Rent Increase in Nigeria: What Landlords and Tenants Need to Know
Rent increases are a common feature of the landlord-tenant relationship in Nigeria. Landlords may periodically review the rent payable on residential and commercial properties due to changes in market conditions, inflation, property values, maintenance costs and other economic factors.
However, disputes often arise when a landlord proposes a significant rent increase, particularly where the increase is unexpected, inconsistent with the tenancy agreement, or introduced without sufficient notice or an opportunity for the tenant to respond.
In recent years, tenants across Nigeria have faced substantial rent increases, with some landlords reportedly increasing rents by 50% or even 100% at the point of renewal. This has become a particularly important issue in cities such as Lagos, Abuja and Port Harcourt, where demand for accommodation remains high and the cost of living continues to rise.
So, can a landlord increase rent at any time? Can a tenant challenge an unreasonable rent increase? What happens where the tenancy agreement contains a rent review clause?
This article explains the legal position on rent increases in Nigeria, the rights of landlords and tenants, and some important considerations when negotiating or drafting a tenancy agreement.
Can a Landlord Increase Rent in Nigeria?
Generally, a landlord has an interest in reviewing the rent payable for a property, particularly when the existing tenancy is approaching renewal. However, a landlord’s ability to increase rent depends significantly on the terms of the tenancy agreement, the nature of the tenancy and the applicable law in the relevant state.
Rent is fundamentally contractual. Where the parties have agreed on the rent payable during a particular tenancy period, a landlord cannot ordinarily alter that contractual term unilaterally during the subsistence of the tenancy unless the agreement itself gives the landlord a contractual right to review the rent.
The Court of Appeal in Jovinco Nigeria Ltd & Anor v. Ibeozimako (2014) LPELR-23599(CA)reaffirmed the contractual nature of the landlord-tenant relationship and held, in substance, that a unilateral rent increase is an offer which the tenant may accept or reject. Where there is no agreement to the increase, the landlord must either continue on the existing terms or take lawful steps to determine the tenancy. (judy.legal)
This distinction is important. A landlord may propose a new rent, but a proposal is not necessarily the same thing as a legally enforceable alteration of an existing tenancy.
Why Do Landlords Increase Rent?
There are several legitimate reasons why a landlord may review rent upwards.
1. Changes in Market Rental Values
One of the most common reasons for a rent increase is an increase in the prevailing market value of comparable properties.
Where rents in a particular neighborhood have increased substantially, a landlord may seek to bring the rent payable on the property closer to the prevailing market rate.
2. Inflation and Rising Costs
Inflation can significantly increase the cost of maintaining and managing property. Expenses such as repairs, security, insurance, utilities, property management and other operating costs may increase over time.
Landlords may therefore seek to review rent to reflect increased costs associated with ownership and management of the property.
3. Improvements to the Property
Where a landlord substantially improves a property for example, by renovating the kitchen or bathrooms, installing security systems, improving common areas or carrying out significant structural works, the landlord may seek a higher rental value upon renewal.
4. Location and Infrastructure
The value of property is often influenced by its location and surrounding infrastructure.
Development of roads, transportation networks, commercial centers, schools, hospitals and other amenities can increase the attractiveness and rental value of a neighborhood.
5. Demand and Supply
Where demand for accommodation significantly exceeds available supply, rental values may rise. This is particularly noticeable in major Nigerian cities and desirable residential or commercial locations.
However, the existence of a strong rental market does not automatically mean that a landlord can disregard the terms of an existing tenancy agreement.
Can a Landlord Increase Rent During an Existing Tenancy?
This is one of the most important questions for both landlords and tenants.
Where a tenancy agreement specifies the rent payable for a particular period and contains no valid rent review mechanism, a landlord generally cannot simply impose a different rent during that period.
For example, if a tenant has paid ₦2 million for a one-year tenancy and the tenancy agreement does not provide for a mid-term rent review, the landlord cannot ordinarily demand an additional ₦1 million simply because market rents have increased.
The position may be different where the agreement contains a properly drafted rent review clause allowing the rent to be reviewed at specified intervals or upon specified events.
