Evaluating The Problem Of Rent Collection As An Aspect Of Residential Property Collection

Project and Seminar Material for Estate Management

Evaluating The Problem Of Rent Collection As An Aspect Of Residential Property Collection


Abstract


Rent is a periodic payment made to an owner of a property for the use of such property. This payment is on the increase n modern times due to several factors which includes increase in the price of goods, inflation and greed on the part of landlords. Similarly, the collection of rent is limited by a lot of problems which often results to rifts between landlords and tenants. However, these problems of rent collection can be solved successfully, thereby promoting a cordial landlord –tenant relationship. This study therefore seeks to achieve this by identifying the problems of rent collection in residential properties in Enugu, and make recommendations on how to solve these problems.

The government overtime have put up measures to help ensure that the process of rent collection is less cumbersome. These measures have come in form of rent control edicts and recovery of premises edicts, as well as the setting up of rent tribunals. These laws have been adopted by various states of the federation, and modified to address the problems of rent collection peculiar to their state. States such as Cross-River, Kwara, Anambra and Lagos State have done this.


Chapter One


Introduction

1.1 Background of the Study

Housing is one of the most basic needs of man second to food and followed by clothing. As man continues to undergone changes from one stage to another, the need for decent housing keeps arising. Increasing human population and advancing technology have increased the need for housing. This need overtime have been addressed through the provision of residential property by developers who in turn collect rent from the tenants. Increasing demand for housing which keeps rising above the available supply has given rise to hike in rental price of housing, especially residential housing.

Housing as a basic need is being provided by the public and the private sector. The private sector which is a major provider of housing do so at exorbitant prices and employs various methods in collecting rents. However, the process of rent collection in residential properties is marked by problems which often lead landlords to take extreme measures to ensure that rent is collected. Sometimes too, landlords and tenants do engage in long legal battles which often times linger on over a long period of time.

Measures to address the problems of rent collection have been adopted by the public and private developers. The government have enacted rent control edicts and rent tribunals to help to ensure that rent collection issues are properly handled with minimal disagreements.

Rent collection is a method of residential property management for both the public and private providers of housing. It involves the collection of an agreed sum of money after a specified period of time which could be monthly, annually or bi-annually as the case may be. Rents collected on residential property are used to manage the property and rehabilitate the property if necessary. This helps to increase the life span of the property. Rent to be collected on a property is usually subject to increment after an agreed period of time in order to accommodate inflation.

Rent collection in Nigeria as well as in Enugu metropolis is the principal duty of the provider of the housing. However, this duty most times is delegated to other parties who collect rent on behalf of the owner. Such delegation is usually made to Estate Agents, caretakers or any other representative who engage in contractual agreements on behalf of the landlord both for rent collection and admittance of new tenants. Estate Agents when acting on behalf of landlords charge monthly or yearly fees for their services. These fees are added tot eh rent payable by the tenant, further increasing it.

The government as a provider of housing have made several attempts to address the issue of rent collection in Nigeria. Laws such as the rent control and recovery of premises edict and other similar laws found in various states are some of the measures taken by the government. The rent control edict has been adopted by various states of the federation to reflect their peculiarities. These laws cover areas such as fixing of rent, mode of collection and increment.

Rent collection on government owned residential property has lesser problems than that of private individuals. This is often the case because tenants perceive the government as having the power and right to eject them from their houses more than private individuals. Therefore, they easily comply with the payment of rent without delay whether the price is high or not. The mode of collecting rent from tenants by the government which is usually through government agencies also help to reduce the problems of rent collection on government owned residential property.


1.2 Statement of Research Problem

The process of rent collection on residential property has a lot of challenges. One of such challenges is delay in the payment of rent. Some tenants fail to meet u ewitht he agreed dealine for payment. This could be asa result of delay in the payment of wages by their employers, increase in rental price, the effects of inflation, among other factors. Delay in the payment of rent often results to the tenant being penalized by paying extra on the agreed rent. It could also lead to legal battles between the landlord and the tenant, which may lead to the forceful eviction of the tenant.

Another challenge of rent collection is in the area of regular increment. This condition may arise when the interval for rent increment is not specified in the ‘Tenancy Agreement’. This leaves the tenants at the mercy of shylock landlords who increase rent at will. Similarly, when property owners delegate their rights as landlords to agents who act on their behalf, these agents charge service fees which are added to the rent price. This is usually perceived as rent increment by tenants. In addition, most landlords do not give enough time or even formal notice of increment to tenants. These problems leads to delay in payment or even refusal to pay.

A third challenge is the absence of any signed document of agreement between landlords and tenants. Such a document which should contain details on the amount to be paid, when to pay, and whom to pay to, when absent can result to problem when rent collection is due. The absence of a ‘Tenancy Agreement’ may bring disagreements between the landlord and the tenants on whether rent should be paid annually or monthly as the case may be.

