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COVID-19 forces tenants to request moratoriums from property owners

Tenants demanding moratorium from landlords because of the effects of COVID-19.

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Nigeria's real estate, COVID-19 forces tenants to request moratoriums from property owners

The effect of the Coronavirus pandemic is telling on the Real Estate sector, as many occupants have requested moratoriums from property owners or managers.

In separate interviews, some tenants told Nairametrics that they could no longer afford their rents, hence the need for moratoriums. If denied, a lot of them are ready to move to border towns of Lagos.

READ: Bank’s Credit to Nigeria’s Real Estate sector hits 5-year low

A moratorium is a legal authorization to debtors to postpone payment. The document can be obtained by tenants, to prevent the managers or owners of properties from taking legal actions against them.

A banker and resident of Oduduwa Crescent, Ikeja GRA, who simply identified himself as Kola, said that his landlord had informed him of a planned 25% increment in his rent from April 2020, a month before his rent was due, which he had agreed to.

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Unfortunately, in May 2020, his employer (one of the Tier-1 banks) gave him the option of either accepting a 25% pay cut in May or resigning. Considering the fact that he had no side hustle, Kola chose the ‘lesser evil.’

READ: Non-Performing loans hit 4-year low as Banks recover N496 billion

“I took the decision because it pays me to allow a pay cut, than being out of job. At that point, I considered requesting a moratorium, as I have never owed rents before. I could afford to pay the rent, but I didn’t know how long I will be without a job, and paying the rent from my savings was not a wise decision for me. As Expected, the property owner was not comfortable with my request, as he suggested that I relocate to a cheaper facility.”

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In his own case, Richard, who was a manager in one of the hotels close to the Lekki toll gate, was not as lucky as Kola. His rent was due by May, the same month his employer asked him to stay at home till further notice.

Efforts to plead with his landlord to buy more time fell on deaf ears, as the owner of his Surulere apartment was bent on collecting the rent.

READ: Lagos State Government offers 15% Discount on Land Use Charge Payments

He said, “I had no choice but to plead for three months to secure another apartment when it became obvious that my employer would not recall us anytime soon. Eventually, I decided to move from Surulere to Magboro where rents are cheaper, and property owners may be reasonable unlike their counterparts in Lagos.”

Kola and Richard are only two among hundreds of breadwinners that lost their sources of income or had pay cuts, especially during the lockdown. A lot of them, whose rents were due between April and July, are currently looking for cheaper residences amidst pressure from their landlords.

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No doubt, apartments are cheaper in some border towns of Lagos. Some of the areas are Akute, OPIC (Wawa), Arepo, and Magboro, all in Ogun State.

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For instance, while a self-contain apartment is obtainable between N120,000 to N150,000, a 2-bedroom flat goes between N250,000 to N300,000 per annum, and a 3-bedroom flat is rented between N350,000 to N400,000. In the city centre, such as Ikeja, Gbagada, and Surulere or on the Island, the rents are astronomical.

The heat will be more

A Real Estate practitioner and also the Vice President, Lagos Chamber of Commerce and Industry (LCCI), Gbenga Ismail, explained that the impact of COVID-19 in real estate would be felt later, because of the tenancy/rent structure of the sector.

Unlike what is obtainable in other climes like the United Kingdom (UK) and the United States of America, where rents are renewed on a monthly or quarterly basis, Nigeria may not feel the pressure now, as rents are paid in one or two years’ advance.

Ismail, in an interview with Channels TV, said, “Most people that either lost their jobs, or had their salaries slashed, are likely to have paid their rents in advance before the virus, and that could still ease the tension for now, at least till the end of the year. Right now, what happened is that, by the lockdown period, you won’t feel anything; but by the third or fourth quarter of the year, you start feeling it; only then, would we see how it has affected Nigeria. By then, people won’t be able to pay rents or buy houses as planned. We are not sure of where the monetary issues are going now, and if lending will continue into the real estate sector. We are yet to see some of these things going on. Even in inventories, where developers have put houses out for rent, the concern is who is going to rent them? Before COVID-19, we wait 6 months before houses get rented or leased, but now it may not be less than 12 months. The immediate impact would soon start to reveal itself.”

More plead for a moratorium

Ismail added that more tenants would likely plead for moratoriums, because their businesses may have been affected, and some might have lost their jobs.

“Those who have mortgages and are possibly in the risk areas of losing their jobs will definitely have discussions with their lenders if that happens. I think the mortgage firms have to listen and think of how to help them since the COVID situation is a force majeure – unexpected circumstance. People are being forced to make decisions they did not plan to make,” he added.

Explore the Nairametrics Research Website for Economic and Financial Data

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In all, the experts urged all stakeholders not to panic, as the phase will definitely pass, and the economy will gradually recover.