The terms of the tenancy agreement should therefore always be examined before determining whether a proposed rent increase is enforceable.
Is There a Law Limiting How Much Rent Can Be Increased in Nigeria?
There is no single nationwide rule prescribing that a landlord can increase rent only by a particular percentage.
For example, there is no general Nigerian law providing that a landlord can increase rent by only 10%, 20% or 30%.
The legal position depends on several factors, including:
- the tenancy agreement;
- the applicable tenancy or recovery of premises legislation;
- the nature of the tenancy;
- whether the existing tenancy is still subsisting;
- whether there is a rent review clause; and
- the particular circumstances surrounding the proposed increase.
Consequently, an increase of 50% is not automatically unlawful simply because it is 50%. Equally, an increase of 10% is not automatically enforceable merely because it is relatively small.
The key issue is whether the increase is contractually and legally enforceable in the circumstances.
What Happens Where the Tenant Rejects the Rent Increase?
Where a landlord proposes a new rent and the tenant does not agree to it, the landlord should not resort to self-help or unlawful eviction.
The Court of Appeal’s decision in Jovinco Nigeria Ltd & Anor v. Ibeozimako is particularly relevant. The court recognized that an increase in rent must be supported by the contractual relationship between the parties. A landlord cannot simply alter the agreed rent unilaterally and treat the tenant’s continued occupation as automatic acceptance of the new rent. (judy.legal)
Depending on the circumstances, the landlord may have to allow the existing contractual arrangement to continue or take the appropriate legal steps to bring the tenancy to an end.
Importantly, a landlord must not resort to unlawful means of eviction, such as locking the tenant out, removing the tenant’s belongings, threatening the tenant or deliberately interfering with the tenant’s occupation.
Rent Increase and Notice to Tenants
The issue of notice must be considered carefully.
There is no single nationwide statutory notice period applicable to every rent increase in Nigeria. The appropriate notice may depend on the tenancy agreement, the nature of the tenancy, the applicable state legislation and whether the landlord is proposing a new rent for a renewal or attempting to alter the rent during an existing tenancy.
This is different from a notice to quit, which is a notice used to determine a tenancy and recover possession.
For example, under the Lagos State Tenancy Law 2011, where there is no contractual stipulation on the notice required to determine a tenancy, the Law prescribes different notice periods depending on the nature of the tenancy, including one month for a monthly tenancy and six months for a yearly tenancy. (Lagos State Ministry of Justice)
Therefore, landlords and tenants should avoid assuming that a particular notice period applies to every rent increase across Nigeria.
Unreasonable Rent Increase in Lagos State
Lagos State has a specific statutory mechanism for dealing with unreasonable rent increases.
Section 37 of the Lagos State Tenancy Law 2011 provides that, subject to any agreement to the contrary, an existing tenant may apply to the Court for an order declaring an increase in rent unreasonable.
In determining whether an increase is unreasonable, the Court may consider:
- the general level of rents in the locality or a similar locality;
- evidence presented by the parties; and
- any special circumstances relating to the property or any other relevant matter.
Where the Court is satisfied that the increase is unreasonable, it may order that the increase be changed to a specific amount. The Law also provides that a landlord cannot eject the tenant from the premises while the action concerning the rent increase is pending. (Lagos State Ministry of Justice)
This statutory protection is particularly important for tenants in Lagos who believe that a proposed rent increase is unreasonable.
It is also important to note that the Lagos State Tenancy Law has specific areas and categories of premises to which it does not apply. For example, the 2011 Law expressly excludes certain areas, including Ikoyi, Ikeja GRA, Victoria Island and Apapa, subject to the statutory framework and any subsequent applicable orders. (Lagos State Ministry of Justice)
A tenant should therefore obtain legal advice before assuming that Section 37 applies to a particular property.
The Importance of a Rent Review Clause
A properly drafted rent review clause can prevent many landlord-tenant disputes.
Rather than leaving the issue open-ended, landlords and tenants should consider expressly agreeing on:
1. When the Rent May Be Reviewed
The agreement should specify when a rent review may take place for example, upon renewal or after a specified number of years.
