STEPHEN Ola Jagun, a seasoned facility manager and vice chairman of the Estate Surveyors and Valuers Registration Board of Nigeria, shares his insights on Nigeria’s deepening housing crisis in this interview with THE ICIR. Jagun explains why rents have skyrocketed across the country, how economic instability is driving displacement among tenants, and why government intervention, especially in infrastructure, mortgage access, and policy reform is critical to solving the problem.
The ICIR: Help us understand why rents are increasingly high these days, as it has more than tripled in most places?
Jagun: Generally, economies worldwide are going through challenges. Narrowing it to Nigeria, our economy has faced several challenges, particularly in the value of the naira. I can give you instances, in some places where rents used to cost N500,000, they have now gone to above N1.5 million. There’s a place in Lekki where a former tenant was paying N2.8 million. He packed out, and the landlord did some repairs and got another tenant who paid N8.5 million. That’s thrice what he used to earn. Looking at it from a layman’s angle, you could say the landlord wasn’t building a new house or buying costly cement or other materials. But he invested so that his investment could yield income and help cater to his needs.
The value of the naira three years ago is not the same today. Let’s say you translated N1.5 million into dollars three years ago; if translated today, can it fetch you a quarter of what it used to be years back? No! It’s the economy that’s driving the costs of rentals.
In some highbrow areas like Banana Island, Victoria Island, and Ikoyi, we can say it’s criminal to charge in dollars, but what the landlords do is convert the dollar value to naira and charge the tenants. Recently, I went to the market to purchase an item on Lagos Island. The attendant told me a price, but as I went to the boss to pay, he first calculated the dollar value before the item was sold to me. It may look shocking, but I understood immediately because the money he’s going to make from me, he’s going to use it to replenish his stock. If he sells below the dollar value, he’ll not be able to restock. That’s the reality, and it’s what’s making rentals increasingly high and creating a lot of friction between landlords and tenants.
Another major reason is that for an average flat in Ikoyi, you should be thinking of N15 or N20 million. To someone who has been living there and has been paying N10 million, if the landlord increases the rent to N15 or N18 million, he may go to Yaba or Surulere, which is not far from the Island, and offer a landlord N5 million, thereby displacing tenants struggling to sustain N2 million rents. What this means is that people relocating from Ikoyi will displace tenants in Yaba or Surulere, and likewise, people in Yaba will go and displace tenants in Agege or Egbeda. That’s exactly what we’re witnessing at the moment.
The ICIR: We can only imagine the huge investment in highbrow areas, but for average Nigerians who live in a single room, a mini or 2-bedroom flat built some 20 or even 30 years ago in a local environment with no proper maintenance on the facilities, does it justify the reasons you have given?
Jagun: Yes, people are displacing those who are below their cadre. For example, if somebody who used to live in a 3-bedroom flat suddenly can’t afford it again, they may move to a 2-bedroom flat in a neighbourhood that’s not too far away and displace other tenants. Those living in 2-bedroom flats will go and displace those living in single-bedroom flats, and so on.

The houses might have been built 15 or 20 years ago, but the purpose of a building is for it to bring returns. The naira value of an investment 10 years ago isn’t the same today. Some clients told me that the annual returns from their investment can no longer take care of their mortgage because of the loss in naira value.
Another reason is that the costs of repairs are not cheap these days. The awareness it’s bringing is that the tenants who used to bear some repairs and didn’t complain, won’t do so again. If a tenant lives in a house that was N500,000, and the landlord asks him to leave because the rent has increased, the tenant will stay if he discovers that the rent is higher somewhere. But he’ll want to fight for his rights by calling on the landlord to do every little repair he used to take care of. The landlord will also realise that he needs to continue to earn higher rent to plough it back into the investment to make the house conducive for the tenant. It’s not a matter of the age of the building but the returns it brings, so the investor is not short-changed.
The ICIR: The mortgage system has been introduced for decades. Do you think we’re getting it right?
Jagun: The mortgage system has not been up and doing, although the players in the industry are looking for creative ways to make it more accessible. If you check anywhere in the world, one of the primary needs of man is shelter. In Nigeria, people in the mortgage business are struggling to get funding with a benchmark interest rate above 27 per cent.
Also of concern is the duration of the mortgage. It takes close to 20 to 25 years for a mortgage to be fully settled. In a country where there’s no job security, it’s a challenge. It’s even harder for banks to stand on such long-term lending, or else they will go under. A former governor of Lagos State, Babatunde Fashola, started the Lagos HOMS (Lagos State Home Ownership Mortgage Scheme), but immediately he left, the government that succeeded him didn’t see the need to consolidate the scheme. He planned to put some seed funds down that would be revolving. Ask yourself, how many governments in Nigeria, as drivers of the economy, are renting out houses? I’m not sure there is anyone because it doesn’t pay them.
It takes close to 20 to 25 years for a mortgage to be fully settled. In a country where there’s no job security, it’s a challenge.
