The Lagos State Government is pushing forward with a legislative overhaul aimed at ending the exploitative 20 percent agent and agreement fees that have long burdened tenants in the state. However, there is a significant catch: the proposed law has not yet been passed and remains stuck in the committee stage at the Lagos State House of Assembly.
What the Bill Proposes
The Lagos State Tenancy and Recovery of Premises Bill seeks to cap agent commissions at 5 percent of the annual rent, down from the common 10 percent for agency and 10 percent for legal fees. Unregistered agents would face up to two years in prison and fines of up to 1 million naira for defrauding tenants or withholding rent. Landlords would be prohibited from demanding more than one year's rent in advance from new tenants, and existing tenants would only be required to pay up to three months' rent upfront.
Why the Bill Matters
For years, tenants in Lagos have faced exorbitant upfront costs. A typical 2 million naira apartment often requires over 3.5 million naira to move in, due to agency fees, legal fees, and caution deposits. The new bill aims to eliminate these hidden charges and make renting more affordable. However, similar attempts in 2015 and 2022 failed because agents ignored the caps, relying on the housing shortage to force tenants into under-the-table cash agreements.
The Current Status
The bill is still in the committee stage and has not been passed into law. Until it is signed by the governor, the old 2011 rules remain in effect, meaning agents can continue to demand high fees. The government is using the announcement to warn exploitative agents and landlords that a clampdown is coming, but for now, landlords still hold the power.
Key Provisions of the Bill
- Fee Cap: Agent commissions are capped at 5 percent of annual rent, making the traditional 10 percent plus 10 percent illegal.
- Licensing Requirement: All agents must register with the Lagos State Real Estate Regulatory Authority (LASRERA). Operating without a license becomes a criminal offense.
- Penalties for Abuse: Agents who disappear with tenant money or withhold rent face fines up to 1 million naira and up to two years in prison.
- Rent Advance Limit: Landlords cannot demand more than one year's rent upfront from new tenants. For existing tenants, the limit is three months.
- Monthly and Quarterly Rent: The government is encouraging voluntary instalment structures through collaboration with ERCAN to align rent with monthly salaries.
- Protection Against Rent Hikes: Section 33 of the bill allows tenants to challenge outrageous rent increases in court.
Challenges Ahead
Despite the promising provisions, enforcement remains a concern. Previous regulations were widely ignored due to the housing shortage and lack of enforcement. The success of this bill will depend on strict implementation and the availability of affordable housing options.
Until the bill becomes law, tenants must continue to navigate the current system. The state government has signaled that change is on the horizon, but for now, the power still belongs to the landlords.
