Escolar Documentos
Profissional Documentos
Cultura Documentos
Practice in Nigeria
'
By
Peter C. Nwankwo
PELIN . LAGOS
ACKNOWLEDGMENTS
PCN
Lagos.
Apri l 2004
Printed by:
B.G. Company
P.O. Box 6030, Fcstac Town. Lagos.
Mobile: 0803-376-3291
ii
iii
TABLE OF CONTENTS
To all noble colleagues
INTRODUCTION
vii -xvii
The emergence of the professional estate manager. For whom this book is
written. Scope. The relationship between property management and facility
management
CHAPTER I
THERELEVANCEOFTHEPROPERTYMANAGER
1-9
Failure to seek advice at the initial stage. Wrong advice. Unsuitable site. Bad
builder. Unsuitable location. Choice of material. Turnkey projects.
Legislation. Taxation.
CHAPTER2
SOURCING OF BRIEFS
10 -19
The invitation to manage. Packaging. Competitive bid. Direct invitation.
Scouting for briefs. An ear to the ground. The decision to manage. Title to the
property. Does the property meet requirements? Other considerations.
CHAPTER3
THE MANAGEMENT AGREEMENT
20-26
Verbal instructions and correspondence. Executed but unstamped agreements.
The power of attorney. The management agreement. The appointee. The
appointor. The property. The duties of the agent. The fee. Dispute. Duration.
Termination.
CHAPTER4
PRELIMINARIES
27-37
Taking Control of the property. Office accommodation for the site staff.
Living
accommodation. Electricity meters. Taking over on completion of
construction. Taking over from another manager. Determining lettable space.
Viewing by prospective tenants. Omitted features.' To Let'. Staff recruitment.
CHAPTERS
TAKING CHARGE
38-49
The manager's office. Getting the best deal. Enhancing the value of the
property. The client. The tenant. The expert. Third parties. Background that
limits expertise. The manager as a shield.
CHAPTER6
LETTING AND RENT
50-78
Dealing with ad-hoc letting instructions. Advising the client on rent. Factors
that may affect rent. Finding tenants or buyers. Tenant selection. The offer.
Acceptance. The rent. Remittance of rent. When to put the tenant in
occupation.
condition.
Schedule
CHAPTER 13
of
179-
CHAPTER7
REPAIRS
93-J/4
Direct labour. Work orders. Contracts. The service contractors. Air
conditioning. Generators. Boreholes and treatment plants. Swimming pools.
Pumps. Fire installations. General contractors. Cleaning. Pest erad ication.
Refuse disposal. Long term maintenance. Certifying repairs. Who pays.
CHAPTER9
JJS- 150
SERVTCECHARGE
Defmition. The fixed service charge. Revisable service charge. Determining
the amount of serv ice charge. The service charge year. Collection of
service
charge. Collect ion of service charge deficit. Collection of supplementary
service charge. Waiting till the end of the year. Management of service
charge. Diesel. Water pumps and tanks. CommoP. parts. The garden and
refuse disposal. Security. Emptying and eleaning'-bf septic tanks and soakaways.
Fire-fighting equipment. Swimm ing pools, boreholes and treatment plants.
Other maintenance services. Other services that the manager thinks will be
of serv ice to the tenants. Staff. Organising the staff. Staff
performance. Accounting for service charge. Relationship between rent and
service charge. Tenants' Committees 0r Assoc iations.
CHAPTERIO
THEMANAGEMENTAGREEMENT
CHAPTER II
APPENDJX3a
vi
214-219
SUMMARY
APPENDIX2
CHAPTERI2
207-208
THE FEE
151- 162
INSURANCE
Valuation. Classes of insurance. Sinking fund. The insurance broker and his
role. Fire prevention and protection. Maintenance. Fire drills. Firemen. Fire
certificate. Fire!
/63-171
REGULAR INSPECTIONS
Viewing the condition of the property. The vacant property. Compliance with
tenants' covenants.
191-
MA NAGEMENT OF'ESTATES
220 - 227
228-230
LETTER OF OFFER
231
APPENDIX3b
232
vii
233
INTRODUCTION
or
viii
"'
--
- -'--
--
Introduction
Before 1960, apart from Gleaves & Fox, there were no other
properly organized, professionally qualified, private property
management firms but most fami lies owning landed property managed
them either directly or through caretakers many of whom were no more
than rent coll ectors. Some of the big foreign companies like John Holt,
Patterson Zochon is, Leventis, Barclays Bank DCO, the Bank ofBritish
West Africa, the British and French Bank, etc, managed their properties
largely in-house. The United Africa Company and G. B. Ollivant had
subsidiary property companies hand ling their property matters wh ile
other companies and banks also brought in consultants from Europ
from time to time to adv ise on their property matters.
Federa l or regional governments had their Government
lh:sid .:n tial Areas (GRAs) and other residential, commercial and office
Jll opL'rty managed by various Mi nistries of Works and Housing or
I .IIHI'> and Surveys through both qualified and unqualified staff. The
t'OIJHII at ions and other parastata ls had their properties managed in
hoi I'-ll' by l'Xpatriatc and indigenous staff.
;\...,at independence most of the major property development in
Nlgt.:J J,I Ia lon pld to government or government corporations. These
Jill 1111lcd 1 Ill Ill\ L' tm .:nt llouse owned by the NIPC, the Federal Palace
111 .;1 "hIllI",,., p1 L'\ iously cal l ed Victoria Garden Hotel, the hou ses
of
Jloilli,,,,ll.lll IH1Ili in I npos and the regional capitals, th e large post
ollllt ., olhtl ''}' tlllal gmernment buildings, the University College,
lh,ul.111 lilt I olkt.L...,of '\Jh.ScicnceandTechnologyinEnugu,Ibadan
and I,ul.t, IIH.:Il' "t:lt'.dso lhLIndependence building in Lagos, Cocoa
1 Jousl' at I had an .tlul Wt...,tl'lll I lou se in Lagos which had been
prograniiiiL'd f01 Ullllpll'tloll f'o1 J IH..: independence celebrations but
were not quite conlpktLd n l.'llthollp.h an independence party was held
on th e terrace or Wcsle1n llousl' < >lhl'l than the NTPC wh ich was a
property company owned by thL: m l'lllllll'llt of' Western Nigeria there
was the African Real Estate owned by lhL' Oovcrnment of Eastern
Nigeria.
Major private development includcd thc old Niger House, the
X
Introduction
most banks have built their own head offices. The list is not
exhaustible.
It was clear that the government was aware early of the need
for
----- -- -"tratned _ prop_ert}:_}nanagers to handle the rap idly increasing stock
of buildings and the intricacies of land and its proper administration
and use for it began in the nineteen-fifties encouraging the study of
the subject of estate management by means of scholarship awards to
citizens in schools abroad.
In 1957 local study was introduced in the then N igeri an
College of Arts Science and Technology, Enugu, which offered the
Royal Institution of Chartered Surveyors syllabus to intermediate
examination after which the students had to be sent to England for
their articleship and for the final examination. That course
metamorphosed into the estate management department of the
University ofNigeria i n
1962. From then on interest in the profession has grown to the extent
that there are now as at 31st December 2003 thirteen Universities and
seventeen Polytechnics (information from the N igerian Institution of
Estate Surveyors and Valuers and Joint Ad missions and Matriculation
Board brochure for 2004) offering courses in estate management. As at
December 31st, 2003, there were one thousand seven hundred and
forty two corporate members of the Nigerian Inst itut ion ofEstate
Surveyors and Valuers, two thousand four hundred and forty four
probationers and one thousand nine hundred and ninety eight student
mem bers.
