NIGERIA'S RENTAL VARIATION IN RESIDENTIAL AND COMMERCIAL PROPERTY: A COMPARATIVE ANALYSIS

NIGERIA'S RENTAL VARIATION IN RESIDENTIAL AND COMMERCIAL PROPERTY: A COMPARATIVE ANALYSIS

BACKGROUND OF THE STUDY

Shelter is an essential human requirement. This desire can be met by either inhabiting one's own property (owner's occupier) or renting another person's home. In our traditional culture, the first option, owner occupation, is primarily used to meet the demand for housing. The situation has altered as a result of the urban centers' emergency. Because of the difficulties in acquiring land and the high expense of construction, many individuals are no longer interested in owning property. As a result, individuals are left with the option of renting other people's homes in order to meet their housing needs. As a result, two types of urban residents have emerged: the landlord and the tenant. Under this arrangement, the renter pays the landlord a set amount of money in exchange for the use of the owner's property. This sum is commonly referred to as rent.

Many landed estates in the old Eastern Region of Nigeria, including Enugu, were destroyed during the civil war that lasted from 1966 to 1970. As a result, following the war, the availability of landed estates decreased dramatically. Furthermore, due to the obvious riches brought about in the metropolitan region by the oil boom, the post-civil war period saw an unprecedented number of rural people flocking to the cities. As a result, the existing restricted supply of landed properties was in great demand. Rents for landed properties grew dramatically as a result of these changes.

This tendency has persisted, with the result that "the ordinary worker pays 30% to 40% of his wage as rent" (Oshadiya, 1985). As a result, the rise in property rentals has resulted in a variety in property rents.

In metropolitan areas, rents tend to vary depending on the type of use that a property may provide (for example, great location), which certain properties provide over others for commercial and residential applications.

STATEMENT OF PROBLEM

Economic property location has been a challenging notion to grasp (Ajayi, 1998). Although the major goal of commercial properties is to generate profit, the primary goal of residential properties is to provide habitation, shelter, and comfort, land demand is a reflection of the profit or usefulness that may be derived from its usage. The more the rent that a user is ready to pay for a given usage, the greater the advantage that the user will derive from it (Balchi, 1982).

In Enugu and Nigeria in general, there appear to be significant disparities in the amounts of rent passing on residential and commercial properties.

This study utilizes Ogui New Layout and G.R.A as a case study to investigate the reasons of rental variance in commercial and residential properties in Nigeria.

AIM AND OBJECTIVES OF THE STUDY

The main aim of this research is to examine the reasons for rental variation in commercial and residential properties with a view to provide tool to be used in catching issues related to rent on these properties in Enugu and Nigeria generally.

To achieve the standard goal, the following objectives are to be pursued;

1. To identify the level of rents for commercial and residential properties in the study area.

2. To ascertain and examine the factors influencing the rents being commanded by these properties.

3. To determine or examine whether the income of prospective buyers/tenants affect their decision to acquire properties.

4. To ascertain if there is disparity in rental values for residential and commercial properties in the study area.

5. To find out the rate of demand between commercial and residential properties?

RESEARCH QUESTIONS

1. What is the level of rent for commercial and residential properties in Ogui New Layout and G.R.A respectively between years 2002-2004

2. What are the factors influencing rents passing on those commercial and residential properties

3. Does the income of prospective buyers/tenants affect their decision to acquire properties?

4. Is there any disparity in the rental value or rent passing on residential and commercial properties in the study area?

5. Amongst properties put for Commercial and Residential use, which is on a higher rate of demand?

SIGNIFICANCE OF THE STUDY

The following groups will benefit from the findings of this study:

For starters, renters who are charged rent for a variety of reasons, especially when the properties are similar in character (physically). This will allow investors to learn not just how occupiers think, but also why and what factors they consider when purchasing buildings for specific applications.

Second, the broader public now understands why the rents demanded by these assets must be different.

Finally, this research will aid in determining the elements impacting commercial and residential properties, which is a necessary pre-requisite for successful development, as well as pique students' interest in conducting more research on the subject.

SCOPE OF THE STUDY

The study covers a period of three years (2002 to 2004) and it is restricted to selected properties (Residential and commercial) comprising blocks of flat and tenements in Ogui New Layout and G.R.A, Enugu.

LIMITATIONS OF THE STUDY

During the data gathering stage, this project encountered certain challenges, as one could expect. The topic of rent passing on a property (residential or commercial) is typically viewed as confidential information that is difficult to share with others, especially researchers. This was widely assumed to be the reason why some Estate surveyors, property owners, tenants, Estate firms, property companies, and even Estate agents who were approached through oral interviews, discussions, and visits found it difficult to reveal essential information. Despite assurances that the exercise was solely for academic purposes, a significant number of them still harbored fears that it could be used for property rating and taxation purposes.

There was also the logistical issue that the society had created. Throughout the investigation, the researcher worked on a shoestring budget because the frequent and repeated trips to key people and offices cost a lot of money. Also, keep in mind that some of the interview respondents were uncooperative, as they continued to play to the gallery to avoid providing the essential information. On a more general note, the researcher assured that these bottlenecks had no impact on the study's conclusions because the study's success greatly overcame the aforementioned obstacles.

OVERVIEW OF STUDY

Chapter one treats the introduction of the project work. Chapter two deals with literature review, chapter three treats the research methodology, chapter four is on data presentation, analysis and interpretation and chapter five deals with findings recommendation and conclusion.

DEFINITION OF RELEVANT TERMS

RENT: The universal dictionary of the English language (1971) defined rent as the regular payment made for the use of land or buildings that belongs to someone else. The Economist defined rent as “the revenue from land resources that is equal

to the value of its marginal services rendered in a productive process” (Richfield, 1974).

In summary therefore, the word rent is that fixed periodic payment made by a tenant to his landlord for the exclusive possession and use of leased property.

PROPERTIES: According to the High Court, the Court of Appeal and the Supreme Court, property is the right to possession, enjoyment and disposition of all rights and things subject to ownership.

Property is therefore a legal right expressing the relationship between a person, the owner and his possession of the thing owned.

A RESIDENTIAL PROPERTY: according to Kilpatrick (1999) is a land use in which housing predominates, as opposed to industrial and commercial areas. Housing may vary significantly between, and through, residential areas. These include single-family housing, multi-family residential, or mobile homes.

COMMERCIAL PROPERTY: According to Malys (2012), this refers to buildings or land intended to generate a profit, either from capital gain or rental income. It includes office buildings, industrial property, medical centers, hotels, malls, retail stores, farmland, multifamily housing buildings, warehouses, and garages. In many states, residential property containing more than a certain number of units qualifies as commercial property for borrowing and tax purposes.

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