So, it’s the source and costs of funding that are making mortgages not viable. Some investors who would have loved to bring in money from abroad are afraid of the system and policies in Nigeria. They feel unsafe because most of our policies are based on sentiment and someone’s body language. When they do bring funds at all, they do so on a short-term basis.
I attended the launch of a mortgage bank that wants to partner with some developers to bring delivery and value to the market and deliver on the plans. The idea was for developers to bring something to the table, and the mortgage bank to take it from there. By so doing, the developers are not afraid their projects will get stuck as the mortgage bank is to fund it. When it’s between the developer and subscriber, at some point, the subscriber will default on payment, and the whole thing gets messed up with penalties and lawsuits. There are other concerns, too, that bother on affordability and whether a mortgage system is decent for individuals.
The ICIR: Since the mortgage system is not being effective, is a rent-to-own initiative a better choice?
Jagun: It’s a choice to adopt. The scheme that Fashola put in place was rent-to-own. If my house rent is N500,000 and I’m asked to pay N700,000 yearly for 10 years to own the house, I’d rather pay N700,000. Culturally, particularly in Nigeria, it’s a thing of pride for someone to own a roof over his head. When you give someone the opportunity, they will cut down on some expenses and luxuries. His wife and children will cooperate, knowing that the place will become theirs in a few years.
Check it, anywhere in the world, mortgages are better than paying rent.
If rent-to-own can be encouraged, it’s a good thing. Some people have been tenants in some houses for 15 years, and that doesn’t make them co-owners or rent-free. Rent-to-own is something that should be looked at, and I believe many Nigerians will jump at it. What it means is that the rent they’re paying for is an investment in their own houses. Check it, anywhere in the world, mortgages are better than paying rent.
The ICIR: With the increasing rate of rents, what should the government do differently to address issues in the housing sector?
Jagun: I always believe that the government has no business building houses. If they build 50 units of houses, the truth is that it would not even go around the official in the governor’s office. My advice would be that the government make accessible and easy and simple, and bring infrastructure to every nook and cranny of the land. You’ll be shocked that in most of the places we call bush today, people bought land there five or 10 years ago, but they couldn’t move there to start anything because if they did, they would be the ones to construct roads, bring electricity, water, and other amenities. But if infrastructures are available, it will aid development, make construction rapid, and provide an avenue for the government to charge taxes and grow the economy. In some countries, you see them opening new sites and creating roads and infrastructure so that people can go there to live. As people go there to construct, the industry will grow and help the economy.
The current laws on land, particularly the Land Use Act, are also a concern. For instance, a governor can just wake up and cancel somebody’s C of O (Certificate of Occupancy) if he perceives his enemies own the land and straight away take a bulldozer and demolish the structure.
Another major thing the government can do is in the issue of funding. The government has access to so much money that is idle money that it can redirect to the housing sector.
Also, the government can encourage the use of local materials. Virtually, 80 to 90 per cent of what we use, apart from sand and water, is imported. Is the government encouraging research in schools and universities on building materials? Even the ones that have been carried out, what has the government done to encourage the researchers? What roofing systems and building materials can we use that are good for our environment and affordable should be of concern to the government.
The current laws on land, particularly the Land Use Act, are also a concern. For instance, a governor can just wake up and cancel somebody’s C of O
I can recall a time they were talking about a land swap in Abuja, but it was another fraud. Some people wrote a proposal for the government to give a large expanse of land to private investors to provide infrastructure and sell the land to people. But it ended up in the hands of friends of government officials, who then started selling the land at their own prices instead of providing infrastructure. Was that the purpose? No! It happened because their friends were in the government. Another government came and demolished it, but that demolition destroyed wealth. Instead of looking at these problems and solving them once and for all, we look for a quick-fix answer that suits us. It’s the government that can give direction to where we’re going, but most of the time, they do so based on personal interests.
I can guarantee you that if a governor oversees the construction of a thousand units of houses, he and his commissioners will go away with almost 15 per cent of those units of houses. Some other party chieftains will come and take part. Is that place going to spread? No.
For example, if the government of Lagos State moves to Ikorodu and starts providing sites and services, won’t everybody who owns land there build? With that provision of infrastructure, you can be sure that in the next two years or so, houses will spring up, and the government can then go there and charge taxes. Other things will come up – residential houses will spring, commercial activities will rise, and employment will be created. You can imagine the scale it’ll have not only for the building industry but also for the economy.
Dubai has the least oil of all the Emirates, but was very creative, focusing on items. I got to know years back that what a tourist spend [averagely] in Dubai was about $2,000. What did the Dubai government do? They started bringing people, making it as easy as possible for you to come. They went into construction, which generates activities for their economy to run. But in Nigeria, when a person is in government, his brother is the one building, his wife is the one supplying the materials, and his children are the ones selling the buildings. It’s not circulating. The government needs to rise and help the economy.