The Nigerian Institution of Estate Surveyors and Valuers was
formed in 1 969 after a futile attempt to have an umbrella body
embracing all the disciplines covered by the Royal Institution of
Chartered Surveyors. The late J. W. Ekpenyong was its first president.
Among its major objectives were, briefly,
I. To establish a high standard of professional conduct and
practice.
2. To secure and improve the technical knowledge of the
whole facet of the profession including liaising with the
U niversities to facilitate the acquisition of such
knowledge.
x
i
i
3.
Not only did government and private companies increasingly emp loy
professionals in-house but they began to contract out the management of
their properties to private property management firms.
.
F llowing Gleaves and Fox which became Fox and Company m 1963
With the departure of Gleaves came firms like J. W. Ekpenyong
& Co (196 1 ), Shelley & Co (1964) which a year later became Knight
this
book
is
This book is written primarily for the estate surveyor and valuer. The
est te surveyor and valuer is defined as a person who has undergone a
penod of study of the prescribed subjects and, having acquired the
necessary practical train ing, has been admitted into corporate
membership of the Nigerian Institution ofEstate Surveyors and Valuers
and registered by the Estate Surveyors and Valuers Registration Board
of Nigeria as qualified to practice the profession. But this book is
xiii
Introduction
Scope
To appreciate the scope of this book a look at the defi nitio n of estate
management by Michael Thorncroft in his book, 'Principles of Estate
Management' will be hel pful. He defines it as 'The direction and
xiv
Introduction
Lagos or outside Lagos, local statutes may vary but the principles
remain the same.
The relationship between property management and facility
management
XVI
xvu
---
Introduction
world are simply for shelter- houses and tlats, dormitories, tenement
blocks, residential estates. In fact one could guess that the great
majority of all structures on earth are living places, shelter, requiring
uncomplicated care. These with the common office blocks, industrial
and commercial buildings, form the overwhelming majority of
properties that often come to the care of the property manager. Is there
anything to gain by now calling the managers of these basic properties
facility managers?
Now the qualified estate surveyor and valuer can practice h is
profession by taking up pai d employment in a major organization as
property manager or facility manager or whatever other name the
organisation designates. He will work within the framework of the
organization to the extent of authority given to him . As an insider he
will be able to practice facility management as defined above by the
experts as he may have unrestricted access to all nooks and corners of
the organisation. It seems that, in Nigeria, the people who may be able
to practice complete facility management nearly always have to be
employees or part of the organizations involved. The property manager
of the Union Bank of Nigeria Pic can provide the sort of service
described by the experts on facility management because he is part of
the bank and has full knowledge of the bank's requirements for its work
and staffing, and has access to all parts ofthe bank.
Alternatively, the estate surveyor and valuer may set up a
practice offering services to companies and individuals. But the private
property manager is restricted by the provisions of his deed of
appointment. If he manages a multi-occupied property in which a bank
is one of the tenants he will be concerned about common services and
will not be given the opportunity to practice full facility management
within the bank. But the owners of the multi occupied property may sti l l
want to call him their facility manager. The facility manager for a
hospital has to be within its work force. The facility manager for a
refinery will have to be a staff of the refinery or the organization owning
the refinery as there may be security implications in a private property
manager having tiee access to all the installations. The facility manager
xviii
for a brewery will be in the employ of the brewery. Will the Nigerian
Government employ a private estate surveying and val uation finn to
manage the Murtala Muhammed airpo1t facilities? ln these days of
espionage and sabotage it is u nlikely that a private estate surveyor and
valuer will be called upon to manage the facilities of organizations like
the Kirikiri prison, the lunatic asylum, the military barracks, the Mint,
the Central Bank building, etc.
If estate surveyors and valuers, property ma nagers, want to add
'facility managers' to their headed paper or their complimentary cards
they are entitled to do so. After all, what they have been managing all
these years are facilities. Whether they are called property managers or
fac il ity managers, whether they are employees of multinationa l s or
are engaged in private practice, their activities will be limited by
the provisions in the agreements between them and thei r employers, on
the extent of the authority given to them.
Estate surveyors and valuers should understand the above
limitations and constraints. They should endeavour to continually
broaden their knowledge and keep abreast with modern trends. For ful l
specialisation in facility management there are universities in Europe
and the United States of America offering higher degree co u rses i n
facility management.
XIX
Chapter
Why does one need somebody else to manage his property? There are
choice
the FHA who insisted on his obtai ni ng proper approva ls. He stopped
buil d ing by day and resorted to building by nigh t!Soon the house was
property O\\ ners are not aware of the problems associated with
decked. One day the FHA moved in with th ei r bulldozers and knocked
the building to pieces. That rubbish rema ined l ike t hat, an eyesore,
while others are created by t hird parties or nan1re. Some p roblems exist
on the site itself before a hole is dug, others are created duri ng the course
thing. No doubt the developer l ost a lot of mo ney. The property owner
who emp loys a brick laye r to mou ld as many weak blocks as possibl
Examples of
ownership include:
e out of each bag of cement will have problems w ith his build ing as
long as it sta nds.
'
Expert advice is needed even at the idea stage. Is the timing right? Is the
paid over one hundred mi llion naira to a fami ly for a vast expanse of
land at the Lekki Beach only to now fmd that he cannot get a certificate
of occupa ncy covering the lan d. The area is zoned for tourism and
de\'elopment for the site. Quite often a site owner is aware that he
zone, only a few hectares can be given out to each ind ividual company.
The gentlema n is head ing for a huge loss that could have been avoided .
1
2
Wrong advice
Bad builder
A bad or dishonest bui lder could red uce the sizes of i ron rods
paint thus building in probl ems from the begi nning. Occasionally too,
one v isits a bu ild i ng and has to bend over to go up the stairs otherwi
se he wou l d
b ruise his head . The sta irs risers may be of vary ing h eiahts
' t he wa
lls
:;,
and electri cal engineers whi le the draughtsma n's work may go strai
ght to the contractor who may play the part of other professionals like
Unsuitable site
office bui ld i ng that has been sta nding for over ten years. Why the
Som e years ago a professor paid three years rent on an 'ideal' house in
building was si ted there is u ncl ea r a nd t he reason for its being aba
the GRA, fkeja, and moved in. One day h e came home and was shocked
ndoned is n ot relevant here. But one day, hopefull y, tha t bu i lding w ill
to see the house standing in what looked like a l ake w ith his furniture
be completed. And
associated wi th such a
moved out in a hurry. In the dry season, at the time he took the property,
l ocati on. ff it is for in vestm ent pu rposes it w ill not att ract the type
as a layman he could not notice that the house was in a depressed site. If
o r c l ass oftena nts a bl e to pay the sort of ren t tha t justi f-ies the outlay
the
ow ners will
discover
the
p robl em s
attract any te nants for years. Even if it is ent ire l y for owner-
occupation the prob lems attaching to the l ocation are many. Badagry
Expressway is often pot-holed and co uld get more congested with
learly.' the devel opers never th oug h t of a II these. They never took
are not concerned wi th sui tabili ty to local social, econom ic, or climati c
conditi ons or th e managem ent prob lems that migh t occur thereafter. The
Choice
material
U se
of
l E l ec tric Powe r
of
5
poor
quality
or wrong
materi a ls
bui ld s
in
perform
so
--
Turnkey
projects
The aim here i s not to disparage turnkey projects. They present
many advantages. But governmen t, in particular, mu st
ensure th at the contractors turn out structures adapted to l ocal
conditions. Otherwise the contractors may build the replica
of buildings in Tokyo or Washington, collect their money and
Property
Management
Practice in Nigeria
of The Federation of
Since 1978 the Land Use Act has been the general law govern
States have their laws but where there is confl i ct the Land Use
as the marble
red Verona
after
part
of the Nigerian
to hold in trust and ad minister for the use and common benefit
type
laid
presum ably
property owner.