Rent collection becomes problematic when the property in question belongs to a family and the members are having disputes as to who rent should be paid to. In addition, when the landlord and the tenant are engaged in legal battle, the tenant may likely decline from paying rent until the matter is determined. To achieve this, the tenant may device a means of making the case to linger, during which rent is forfeited.

Other problems of rent collection arise from continuous inflation and increase in the cost of raw materials which in turn increases the cost of rent.


1.3 Aim and Objectives of the Study

The aim of this study is “To evaluate the problems of Rent collection as an aspect of residential property management in Enugu”, with a view to making recommendations on how to address these problems;

The following objectives will help in achieving the aim of the study:

  1. To determine the methods of rent collection by residential property owners in Enugu metropolis.
  2. To determine the contribution of the government in rent collection.
  3. To identify the problems of rent collection in residential properties in Enugu metropolis.
  4. To make recommendations on possible ways to solve the identified problems of rent collection in Enugu metropolis.

1.4 Research Questions

The following research questions will be answered during the study:

  1. What are the methods of rent collection in residential properties in Enugu?
  2. In what way has the government contributed to rend collection in Enugu?
  3. What are the problems of residential property rent collection in Enugu?
  4. How can the problems of residential property rent collection in Enugu be solved?

1.5 Significance of the Study

This study on the evaluation of the problems of rent collection in Enugu metropolis is especially significant considering the rising wave of tenancy cases in law courts. This study will help to reduce tenancy cases by identifying the problems of rent collection and proffering solutions to address these problems. By reducing the number of rent-related suits in court, the burden on the courts will be reduced and enough time devoted to other more important cases.

The significance of this study can also be found in the area of reduction in forceful eviction of tenants. This will result from a better understanding between landlords and tenants. Furthermore, since rent collection is an important aspect of property management, this study will enable property owners to assess the best possible way of collecting rent. This will help to save time spent on litigations and as well save resources which are scarce.


1.6 Scope of the Study

The scope of this study covers the problems of rent collection as an aspect of property management in Enugu. However, emphasis will be placed on residential properties in Enugu metropolis alone. This is because rent collection covers a wide range of property types, and delving into these will make the study too broad. Also, the study will cover the methods of rent collection in residential properties in Enugu. Doing so will help in identifying the problems inherent in them.

Furthermore, this study covers the contribution of the government to rent collection in form of the various edicts, bye-laws and acts. Attempts will be made to figure out areas where these contributions by the government to rent collection can be employed to solve the problems of rent collection in Enugu metropolis. Finally, recommendations on how to solve the problems of rent collection in Enugu metropolis will be made based on the findings of the study.


1.8 Overview of the Study

This study deals with an evaluation of the probes of rent collection as an aspect of residential property management in Enugu metropolis. In other words, attempts will be made to identify the problems of rent collection as it affects residential property. During the study, the methods employed by landlords in the collection of rent for residential property will be aanlysed with a view to determining the effectiveness of thee method. To achieve this, the researcher will interview selected landlords, tenants and agents.

Furthermore, this study will evaluate the contribution of the government to rent collection by looking at the various rent control edicts and other laws on rent control. The main aim of the study is to evaluate the problems of rent collection as an aspect of property management in Enugu metropolis. Objectives such as; determining the methods of rent collection in residential property, determining the contribution of the government to rent collection, identifying the problems of rent collection were drafted to help in achieving the aim.

Finally, this study is presented in five chapters. Chapter one contains the background of the study, chapter two has the literature review and chapter three contains research methodology. Chapter four deals with data presentation and analysis, while chapter five covers the recommendations and conclusion.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to evaluate the problem of rent collection as an aspect of residential property collection.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of rent collection on residential properties.


5.2 Summary

The challenge of managing public housing especially improving rent collections while improving tenant satisfaction continue to confront most public housing agencies. A comprehensive rent assessment, collection and management system which is alive to the needs of the tenants is essential for sustainable public housing programs


5.3 Conclusion

Since rental public housing is a service to a community mainly financed for public resources, tenant satisfaction is a vital tool for continuously assessing and improving the performance of the provider of the service which in this case is rental housing. Although as a measure it has acknowledged short comings, it is none the less the most realistic avenue to ensuring sustainable access to decent and affordable housing. As with all products, it is widely accepted that acceptance of the product by a consumer yields more effortless payments. This is therefore the basis of of this study that tenant satisfaction is the main course of non-payment of rent.


5.4 Recommendations

Rent assessment, collection and accounting especially in public housing is a very intricate affair with potential social, economic and political undertones and therefore incidences of rent arrears is inevitable. Public housing providers should therefore regularly review their approach to and management of rent arrears, develop a strategy for managing arrears and periodically assess how performance can be improved. The researcher therefore makes the following recommendations;

The management structure of the rents service this should clearly indicate who is responsible for receiving and determining reports of any difficulty of paying, collection, and assessment of tenant affairs. The criteria for assessing rent levels. The methods used for the collection of rents which may vary from payment to designated bank accounts, cash MPESA etc. Procedures for the accounting and monitoring of rent receipts. Strategies for preventing the accumulation of rent arrears.


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