The Nigerian real estate market is not yet mature and ready for the burgeoning rent-to-own homeownership model, Previs Development, a special purpose vehicle in the James Cubitt Group, has said.
The company, whose vision is to make property ownership possible, enjoyable and meaningful for everyone, notes that despite the seeming simplicity of this model, careful study of the offers in the market now shows that the absence of mortgage financing has significantly limited the number of homes that can be delivered using that model.
As a homeownership model, rent-to-own, also called rental-purchase, is a type of legally documented transaction under which tangible property, such as land or a house is leased in exchange for a monthly, quarterly or annual payment, with the option to purchase at some point during the agreement.
The model is gaining popularity among developers and is being championed by the Lagos State government as a viable option for providing ‘cheap’ housing accommodation for its civil servants.
But Previs says that with some of its building developments sold out using the rent-to-own scheme, it has observed that the Nigerian real estate market is not yet ready for a rent-to-own model for houses.
“We want to cater to Nigeria’s underserved middle market. This is why we have created a product called Rent-to-Own-Land (RTOL). The logic is simple: without access to bulk funds, aspiring property owners must approach their home ownership in milestones – land first. Getting land is where the journey starts for most homeowners,” explained Peter Coker, Previs’ managing director, in a statement.
“Our planned estates are strategically located. Subscribers under our RTOL scheme enjoy up to 200 percent capital appreciation because the estates are in developing areas which are receiving focused attention from the government, ” Posi Lawore, the Project Lead for Previs, disclosed.
“These estates are properly planned. Subscribers know that their neighbour will not turn their residences to office spaces years down the line,” Lawore assured.
The number of residential accommodation being transformed to offices spaces continues to increase daily. This invariably changes the dynamics to the living conditions and may affect property usage and pricing.
Tolulope Olorundero, Marketing and Communications Lead, disclosed that the Phase 1 of their property in Lekki Scheme 2 was sold out, while Phase 2 was also fast selling out because their subscribers enjoyed monthly or annual payment plans of up to 5 years.
“The estate is designed to deliver social amenities such as schools, recreation spots, and communal spaces,” she said