L
e
g
i
s
l
a
t
i
o
n
occupancy.
6
tenants to deduct 15% of rent and pay direct to the releva nt tax
authority. The rate of this tax was reduced to 5% and later increased to
1 0%. Iftenants fail to deduct the property manager must deduct and pay
Chapter
SOURCING OF BRIEFS
The Capita l Gains Tax Act of 1967 (Cap 42 of the 1990 Laws of the
Federation ofNigeria) provides that on purchase and resale of landed
How does a n estate su rveyor and val uer in private practice get
instructed to manage a property that does not belong to him?
Packaging
inter vivos.
This coul d date back to the time he was inst ructed to find a suitable
to be
viability
studies, raising
of finance,
development and
raising
bu ilding
continued involvement
developments
finance
up
to
or
project-managing,
managing
t heir
the .completed
buildings
where
pre-
--
Sourcing Of Briefs
Gen eral . The manager may also have helped purchase the property for a
client who then asks him to manage. Invitation could also be from a
record and experience. A beginner firm should not expect miracles but
office of a firm and asked them to come and take over the man agement
of a block of offices. His company had heard many good things about
the firm.
help it keep existing clients and at the same ti me attract new ones.
Competitive bid
even corporate bodies of the necessity for their services. The manager
had to make concessions sometimes including virtually managing free
of fee foe a period, or on the conditi on that fee be collected from the
tenants, or even further that tenants would be made to accept full
repairing and even full i nsuring leases. In many cases, especially where
packaging was involved, t he c lient did not understand why he should
pay fees at so many stages like fee for helping to purchase the site,
feasibi lity study, project management and finally, letting and
employ any of the applicants. They may engage a firm from criteria
management.
which they are not bound to reveal. The invitation may even be a
The eager manger often had no choice than to charge lower fees
or even forgo fees for one or two stages so as to ensure instruction at the
crucial stage of letting and managing the completed development.
smoke-screen and a party who may not have submitted a proposal may
be appointed. The advert may simply be to fulfill the board's conditions
and somebody may have been appointed even before the advert.
getting properties to let but also to manage. Often, qualified staff are
party who may have heard of the finn's suitability for the job. Under th is
assigned
11
-----
----
--------------------------------------------------------- ------------------
Sourcing Of Briefs
Au
11
13
Sourcing Of Briefs
for a term often years erected a building on land but failed to acquire a
Property managers must be alive to the possibility that the issue of title
can still come up long after they stopped being man agers. They shou l
d therefore take interest in cases such as:
Plaintiff
AND
Knight Frank & Rutley (Nigeria)
L.S.D.P.C Defendants
companies, etc, and may not see the title documents but it will be an
1.
2.
The Lagos State government had acq uired the whole property
never knew about which he, as an expert, must point out to them . It is a
different matter with instructions from unknown companies, fami ly
estates and individual s. He should ascertain the veracity of their titles.
In the past, property managers had been embarrassed where different
Adeyem i-Bero then sued the LSDPC and Kni i1L :'rank & Rutley
certain properties which they were already managing. The adverts went
ahead to state that the appointors were not the rightful owners of the
properties. There is the case of a famous family whose scion had been a
minister in the First Republic that has been entangled with court cases
till recently and whose agents did not escape the wrangling. Sometimes
office, he has to consider critically his ability to cope with both the cost
properly supervise, and the likely inabili ty to do a proper job. If the brief
15
16
Sourcing Of Briefs
recommend a suitable finn practicing in Enugu for the job. Even w1thm
the same town the manager may decide not to manage properties in
1n
A papa or Surulere to
certain locations.
The quality of the property is another factor that will be
have its own policy, perha ps set a minimum rent roll for the properties it
17
Other considerations
The firm may have dealt with a certain property owner in the past and
may not want to repeat the experience. There could also be a break
down in negotiations for the terms of agreement, for instance, the fee. In
the early nineteen-eighties n egotiati ons for the management of one of
the major buildings on Broad Street broke down because the would-be
manager refused to sign a management agreement that required him to
guarantee that the lifts woul d never break down! The manager must not
accept impossible cond i tions just to secure the management of a
property. There could a lso be reasons of religious incompatibility, the
manager's inabili ty to co pe w ith new properties at a particular
time, politics, a nd so on. The m a nager, in accepti ng instructions, must
ensure that the term ination of the appointment of his professional
colleague who had been managing the property was properly done. He
wou l d ask to see the agreement between the parties. If he is
satisfied that th e terminati on was not proper, he must educate the cli
ent on the proper way. This should not amount to touting because the
property owner had
18
Sourcing Of Briefs
Chapter
THE MANAGEMENT
AGREEMENT
before the.end.of the term s intended. But as they govern what managers
e
property i f tJ ,.._ manager waits till letters, draft agreements are sent
do.fot heuclie nts they are being t reated here as managers are advised
to 111S ist on the execution of their agreements as one of their first tasks
appre late
before the expiry of the term as amendments are made here and there. If
clients,
mens
emg s.Igned. It cou ld be either that those c lients themselves do not
also
manager, he should not wait. Many landlords also do not want to sign
anything and in some cases managers run properties for years without
anything in writing.
are_ executed and stamped early and, in many cases, are not completed
19
noI t ava .il ab.le he may be u nabl e to take certai n dec isions. Di fficulty
ma
a so anse I f t h e ma nager h as to make cIal.ms on hi.s c l.ient say
f, y
;rongfu l term ination of his appoi ntmen t or i f he h i m self,wan;s
er m m ate
.the
intervening probl ems without delay. The following are the types of
J. Verbal instructions
I mally succeed ed in persuad ing the cl ient that a stranger shou I d;t:;
2. Exchange of correspondence
3. Executed but unstamped management agreement, deed of
stence o
.
some categon es of
f'orl r e:fl:: i L:e:te st, he m jri ty of cli e nts have regard
.
p ct t he prov i S ions of the agreement
Th
e
fact
that
some
prop
a th'
h
.
erty ownersareusual ly
reluctanttosian
n.yI mg t at b mds them legally may fo rce m anagers to conti t:>
WI i t 10.U t agreem en B ut t h.IS means t h at their operati nue
ons
ts .
agreementsarie
s
w ill not be able to auth oritati vel y carry out his duties and
actual fact
in the event of a
dispute. If th e
'case is against a third party he can have an agreem ent prepared,
executed and stamped. But this wastes time and the manager or his
client could incur financial losses. Where the dispute is with his client
the client m ay refuse to execute an agreement and the manager can only
seek the protection of equity. Again, time will be lost and fin ancial loss
may result since his duties were not spelt out in an agreement and the
client may claim that he exceeded his a uthority. It will then be left to the
. am. pant, f u rther dis.cuss ion oft he prob lem I.S not th o u ght necessar
I t IS ho ped t h at m anagers w i ll i nsi st wher
' bl
y as
agreem ents executed d
'
e poss l e, on hav i ng their
an stamped.
