses all civil disputes regarding rent and or relating to the relationship between a land lord and his tenants.(see section 2)The statute establishes a tenancy agreement where premises are granted for value either orally, written or implied(section 3).

The Lagos state Tenancy Law illegalized the request from a tenant by a land lord, or an offer to pay by a sitting tenant rents in excess of 6-month advance. By extension, it renders illegal any request from and payment by a new or would-be tenant, rents in excess of 1-year advance payment and further criminalizes it. (Section 4).It also compels landlords of premises to issue receipts for payments made by tenants stating specifically the date of payment and addresses of landlord and tenants among other things, purposely to serve as an evidence of transaction (Section 5).

The rights of a tenant are adequately captured therein and they include privacy, freedom from reasonable disturbances, right of exclusive possession save otherwise for legal inspections permitted under law for the landlord and finally, right to reasonable use of the areas of the premises for lawful purposes (Section 6).The legal duties of tenants and landlords are spelt out in the provisions of the law. They include rightful payment of rents, rates and dues permitted under law and stated in the lease. (Sections 7 and 8). It also confers duty of specific repairs on the landlord and it also precludes both landlords and tenants from illegally subletting any part of the premises or any attempt to make illegal charges for any part thereof of the premises. (Section 9).

By the provisions of Section 10, issuance of separate receipts to tenants is a must in respect of service charges, facility and security deposits amongst others. Upon the breach or non-observance of any terms and agreement with respect to the premises, the law provides a right to institute an action in court. (Sections 11 and 12).The length of notices required for the varying categories of tenancy is provided for in the statute. Further to this Law, a tenant may be given a notice to quit, the shortest being a week while the longest is six months depending on the status of tenancy (tenancy at will, monthly or yearly tenant)(section 13).

The Law allows a landlord to recover his property on several grounds upon expiration of a notice to quit and upon failure of a tenant or his agent to deliver up possession, to institute a civil action in any magistrate court where the premises falls in jurisdiction(section 24). Additionally, by the provisions of the same statute, a tenancy for a fixed term is allowed to be determined following effluxion of the time reserved by a court (section 25).Similarly, upon proof that a premises is used for varying antisocial activities, a court, upon request of a landlord, may grant repossession (section 25[2]).

The court is empowered to hear matters from tenants on matters affecting unreasonable increase in rent (section 36). It further provides that the court may issue a warrant of possession in favor of a landlord notwithstanding the understated claim (section 38). The court is also at liberty, at the instance of the landlord, to issue a warrant of possession where an order of possession by the court was not obeyed (sections 42 and 43).

Certain conducts of a landlord are capsulated as misdemeanors in the face of the law. Some which may be forceful ejection of tenant either by threat, partial demolition, alteration or modification of a building or premises. The law further sets specific fines against such landlord who may try to do such and also granting the magistrate court power to hear the matter (section 44).

Criticisms of the Lagos State Tenancy Law 2011

There is no doubt that the law has done quite a number of justices to cater for the possible infringements caused by landlords against their tenants. It has further helped to drive a fighting chance for the low-income earners to have shelters over their head with very little loss on the side of the landlords.

It did not only make payment of rents easy, but it removed the humongous burden of having to pay excessive rent in advance. It bestowed specific rights and duties on both land lords and tenants, making it quite easier for matters to be addressed with some level of civility. Additionally, it is commended because, rights and duties, as well punishments and access to court of law on matters of rental housing have made conflicts and aggressive approaches to disputes less common amidst the duos of landlords and tenants.

However, a number of criticisms against the Lagos State Tenancy Law exists. They vary from the turn-off it douses at real estate investors, to its bad effect on the technicalities of construction, market segregation, war between land lords and tenants and an ever-stretch difference clime between the rich and poor of the state.

It therefore could be said that while the law has been able to curb unending disputes that occur between land lord and tenants, protecting the interest of all parties to such transaction, it has, to a reasonable extent, failed to capture the interest of investors, developers and financial institutions who pool resources to fund developmental projects. This is portrayed in the limitations of advance rents.

Effects of the Tenancy Law in Real Estate Development in Lagos

Starting point, exempting high-profile locales in Lagos from the application of the law not only stretches the burgeoning difference between the classes of citizens in the state but also puts all parties to a tenancy of having one or more interests or rights infringed upon without the protection of the law. Better put, do we say that certain laws are to be for the poor while other laws are for the rich? Well, that’s the long and short of the exclusion of Victoria Island, Ikoyi, Apapa, and Ikeja GRA.

Importantly, while one may conclude about the possible favoritism that may emanate from the exclusions, one can say the law did not envisage the possible hardship persons may face in trying to secure shelter in these locations. A prospective tenant would first have to deal with the exorbitant rents, and then the possible compulsion to pay unreasonable rent in advance. True, while this may do well to the land lord, it puts such a tenant at an unreasonable hardship. This would go a long way in aiding the rip-off of tenants by landlords on a lighter note, and illegal evictions premised upon issues that have already been prevented by the law if only it were applicable to the area in question.

Speaking business and investment, restrictions on maximum advance rent applicable to a new tenant limits and not just complicates the target quantum rent recoverable following a project’s waiting period. This makes loan repayment quite tough for investors and real estate facilitators, making many business men run at a loss, discouraging the development of properties for rent and promulgating development of properties for sale.

To a tenant, a lump sum payment for some years in advance, however so difficult, would have amounted to a premium leading to gains of economic rent over a period of time paid for notwithstanding changing economic situations (See Akindele Afolayan; Sustainable Urban Rental Housing Delivery and the Challenge of Tenancy Law 2011 in Lagos State published on Researchgate.com). A tenant paying his rents accepting the legal provisions of paying no more than a year in advance would be delving on the uncertainties of the changing economy and possible unaffordability of the property in question in the later future.

Landlords on the other hand, would have to bear the brunt of slow return in investment if at all there is a return. The possible channeling of advance rents into funding of new projects of extra units of housing and to a large extent prompting a landlord to painstakingly increase rents on leased out properties.

Conclusions and Recommendation

So far, the article has been able to draw a revolving explanation for the enactment of the tenancy law. It also adduced the major provisions of the law and how it affects individual parties subject to it. It made out some of the criticisms made against the law, but still commending the brilliant efforts there is. It discussed the effects generally as it affects real estate development and the stakeholders who suffer the brunt of certain limitation in the law.

It is recommended however that the legislature revisit the law and find a way to create a balance in the law. There is need to capture negotiations between landlords and tenants with respect to advance rent, and remove the barrier that limits it. It also needs to capture investment returns and cater alternative ways, if any, for landlords to make returns on the property faster than it is now, as it would ease the real estate development for rent in Lagos.

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