2. How the Review Will Be Initiated
The agreement may require the landlord to issue written notice of the proposed review within a specified period.
3. How the New Rent Will Be Determined
The parties may agree that the new rent will reflect prevailing market values, a professional valuation, an agreed percentage increase, or another objective mechanism.
4. How Disputes Will Be Resolved
The agreement may provide for negotiation, mediation, arbitration or another appropriate dispute resolution mechanism where the parties disagree on the proposed rent.
5. The Effective Date of the New Rent
The agreement should clearly state when the reviewed rent becomes payable.
A vague clause such as “the landlord may increase the rent at any time and for any reason” can create significant uncertainty and may lead to disputes.
A carefully drafted rent review clause, on the other hand, gives both parties greater certainty and allows them to plan for future rental increases.
What Should Tenants Do When Faced with a Large Rent Increase?
A tenant who receives a substantial rent increase should not immediately assume that the increase is either lawful or unlawful.
The tenant should first:
- Review the tenancy agreement.
- Check whether there is a rent review clause.
- Determine when the existing tenancy expires.
- Check how much notice the agreement requires.
- Compare the proposed rent with similar properties in the area.
- Communicate with the landlord in writing.
- Consider negotiating the proposed increase.
- Seek legal advice where the increase appears arbitrary or the landlord threatens unlawful eviction.
Tenants should also avoid simply withholding rent without obtaining proper legal advice. A dispute over rent does not automatically excuse a tenant from complying with valid contractual or statutory obligations.
What Should Landlords Do Before Increasing Rent?
Landlords should also take a legally cautious approach.
Before proposing a rent increase, the landlord should:
- review the existing tenancy agreement;
- determine whether a rent review clause applies;
- consider the prevailing market value of comparable properties;
- give appropriate written notice where required;
- communicate the proposed increase clearly;
- allow the tenant to respond where appropriate; and
- follow the applicable legal procedure if the tenant rejects the proposed rent and the landlord wishes to recover possession.
Most importantly, landlords should avoid self-help measures. A disagreement over rent does not give a landlord the right to forcibly eject a tenant.
For instance, the Lagos State Tenancy Law expressly criminalizes certain forms of forcible eviction, threats, molestation and deliberate damage to premises intended to remove a tenant. (Lagos State Ministry of Justice)
Why a Written Tenancy Agreement Matters
Many landlord-tenant disputes could be avoided if the parties properly documented their agreement from the beginning.
A comprehensive tenancy agreement should clearly address:
- the amount of rent;
- duration of the tenancy;
- renewal provisions;
- rent review;
- notice requirements;
- responsibility for repairs and maintenance;
- service charges and other payments;
- permitted use of the property;
- termination;
- dispute resolution; and
- consequences of breach.
Tenants should insist on reviewing the tenancy agreement before paying rent or committing themselves to the property.
Landlords, on the other hand, should ensure that their tenancy agreements properly protect their interests while complying with applicable laws.
Can a Landlord Increase Rent Arbitrarily in Nigeria?
A landlord generally has the right to seek an increase in rent, particularly when a tenancy is approaching renewal. However, the landlord’s right to review rent does not mean that every proposed increase is automatically enforceable.
The terms of the tenancy agreement, the existence of a rent review clause, the nature of the tenancy and the applicable law in the relevant state are all important.
Where an existing tenancy is governed by a fixed rent and there is no contractual basis for changing it, a landlord generally cannot simply impose a new rent during the subsistence of that tenancy. Where the tenant rejects a proposed increase, the landlord must consider the appropriate contractual and legal options rather than resorting to self-help. The Court of Appeal’s decision in Jovinco Nigeria Ltd v. Ibeozimako reinforces the contractual nature of rent and the limits on unilateral rent increases. (judy.legal)
For landlords, a properly drafted tenancy agreement and rent review clause can provide clarity and reduce future disputes. For tenants, reviewing the agreement before signing and obtaining legal advice when faced with a substantial rent increase can help protect their rights.
If you are a landlord or tenant dealing with a rent increase, rent review dispute, tenancy agreement or threatened eviction, it is advisable to obtain legal advice based on the specific facts