.
.
ere ey are to
a d th
as pn mary ev i de nce m court they w ill need to be stamped
n
ere may be a penal ty for l ate stamping.
2
3
The appointee
The documen t should co ntai n his name, address a nd business. If it is a
partnership the names of all the pa r t ners wou l d be specified as an a l
ternative to l isting the names of one or two partners as acting on
behalf of th e partnersh i p.
The a ppointor
Th e nam e an d address of th e appoin tor sh o u ld be c lear ly specified as
well as t he nature ofhis i n terest in t he proper ty.
The prope1ty
The add ress a n d build ing type shoul d be spec ified.
The d uties of the aaent
Som etim es t he fu ncti ons of l etting an d managi n g are separated and the
documen t shou ld state clearl y t he fi rm doi ng t he l e tting and t he firm
24
may, during the term, seek to pull out even though this may be
resisted by the other party but it should be possible to do this.
The agreement should be carefully worded, engrossed.
executed and stamped with a copy sent to the client and a copy kept
b; the manager.
Obviously the foregoing is not a treatise on the law relati ng
to manage 11ent agreements. Each property manager is expected to
retain the s r:'Ices of a good solicitor, or, at least, have close relation sh
ip wi th
a solicitor who shou l d be able to guide him as occasions demand.
25
26
Chapter
PRELIMINARIES
Taking control of the property
As has been stated earli er, the manager does not have to wait for the
m a nagement agreem e nt to be fu ll y documented before tak in g action
on the property. The management agreement was discussed in the
last cha pte r because, under norm al c ircumstances, it should be
finalized before the ma nager takes over t he pro perty. But, in most
cases, that does not happen. Ind eed, before t he agreement is
concluded the manager would be several m onths into the term of th e
agreement. In effect, t he preliminary matters discussed below
should by now have been
. completed.
The manager should inspect the property in detail a nd m
ake notes for his own use a nd for the benefit of his clients. He w ill
make a sketch of the l ocation of the property for his file. This is
relevant in a large firm where the partner controlling a large portfolio
does not ca rry out the initial ins pections. And the staff who did
could leave the firm exposing the principal to the em barrassment of
find ing out at a most inauspicious time that Oshodi Street is not
necessarily in Osh odi but on Lagos I sland! He must g ive his clients
written details ofthe cond ition of
t h l p roperty and the need for any n ecessary i mmediate works.
He
hPu l d :ll'lo obta i n a ll necessa ry i nformati on available to h is clients
for
27
his own records in cluding a complete set of archi tect ural drawinos
if one exists, plus a copy of his client's titl e d ocument if he ca n . :: '
The ma nager sh ould endeavo ur to kn ow the pro perty ' l ike
th e back of his ha nd ', its strengths a nd weak nesses. It could be
an old build in g with lou vre wind ows, ceme nt screed flooring
and s urface el ect rical wiring requi ri ng close monitoring. It
could be a cheapl y constructed build in g in which one th i ng or
the oth er needs to be repai red often, or a bad ly d esi gned buildi
ng th at requi res a l teration . I t cou l d be in a water-l ogged locati
on a nd l iable to flooding at certa in ti mes of the yea r a nd the septic
ta nk may t herefore be very often flooded
req uiring freq uent evacu ation. I t could be th e first bu ilding put u p i
n th e area and th erefore l ia bl e to floodi ng because ot her
subsequent stru ctures a nd the road a re on hi gher l evels and t he
result i s th at all t he storm water in the a rea flow into th e proper
ty. It could be a m od ern building sited in the middle of a s lum wi th
28
"
-
--
Preli minaries
other wise beau tiful design has not paid enough atten ti on to econ
omy, for exam ple, corridors could be unnecessarily wide, or some
fanciful but expensive features have been incor porated.
So metim es features are incorporated without regard to the
effect of the poor performance of public utiliti es. For exampl e, an
architect, about th e year 1980, forgot about t h e frequent NEPA power
cuts and inco rporated a mass transit conveyor in the desi g n of a
proposed new o ffice building in l koyi for an o il company. It was the
intervention by an estate surveyor and valuer and thc fact that the cli ent
was the listening type t h at saved the day and the particular feature was
removed . Naturally the architect was not pleased. But the man ager had
removed one area of huge futu re ex penditure and em barrassment.
It is useful for the manager to be a ppointed if not at the
commencement of construct ion, at least six months before com pl etion
of con stru ction . He can then have a caretaker or e ngineer on si te m
onths before completion and hand over. The engineer can then cooperate with the arch itect and the contractor to ensure that finishes
meet with th e provisi o ns in the drawings. At that stage any last
minute chan ges that wou ld facil i tate management can be mad e.
For instance, most generators come with very small diesel tank s.
Th e manager sh oul d persuad e his cl i ent to in stall a larger tank, i n
the l arger bu ildings from fi ve to thirty thousand li tres of diesel .. At t h
i s stage the m anager should ensure that other necessary features are
attended to including:
Office accommodation for the site staff
2
9
Living accommodation
For large complexes, especially residential, living accommodation
may be provided for the engineer or caretaker on site and this would be
advantageous for quick action. Also a room or two would be an
advantage for the electricians who wou ld need to work shifts.
Electricity meters
NEPA usually feeds large complexes that draw power of over 1000
amps through one Maximum Demand (MD) meter. That raises the
problem of how to collect the correct charge from each tenant since
NEPA usually does not have enough meters to install for each flat in a
30
-----
31
Preliminaries
block of flats or eac h floor in an office block. The soluti o n is for the
client to install a check meter for each flat or each office floor. And once
a month when the bill comes the m anager apportions pro rata
according
to the read ing on each check meter.
