Still on the Lagos state tenancy law which was introduced 2011, last week we shared ours and your opinion on the segment of the law which states that it will be unlawful for a landlord or his agent to demand or receive rent in excess of 1 year in respect of any premises with the provision for a contravention of the provisions constituting an offence for which anyone found guilty will be liable to a fine of N100, 000.00 or 3 months imprisonment.
Shedding more light today on another segment which the Tenancy law has not covered, we have Barrister Chinedu Ifezue of Sapphire & Breckinridge Legal Practitioners.
It’s a welcome development to see that most Landlords adhered to the tenancy law stated above. However, we have agents on the throats of tenants. We understand that agents charge 2.5% to 10% of the total rent sum depending on the type of property in question. Going by this, the lower class are always at the receiving end of every disadvantage of any kind of law or process.
You have an agent expecting you to pay 20% of the total sum of rent just because your fee turns out very low. Imagine having to pay the sum of 30 thousand naira agent fee for a 150,000naira rent which by right sums up to a 2year agency payment when you are actually paying for a year. Technically, even if this wasn’t signed into law it’s unjust.
We endeavored to reach an Abuja resident who confirmed to us that she never experienced such extortion when she rented her apartment in Kubwa area of Abuja. She paid 10% of the exact rent sum which she paid to her Landlady.
How do you think this can be cubed?
Barrister Chinedu: There is no rule regarding the amount agents can collect as brokerage fee or agency fee. The common practice has become for them to charge 10% of the total rent sum. It’s become so institutionalized now that people rarely ask questions on it. However, in practice, the amount of rent usually determines what an agent can charge as his agency fee. When the rent is in Millions, agents can make do with 5% or less depending on the negotiating power of the proposed tenant. When the rent is less, say in 100s of thousands, you discover that the agents usually insist on 10%.
In regards to them collecting tenancy agreement of 2years while landlord collected 1year, it is still a function between both parties. There is no rule under the tenancy law of Lagos state regulating the amount an agent can charge as agency fee and from whom.
In that circumstance, you discover that the higher the rent, the more likely it is for the agent to make do with 1 year agency fee in consonance with the 1year rent demanded by the landlord. The lesser the amount collected as rent, the more likely it is for the agent to insist on 2years agency. It’s just common sense. For a single rent transaction, there is always a chain of agent involved in different level. The more they get from such small volume rent transactions the more they can share for themselves.
Therefore, it behooves the tenants to insist on the best negotiated agreement. The caveat in that is that the prospective tenant should not lose out of a juicy rent transaction at the risk of insisting on the best agency or 1years agency as the case maybe.
All in all, it is a function of negotiation, understanding and agreement between the prospective tenant and the agent or agency as the case maybe.
That is the principle of pacta sunt servanda
Tell us what you think and how you think the agency fee menace can be controlled. Use the comment box below or join us 3pm with the hashtag #shelterMatters on social media.