How Private Sector Can Help To Tame Soaring Rents

 By Ignatius Okafor

The crisis of rising rents in Nigeria’s major cities has become a painful reality for millions of households. From Lagos to Abuja, tenants face ever-increasing demands for two to three years’ rent upfront, while landlords insist that inflation and high construction costs justify their actions. 

With the country’s housing deficit now estimated at 28 million units, soaring rents are unlikely to abate without urgent reforms. Over the years, successive governments have launched initiatives to address this crisis, yet the impact has been minimal.The Federal Government has, at various times, rolled out ambitious housing schemes intended to provide affordable accommodation. The National Housing Programme (NHP) under the Ministry of Works and Housing built thousands of units across states. While commendable, these numbers barely scratch the surface of Nigeria’s 28 million-unit deficit.
   
Even more troubling is affordability. Many of the completed houses are priced far beyond the reach of average Nigerians, with civil servants and low-income workers completely priced out. Some estates remain unoccupied because they were built in locations without good access roads, water, or electricity. In effect, the NHP demonstrated good intentions but poor execution.

Recognising the limitations of public funding, governments have turned to public–private partnerships. Lagos State pioneered this approach through the LagosHOMS scheme, where the state provided land while private developers handled construction. Similar initiatives exist in Anambra, Delta, Ogun, Rivers, and the Federal Capital Territory.
   
However, the results have been mixed. While these PPPs have boosted the housing stock in urban centres, affordability is again the stumbling block. Developers, driven by profit, continue to target middle- and upper-class buyers rather than low-income earners. A two-bedroom flat in most PPP estates costs several millions of naira, well above what the average worker earning under N100,000 monthly can pay. In practice, PPPs have expanded supply but failed to address affordability.
   
Another area of intervention has been housing finance. The Federal Mortgage Bank of Nigeria (FMBN), National Housing Fund (NHF), and the Nigeria Mortgage Refinance Company (NMRC) were all created to make home ownership easier. Through the NHF, contributors are meant to access low-interest loans for housing, while NMRC provides liquidity to mortgage lenders.
   
In reality, the mortgage system has failed ordinary Nigerians. Mortgage penetration in Nigeria is less than 1 per cent, compared to over 30 per cent in South Africa. Interest rates are typically between 18–25 per cent, effectively shutting out most workers. Moreover, repayment schedules do not match the income levels of average households. The result is a system that works in theory but not in practice.
   
Some states have attempted to regulate rents directly. The Lagos Tenancy Law of 2011, currently under review, prohibits landlords from demanding more than one year’s rent in advance for residential property. Abuja and a few other states have similar laws.
   
On paper, this looks like a progressive step. In reality, enforcement is weak. Landlords routinely demand two or three years’ rent upfront, knowing that tenants have little recourse. Courts are slow, and there are no specialised housing tribunals to protect renters. As a result, tenancy laws exist but are widely flouted.
   
The Federal Government has, at different times, offered duty waivers on imported building materials, as well as land allocations to encourage mass housing projects. Pension funds have also been opened up for housing investment. Cooperative housing has been promoted, with FMBN supporting some projects for civil servants.
   
Yet, the impact remains marginal. Bureaucratic bottlenecks, corruption, and lack of infrastructure continue to discourage developers. Many prefer to focus on luxury housing, where profit margins are higher and risks lower. Cooperative housing works in some cases, but it mainly benefits those in the formal sector, excluding millions of Nigerians in the informal economy.
   
Urban renewal programmes in Anambra, Lagos and Abuja have sought to replace slums with modern estates. While this has produced some well-planned communities, the scale is too small compared to the need. Moreover, displaced low-income residents are often unable to afford the new housing, forcing them back into informal settlements. The net effect is that slum populations continue to rise.

Overall, government efforts have been piecemeal, underfunded, and poorly targeted. They often benefit the middle and upper class rather than the low-income households most affected by rent hikes. The housing schemes produce units in the thousands, but the deficit grows by hundreds of thousands every year due to population growth and rural–urban migration.
 
Tenancy laws exist but lack enforcement. Mortgage schemes exist but remain out of reach. PPPs exist but serve the wealthy. Cooperative housing exists but covers only a fraction of the population. In short, the interventions have created frameworks but have not produced meaningful impact on the ground.
   
If Nigeria is to tame its soaring rents, government must reimagine its strategy. Three shifts are critical.
First, Tenancy laws must be backed by specialised housing courts to ensure quick resolution of disputes. Rent regulation should not remain theoretical but must be enforced.

Second, government should provide land, infrastructure, and tax waivers specifically tied to affordable rental housing. Developers that commit to building for low- and middle-income earners should be prioritised in land allocation and approvals.

Third, the private sector must be mobilised through innovative financing such as Real Estate Investment Trusts (REITs), housing bonds, and co-living models for young professionals and students. Pension funds, insurance companies, and corporate organisations should also be encouraged to invest in staff housing or rental projects.
 
Affordable housing should not be seen as a charity project but as an investable asset class. With the right policy framework, the private sector can deliver affordable rentals at scale while making reasonable returns.
*Okafor is an Anambra-based Estate Surveyor and Valuer.