If n o check meters are installed the manager may co llect by
the number of li ght points in each flat or office. But obviously this
method is faulty. How do the number of sockets d etermine a particular
tenant's consumption? What of the tenant wh o has hi s ai rconditioners on all day and all nigh t as agai nst the one who hates aircond itionin g, or who has traveled? What of th e light industry in one
corner of one of the offices as aga inst a sma ll office that just uses
some li ght points and no air-conditionin g? Some managers base the
charge on the area occupied. This also cannot
be accurate. Check
Property
Management
Practice in Nigeria
future.
detail pro bl ems that the contractor will need to take care
agent informing him of his appoi ntment and asking if he has any
object ion to the chan ge. There cou ld be an objection wh ere there i s
certificate.
a dispute with the property owner. He will ask the former manager for
a schedule of tenants and leases or tenancies, deta ils of payments
and debts including s'ervice charge. The ou tgoing manager may a lso
Taking
over
from
another manager
and managed
the ou tgoing manager and may have problems from the beginning. In a
proper h and over the new manager will have enough tim e to line up
his staffing. Where necessary he will retain some of the old staff for
continuity but may have to move staff from his existing staff pool. That
way he w ill be able to break any subsisting loyalty to the old manager
detailed notes of th e
32
Prelimina ries
after, as has happened to one of the major firms of estate surveyors and
valu ers when the CDBL insisted, years after taking the lease of a
operations and who the manager w ill have to persuade him to rem ove.
space. The space was found to be less tha n had been quoted in the initial
The manager and the client will agree on procequre, which of the
existing staff to lay off, wh ich contractor he can lay off if not found
the landlords.
satisfactory, frequency
outside wa ll, less toilets, lift l obbies, stairs, corr idors, and thicknesses
taken by singl e ten ants, such tenants carpet lift lobbies and position
sched ul e of cond ition and agree these w ith each tenant at the beginning
earned justifY the cost offurnishing. Perhaps th ey are wrong. There are
the drawing and was not closely superv ised by the architect, assuming
hotels.
one was engaged. 1t could also have been a case of the property owner
nit ing the measurements slightly at construction stage to suit his
\\hun The m anager must realize that the reduction or increment of the
34
_ ___ _--.::l
__ _ -
--
--
_ .
To let'
Preliminaries
Staff recruitment
D uring th is period the ma nager sh ould d raw up a l ist of staff requ i red and
recruit them with his client being informed . Some c lients cou ld not be bothered
about thi s but others wi ll wa nt to know. Staff should be
i ntroduced grad ually for it is counter-productive to assemble the staff in one go.
The manager
Omitted features
paying their sa l ari es and meeting other expenses until the property is filled with
.
.
anacrer will also be supervising the ill:clusion of
During thts penod them
t:>
d d the appointor are necessary
any further features which heaperfsuha e
rty Such may include a
1
I ttabthty o t e prope .
to enhance the va ue orsquas
e . cou , h
rt increasing the height of tennts or
chi \dren's play area, a
. h
t for security. A borehole to
the boundary wall and strengthenmg t ega e
supplement the water supply could be sunk.
35
tenants who pay service charge. As tenants move in gradually the client will still
have to be paying the pro rata bills for the unoccupied space or units.
The manager would have determined what calibre of engineer or
caretaker or technician
and the larger the bu ilding is, the more senior and exper ienced the site staff
shou ld be. If he has a large management
Preliminaries
C hapter
existing managed properties to the new one and replace them with new
ones. [tis not advisable to employ all the staff new as they would not
understand the manager's procedures and it is therefore necessary to
TAKING CHARGE
mix old staff with new. If, however, it is his first management property,
all he can do is to attract good staff from other firms.
The property should not be overstaffed since the service charge
Th e duties
dea l i ng w ith main ten ance and ensuring that the tenants ab i de by
...
in t he
that are for the good ma nagem ent of the property as the
cou ld probably
do the
managing a lone w ith a typist and, perhaps, a messen ger. But with
increase in portfolio he will recruit staff and expand his organizati on
to be able to cope w ith the properties he h as or is a bout to take on.
A manager taking on more propert'i es w ithout at the same
time recruiting suitably q ualified staff i s rec i pe for fai lu re. The 'I
can do
37
Charge
oflosingthem.
.
The preference of professio nals to run their own sole practices
himself is work ing himself to pi eces. I n some cases w ives are allowed
partner's child has qual ified as an estate su rveyor an d valuer and the
into partnership. On the oth er hand the manager may stmply want to
keep one hundred per cent control which is a con mon ph nomenon.
The result is that each proprietor has to rely heav ily on paid staff for
those th in gs which he cannot do personally. Regrettably, these days,
many staff do not m erit th e salaries they are paid. They often go out
ostensibly on inspection or to see a client or tenant but end up elsewhere "'
doing their own private things. The manager, there ore, may not get the
e l se shar ing
ideas and
bringing
in
best out of them and this limits the size of portfolto he may be able to
handle effectively.
.
When the sole practitioner goes on leave or is sick there will be .
nobody in the office to sign cheques and take vital decisons. Indeed e
may not even be able to have a vacation for years. Ifhe.dtes the firm wtll
most likely fizzle out w ith dire consequences for chents and tenants
whose money or properties he m ay have been holding. For the purpose
of sharin g responsibility it seems that there should ideally.e anot er
partner or par tn ers with the authority to take
. vital
. decisions, sign
important documents tha, bind the practice mcludmg cheques. h t
way one partner may go on vacation with full.onfid nce that thet e IS
snm ubody in the office ablto take vital deciswns, stgn cheques and
,lm:ra lly look after the firm's affairs. The sole practitioner must at
least
office in Abuja, Port Harcourt or Warr i where it has been told t:,at th ere
is a lot business, that the m anager, with inadequate staff a nd full
consideration of
the
logistics,
opens
an
office. He
on va luation and other reports. The chap then goes ahead to commit
him. Since that branch manager had no proper training and probably
no morals he goes ahead to make money by hook or by crook. He
works for himself rather than for h is em ployer who keeps send ing
salaries from head office each month. When he is ready he leaves to
start his own practice. Within a few months, as if by magic, he is rol
ling in money. He no l onger needs
39
puts an
inexperienced staff as branch manager and gives him his stam p to use
40
property trends in the loca lity. He will not allow his own personal likes
Taking Charge
o .
orgamze
.
t at the beoinning
of each year or one months
salary.
cent mcremen
o
.
bonus at the end of each year. If he is not careful his o ce wdl become a
staging post where staff come and gather exper ene needed for
profit that enables them declare such huge dividends, the Brewery must
.
. tes ll'p
of The Nigerian lnstttutwn of
electiOn
to assoc1a
l
. Estate
Valuers before setting up their own practlc.es. The
Surveyors hand ld endeavour to tie down his best staff wtt h good
manager s ou
.
h
condi;ions of service, generous bonus and commtsswn sc erne or
expl oit the full potentials of its products and will surely deny exploiting
productive staff.
h
.
. to a properly oroamzed office than
Of course t er e 1s mo1e
o
. .
staffing. There is need for telephones, computerization, proVlS!On for
transport, good working environment, etc.
IS
t or pnce to
pl'l I hi.! best whether in form o servtce, ren
.
1111111 ih sa l!.!. Thi! manager must therefore be abreast Wlth
IIIII In
,p
42
Taking Charge
aut
hor
ize
d
to
do
so.
T
h
e
c
l
i
e
n
t
Property management can be seen as a sort of
partnership between client and agent, the agent
working to maximize th e client's profit and keeping
the property in a condition to earn more profit for as
long as
4
3
possible and at the e nd the client w ill be happy to pay his fee. It i s an
association based o n tru st. Unfortunately, once in a while, that trust is
breached by the manager who cou l d - be up to some tricks, or to be more
blunt, is a thi ef and could take action that could undermine hi s cl ient's
i nterest in his bid for qnick m o ney. On the client's part he, som etimes,
for reasons best known to himself, will not take the manager's expert
opini on. Some clien ts do n ot care what happens to th e agent and the
property once they h ave co llected th eir rent in advance. Entreaties by
the manager on the issue of l andlord's re pairs or other obligati on s fall
on deaf ears. But the manager must continue gi v in g ad v ice, i n writing,
preferabl y. He must keep his cli ent ful ly aware of what is happening in
his property and must warn him of the n ecessity for certain future
expenditure, and indeed pl an ahead w ith him for that purpose.
The manager must continu e to work und er constant pressure
from hi s client. The pressure could be either on the matter of earl y rent
collecti on, on the state of the property or o n the behaviour of t he
tenants. The manager must understand his client, his temperament, his
likes and dislikes, especial ly where it has to do w ith his rent or
4
4
enemies. He should be tirm but at the same time recognize the need for
mutual respect. Tenants wil l criti cize shoddy performance just l ike the cl
has engaged the services of an agent. He can foll ow closely what the agent
is doing and will take advice and co-operate with the agent
benefit. He w ill act on expert advice and wi ll take
to m utu al
reducing the chances of bickering over serv ice charge expenditure or othe r
The tenant
Pressure a lso comes from the tenant. But managers shou ld be aware that the
controversies w ill be nipped in the bud since the tenants will be aware of
argumentat i ve tenant is on l y out to get the value of the rent he has pai d. Whi
what the manager has been doing. The manager who shuns his tenants will
le he is there to ensure that tenants are abi ding by the terms of the agreements
the manager
another rent or service charge. A ll the same the manager must be able to
identify bad tenants and advise the client to initiate moves to remove them at
the earliest time practicable. He will take prompt action against defaulters for
The manager must always be aware that a tenant may own property
it is usually the bad tenarits that cause the most problems and influence other
which he may need an agent for and his performance may be a recommendation
tenants.
for appointment or may put this potential client not just off him but off all
agents. Even if the tenant does not own property now he may in future or may
45
have a friend who owns property and may be looking for a manager.
The expert
The manager, having been through University or College of Technology to
become an estate surveyor or valuer now has this constant reservoir of
knowledge in the background from
unconsciously while
the manager
almost
He
is appreciated by virtue
h
g a runnmc r
lient with whom he has been avm
o could
even be from a c
p. erty manacrement requires
d I ed remittance ofrent. top
o
s he
.. day never ends r for
battle over e ay
d
lity the manage
long hours of work an 'm rea '
. a to be told that his
. tl early hours of the mm n me
could be woken up m 1e
II th l"fts have broken down and
tenants have used unqualified techn ic ians. Misuse by third parties might
also ground the lifts. The standby generator may be grounded by
bad diesel from the suppliers.
. ,
ty on fire or that a
e to c
twen
'
bl
ltm
Y
some infirm tenant IS una 'ntoash op He1a
I s to d raa
himself out of bed b k
e
some robbers have ren I
t articular time even if it is only
and take wh atever action he can at th. pI
do about the lifts till
to tell the caller that there is nothmg 1e cak twenty-four hours.
.
h j" ft vice people do not WOI
r right.
morn i ng smce t e I seJ
I
t that he is always
The manager must concede tot 1e c ten
.
. .
d there is a limit to which the manager can drsa ree
It rs hts property an
.
d. .
to the client to accept rt or
.
. H
ill cr ive his advrce an It IS up
fi Is that he can no longer
w rth h rm . e w e
ee
'
th t the manger
not.Ifthings get to the stage a . d . I
an seek to be relieved of
accept the way his client treats hts a vrce 1e c
clients proper
'
IS
the appointment.
Thild parties
.
d b tl . d parties That the
t i s often complt cate y 1 Ir
.
Property managemen
t b the fault of the manager but
lifts in a building do .not work;ay
li ts may also be grounded by the fau lt
of the servtce comp
b
nded by other actions
NEPA The hfts may e grou
power surges from
..
. I' ft doors open because they are
of third parties such as forcmg closlmg I h l'tft call buttons or simply
t They a so punc
t' n of third parties
not patient enoug11 to wa
t
Th
;:e
lean on them.
Th
47
48
Taking Charge
Chapter
in the property
immedi ately after the rents are remitted to him. The manager's
o utstanding request for money to overhaul or replace vital com ponents
management. But how often does that happen? After all, the property
may be the manager's mainstay and he may choose to continue earni ng
the very vital fee while absorbing t he knocks.
The serv i ces of a property manager are in two major areas the agency
serv ice involving the initial letting of the property, and the continuing
management services involv i ng the maintenance of the property as well
as collecting subsequent rent. Separation of these two functions
happens when the investor, having borrowed heavily to put up the
buildi ng, wants a quick letting and does not believe that one agent will
handle it fast enough. He then appoints two or more agents to handle the
letting. But since-somebody has got to manage the property even while
letting is going on he appo ints one of the agents to manage the property.
Al l the a-gents appointed wi ll have to work toget her within certain
gu i delines, the amount of rent, the amount of service charge, etc. What
should be in t he offer letters must have been agreed with the client so
that tenants are made similar offers.
One of the reasons a property owner appoints an agent to
manage his property is that he believes the agent can collect higher rents
than he himself can. This is not to suggest that property owners cannot
collect good rents. Many of them are as astute in that direction as
professiona l property managers. But most property owners need the
professiona ls to re l ieve them of that duty i n addition
to other
as to the duties of
professional property managers and the extent of their serv i ces. This
can be illustrated by the so rt of letters agen ts often receive. /\n examp
49
so
flats in Jjeshated o whi ch I want you to take over and manage for me.
what type of tenant that anxious house seeker woul d tu rn out to be?
For over three years the tenants h ave not been pay i ng proper rents
and I am tired of them. I want you to throw them out and get me a
the property vandal ized. Again t he property owner tries to bl ame the
company who can pay good rents three years in advance.' From this
agent. Agai n the agen t is not li ab le but there was a case where a fi rm
remove difficult tenants and collect the hi ghest rents and no more.
solici tor's job. B u t the above property owner is aware that qu acks
e wil l be t he one to renew the tenancy or lease and earn the fee on
agent to accept the brief, and m any would, and succeed in getting
rid of the tenants, the collection of the first rents could be the end of
his assignm ent as this particular client may not be interested in other
aware of what the tenan t is doing and will mi nim ize the incidence of
for
their cl ients and property owners on t he need for them to entrust their
properties to estate s u rveyors and val uers for managem ent.
Dealing
with
instructions
ad-hoc
letting
Advising the client on the rent
Rent is paymen t for the use of property. To the tenant it is often seen as
that payment he reluctantly makes to his 'shylock' land l ord for the use
of h is decrepit' house or office space. To the landlord i t could be h
is on l y m eans of livel ihood, a return for wise spending in years gone
by, a n.:tur n o n invest ment and t herefore th e h igher the better. A m a
n who borrows a certa i n su m of money repayabl e over a certain n u
mber of years at a rate of in terest to put u p abu ild i ng will obv iously
want a rent Ihat covers his capi ta l and interest repayments p l us som
e profit if h e
52
51
Letting And Rent
5
3
called 'Area Boys who harass other citizens, and street trading. Even the
prestigious United Bank for Africa building on the Marina took a long
time and generous rental concession to let. Offices in Jjora are empty
and decay ing because of bad access roads, very unsan itary surround
ings, flooding and a large population of Area Boys'.
One would have expected that with the high demand there
would be a lot of building going on. But that is not happening. Those
building are government agencies, property developers who are
build i ng main l y for sale, large companies and banks buildi ng their head
offices or branches. Very high interest rates and high cost of bui lding
materials have virtually ruled out individuals from build i ng. Many of
those that are building are doing so from their personal sources. Indeed,
banks hardly finance housing projects except for the categories
mentioned above or where co!laterals are fool proof.
With the above scenario it is no wonder that rents are currently so
high. And if an individual has surmounted all the obstacles mentioned
L
e
t
t
i
n
g
A
n
d
R
e
n
t
accommodation that
Property
Management Practice
in Nigeria
5
5
previously, it
Q
u
a
l
i
t
y
o
f
f
i
n
i
s
h
A marble-floored house should
fetch
a higher
plaster-work and
quality
p
a
i
n
t
w
o
r
k
a
t
a
l
l
.
paintwork
locks
walls,
F
a
c
i
l
i
t
i
e
s
A property serviced
by a generator, or airconditioning or a swimming pool and tennis court
will command more rent that a similar property
without these.
Buil
ding
's
repu
tatio
n
Often a property acquires a reputation, say, for good
security or good
building
may attract
Rent control
This obviously limits the rent that can be collected from residential
property. In Lagos, the Rent Control and Recovery of Residential
Premises Edict 1997 zoned the state into areas for which it fixed
standard rents, terms for which advance rents may be paid and the
percentage increase in the rent at the expiration of the terms. It set up
tribunals to handle cases brought by tenants and landlords. Very high
rent areas like Tkoyi, Victori a Island, the GRA's are excluded from the
Malfunctioning installations
A bui lding in which, for exampl e; the lifts or the generator do not
work will not command the best rents or attract the best tenants. It
may not attract any tenants at all.
occupancy rates.
occupancy rates.
Exorbitant rents
This is another reason why a property may suffer low occupancy rates.
On the other hand, some buildings, because they have acquired a
distinctive character, popularity, a reputation for housing the best
people consistently attract rents that may be considered extra-ordinary
whil e similar buildings equally well located attract lower rents. But,
generally, where service charges and rents are too high the tenants will
naturally move to properties with more reasonable overall charges.
Age ofbuilding
Old un-modernised buildings also suffer from low rents and poor
57
putting up the building that he wants a rent that, at least, covers the
interest he pays to the bank sometimes this is not achieved or he is so
sB
well off that he does not care how long he takes to get the sort of rent and the
sort of tenant he wants. Sometimes his insistence on a particular type
oftenant causes delay.
adverts achieve the purpose is not clear. Cost could be reduced by taking
out omnibus adverts covering several properties and sharing the cost among
several clients. It is easy to pick out from the advert pages the serious adverts
paid for by clients or taken out by property managers who are financially able
to bear the cost especially where they consider the properties easily sellable or
lettable. Such adverts are usually bold and larger. The majority of adverts are
usually 'speculative' where the advertisers may not really have direct
instructions on the properties but are taking the chance of attracting tenants
who can pay their fees while the clients of the agents with direct instructions
pay their managers. Newspaper adverts are expensive and often do not lead
to lettings. In this era of scarcity of certain types of accommodation they are
useful for t he letting of residential accommodation such as flats. Very often,
however, the units m ay already be taken before the adverts appear.
59
Bulletins
Handouts giving brief details of the properties are sent to companies,
property companies, firms of estate surveyors and valuers and
individuals on the manager's mailing list.
Writing to selected companies and preparing brochures
Letters are sent to selected companies or organizations some of whom may
have made enquiries in the past and whose names should have been noted
down. Colourful brochures may be prepared but this, because of the high
cost, may be used where the manager is sure that either the client is bearing
the cost or the property is of such high quality
6o
and value that the manager may believe the cost of a brochure a
worthwhile risk.
Presentations
To Let' boards
company executives and those who have made enquiries in the past are
invited as a group and taken round p roperties which are for sale or to let.
gi\ieS11is address, telephone, e-mail for easy contact. But where several
properties.
paid by the clien t but this hardly happens. The manager pays for it.
common but those who use it justify i t by saying that those who pay it
When the property is let the board is rem oved. Unfortunately some
are more likely to be serious since they only use it in marketing high
firms forget their boards on properties. They stay there unt il they rot or
are blown down by the wind. Often the new tenant takes down the board
and discoloured boards are very unsightly and disgrace their owners
tenants. This is common with quacks who collect such money from
and the profession. Managers shou ld have a record of their boards, visit
people who stray into their offices in search for accom modation. And
the properties often and make sure that their boards still do them proud.
after col lecting the fee nothing else happens whi ch s uggests that
such agents
sell their properties will allow their agents to hang 'For Sal e' boards on
money under false pretences because, most of the ti me, these people
make
their
living
from
such
fees.
Unfortunately,
which probably dates back to the time people had it etched in their
brainsthat it is taboo to sell land and landed property.
especia lly in the Lekki axis are now im proving their credi bil ity
61
62
feeling that 'they know it all'. Th e trend is that during t he last few
years many of them have been relocating to cheaper areas on the main
land. They also congregate in sma ll offices in poorly managed and
poorly maintained govern ment properties.
The internet
Details of properties for sal e or to let can be given to the whole world
through advert i sing on the internet. Many compan i es are currently
Embassies
They are selling their properties and relocating to Abuja, the federal
capita l. All the same they are usually good tenants except those from
Tenant selection
the poorer n ations. But when there is problem with them they cannot be
In the boom years of nineteen-seventies and early eighties it was easy to
that they, once in a wh ile, sent a list ofwould be tenants to their clien ts
of the poorer nations. The case of the embassy of one of the North
to decid e whom they want. Si nce then thi ngs have changed. We
went throu gh a period when the economy was so depressed that
African countries
belonging to the
African Continental Bank for years without paying rent comes to mind.
properties remained vacant for ages and hardly an y buil ding was going
on. Th ese days with the advent of dem ocracy, many foreign
New companies
selling such mundane things as chewing gum, razor blades, fruit juice,
which the property manager has to scrutinize the creden tia ls of tenants
mosq uito coi ls, etc. They were the first to take advantage from the
he lets properly' to. Generally, well known companies like banks, the
year
2000 of our new democracy experiment as they flocked into the country
professional
Regrettabl y,
For offices they took the cheapest accommodation availab le, often
for serv ice charge, rates, and on renewals. Th is could be because their
wort h millions of naira. In this category are some Indian and other
fortunes fluctuate so wildly that very often they are unable to m eet
Middle Eastern traders who have now been followed by the Chinese. In
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64
But it turned out that at least a dozen Chinese actually sleep in the flat
wh i ch
agents made
tenants also have th is nasty habit of vanishing with all their be longings
wit h rents and service charge unpaid and sometimes vandaiizing the
was, 'Cdunt one to five, finish!' In the end the agent understood that he
was expected to watch when they come back from their shops in the
individua l may alS<f seek the protection of the Rent Td unal. .,ut sctme
even.in gs and let in only five people! The agent has now persuaded them
companies are not wo rth more than their headed paper and are as bad as
and hopmg that they do vacate. Quite often these are one-man
they
have
it take
businesses and at the least sign of trouble, such as being found out as
noft-ta:x paying or for fraud or other misdemeanor, the proprietors hop
Client's pteference
The client sometimes comp li cates issues with his prejudices. '[don't
communication companies like the MTN and Econet, etc, who take
as a result of the general belief that black people overcrowd 1\nd misuse
area in Lagos where company chief executives prefer to live in, cannot
be replicated. The result is that rents arc now out of control and any
charges. Even when a company has been found the l dlord qtay still
property that comes up for sale attracts a price in hundreds ofm illi on.
WaJ1t
a result of
t).l
it tan
Tbos.' This is
compa ny puts the property into good condition on vacation may not
from past experience landlords do not want individuals but insist that
impress him. The client may prefer a bank but may prefer particular
\. ,
The manager shou ld ensure that the use to which the i)roperty is to be
not care which of their staff is in occupation since he can always hold
put by the intending tenant is approved by the cli ent and is suitable for
the company I iable for any breach. But in the case of the death of an
the type of property and does not breach planning regulations. What
6s
66
convert properties to uses other than what they were designed for as
long as the tenants pay high rents. Much of Awolowo Road in lkoyi and
parts ofVictoria Island and indeed properties in most conspicuous parts
of Lagos and major cities, previously zoned residential, are being
converted to commercial uses for the reason that they fetch better rents.
In Lagos
client.
Ability to pay
Even at this stage regard should be had of the company's or person's
2.
3.
4.
ability to pay another rent at the expiry of the initial tenn. The manager
must investigate the background of the intending tenant, his record
from his previous landlords. He must complete a questionaire and,
where practicable, obtain references.
Letting policy
For commercial property the manager must be aware of problems of
subdividing the property into too many little units. The more the
Term may differ dependi ng on what part of the cou n try the
property
skeletal form, the terms on whi ch the tenancy wi ll be based. The offer
single dwelling house is unli kely to attract serv ice charge payment.
The letter of offer is usua lly in two copies one of which the offeree
three year lease is offered and rent for only two year<;
will
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67
--
9.
69
70
I0. Offer letters must be copied to the client with whom the
Subject to client's approval: This simply means that the agent does
not have full authority and the offer still has to be approved by his
client.
Duplex:There is confusi on arising from the use of this term.
Chambers English Dictionary says duplex (house) i s a house divided
into two, horizontally or vertically, and thus providing
accommodation to two different families. The same dictionary says
duplex (apartmen t) is a flat on two floors. Property managers must
therefore be careful in their description and the following are
recommended:
Detached house: A self-standing single family dwelling on two floors,
that is, two storeys. This may still be called a duplex.
..Semi-detached houses (pair of semis) Two detached houses separated
by a party wall. Some managers describe them as twin duplex.
Maisonnette: A single family dwelling on two floors wi thin a large
7
1
The tenant will return a signed copy of the offer with or without the
rent. Confusion will usua l ly arise when several offers are made on the
same property and more than one party accept and return the letter of
offer signed w it h the rent. The agent can only accept one and
disappoint the other. This taints his reputation. And the landlord,
seeing that there is keen interest, may insist on the rent being
raised. Again this is an embarrassment to the agent. It is advisable
therefore to make one offer at a time giving the offeree a fixed time to
accept and pay the rent.
The rent
When should rent be demanded?
This applies to existi ng tenants where a ll rents were not paid
m
72
advance. For already agreed rents six weeks is reasonable. For bad rent
payers a longer period will be needed. But most rents are paid in
advance for the whole terms and the question should be when renewal
offers should be made. For the average tenants three months
wi IIsuffice but for other tenants it is advisable to allow a longer
time. This also applies to rent reviews. Some leases or tenancy
agreements do give tenants a period before expiry, often three
months, during wh ich they must indicate their intention to renew. If
the tenant has not been a good one the manager waits and hopes that
the tenant misses the date and quickly insists on vacant possession.
intention is that the tenant pays the tax to the appropriate authority as
agent of the landlord and sends the receipt with the rent to the agent.
The agent is then supposed to send the receipt to his client who is
then expected to complete the tax form declaring all his income
including this particular income and the withho!ding tax already paid
on the rent.
In practice it is a battle to get tenants to pay withholding tax.
Withholding tax
The background was explained in chapter I. The rate is I0% and is a
Federal Inland Revenue tax when the recipient is a company and a State
Inland Revenue tax when the landlord is an individual. The aim of this
tax is to ensure that the landl ord pays some tax on the rent from his
property. Otherwise he may not pay any tax on the rent at all.
Most offers demand rents 'net of withholding tax'. The
73
Very often they deduct the 10% from the rent and do not pay it.
Sometimes they pay to the wrong authority. Managers must guide the
tenants in the offer letters where to pay the tax and in whose name.
The law makes the tenant or the manager agents for collection
and rem ittance of the withholding tax so managers must insist that
this is paid. There is a hefty fine prescribed for default. The landlord's
duty is to make his tax returns and claim for the withholding tax already
paid,
It does seem that the practice of demanding rent 'net of
withholding tax' i problematic for the manager and a more
straightforward procedure may be to demand rent gross. Then the
manager can, having educated his client fully on this, deduct the 10%
and pay to the appropriate authority and send the receipt to his client.
The manager must be aware that, for example, 'N2,500,000.00
per annum payable two years in advance 'net of withholding tax' does
not gross to N5,000,000.00 + 10%, ie, N5,500,000.00 but is
N5,555,555.56. If he wants to collect gross rent and pay the tax himself
he must know exactly what he wants to get for his clients before fixing
the gross rent. The fee shou ld be based on the gross ofN5,555,555.56
though no client will accept it! The manager will collect his fee based
on the amount he is actually receiving.
74
lender and could be sued. He should be vigilant so that his client does
not go direct and collect the rent from the tenant. If his duty is to pay to
Development Levy
In Lagos the state government imposed a development charge payable
on state lands. Very often the client gives the manager authority to
deduct this from rent and pay over to government.
Remittance of rent
Sometimes the client allows the manager to carry out repairs wi th his
own funds and deduct when the rent is collected. Often too the client
Some managers forget to promptly remit the rent. Sometimes they may
asks the manager to make certain other payments from rent when
want to earn interest on the money before remittance. They may also
collected. These will be deducted. When there are no funds there may
be certain landlord's repairs within the units and the client allows the
tenant to fund it and deduct from rent. The rent will arrive less such
charge deficit and this has arisen because the rent and service charge are
money.
Domiciliation
If the manager has been lax with his records he could fall into the trap of
which the rent must reach their clients. Remittance should be by cheque
paying the rent to the landlord in error! For example, the client may
have borrowed money from a bank and, with the manager, signed a
75
Property
Nigeria
Management
Pract-ice
in
tenancy agreement, it may help the landlord's case better ifthere is later
court action because it is easy to compare what the recorded condition
of a property was two or three years ago with what it is now. It is
particularly useful in short tenancies, two or three years, but may not be
so useful in a long lease.
The tenant signs for the keys and completes the NEPA
consumer form so that bills wiIIbear his
name.
77