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Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper. The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference. The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Business

Nigeria records lowest remittances from abroad since 2008

Nigeria recorded the lowest remittances from abroad since 2008 as Covid-19 affected the income of Nigerians living abroad

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Nigeria received $96 billion diaspora remittances inflow in 6-years

Second-quarter data from the CBN shows Nigeria recorded the lowest remittances from abroad since 2008 as Covid-19 affected the income of Nigerians living abroad and looking to snd money to loved ones back home.

According to the data, remittances fell to $3.3 billion in the second quarter of the year way lower than the average of $5.8 billion per quarter remitted to the country. The drop can be attributed to the Covid-19 pandemic.

Explore Data on the Nairametrics Research Website

The data highlights just how bad the global economic crunch has affected the income of people across the world especially Nigerians in diaspora looking to send money to their families. Most have either lost their jobs or seen their earnings tumble due to the global lockdowns.

READ: South South States lead in Nigerian unemployment

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Nigeria also relies on dollar inflows from remittances to improve on its balance of payment position, a critical economic indicator used in determining a country’s foreign exchange position.

READ: Is Zenith Bank thriving on the strength of sound financial indices?

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Total foreign remittances into the country rose to $23 billion in 2019 one of the highest on record helping boost income and investments in Nigeria. Poor countries like Nigeria rely heavily on these inflows to soften the low income paid to citizens while also funding millions of families from education to healthcare.

Nigeria  Remittances only came second to oil as Nigeria’s top export earner much more than foreign portfolio and direct investments into the country.

READ: 150 million to fall into extreme poverty by 2021 – World Bank

Third-quarter numbers are likely to improve as the unemployment rate dropped in the third quarter of the year particularly in the US. For example, the US unemployment rate was as high as 14.7% in April at the height of the lockdowns but has since dropped to 7.9% in September 2020. It was 4.4% in March this year.

Why this matters: Apart from helping to stabilize the exchange rate, remittances are a critical source of cushion for millions of families in Nigeria.

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READ: Nigeria’s dollar earnings fall by over $7 billion due to Covid-19

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  • The global economic impact of the COVID-19 pandemic remains pervasive in most developed countries despite the easing of lockdowns.
  • In fact, some countries, particularly in Europe are going through the second phase of lockdown meaning more jobs could be lost as we approach winter.
  • Nigerians also look forward to the ember months for remittances and is also a useful tool at stabilizing the exchange rate. In the 4th quarter of 2019 and 2018, Nigerians in diaspora remitted $5.9 billion and $6.24 billion respectively.

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Exclusives

Leo Stan Ekeh denies being behind HealthPlus “takeover”

Mr. Ekeh has addressed suspicions of his alleged involvement in the crisis that has rocked HealthPlus Limited.

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Leo Stan Ekeh

“Mrs. Bukky George is A miracle child” – Leo Stan Ekeh.

The news making the rounds is that the billionaire tech entrepreneur, Leo Stan Ekeh, Chairman of Zinox, is allegedly the man behind the takeover of HealthPlus in Nigeria. The rumours come amid a well-publicised management tussle over the soul of the business. Is this real or mere speculation?

READ: Chevron to sack 25% of its workforce in Nigeria

Above the frenzy of social media controversies, it is always good to investigate and ascertain the true facts of any case.
In a telephone conversation with the serial entrepreneur, Mr. Ekeh said that when he read the news, he did not give it much thought and dismissed it as one of those social media noises. But to his astonishment, few clips of the news have been sent to him by friends.

Explore the Nairametrics Research Website for Financial Data

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Hear him:
I have the highest regards for Mrs. Bukky George. I see her till tomorrow as a miracle child like myself. She is extremely brilliant with great energy and passion to succeed in her sector and there are few such women in Africa and my wife is one of them, so it will be spiritually wrong for me to be against her. I know both parties and simply put, they are all credible parties in partnership. I have known her investors – Alta Sempta Capital for some time before I met Mrs. George and we have had preliminary engagement relating to their potential investment in one of my companies and my ambition to roll out across Africa.

But till date, I do not have a kobo share in any of their different investment vehicles including a kobo in HealthPlus, though anyone has a right to invest in any company of his or her choice without clearance from the general public including investing in any of my companies. I have great passion for the health sector and those around me know my investment and support in that sector locally. It is my prayer they resolve their challenges soonest. I want to keep the several discussions I had with Mrs. George private because she is an amazon. I have my highest regards for successful African women and my Group is possibly the only one in the world with five certified women as Managing Directors. You can now understand!”

READ: Minister denies approving NIPOST license fee increment 

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What do you advise Nigerian companies looking for foreign investors?

‘‘Looking for foreign investors is like taking a bank loan locally. You must keep your promises. When you talk about knowledge economy, it means you should be knowledgeable enough to understand what you are going into or pay quality corporate law firms to advise you, but you must listen to them. The money the bank lends to you belongs to depositors and investors and you must do everything to keep to the terms of the loan. Same with foreign investors. They are here to help you build and make money and in the process, you make more than you would have made. They help you alter your destiny. They are not charity organizations. Sincerely, they add huge value to help you institutionalize corporate governance and make more money than you would have made.

I had warned severally in conferences that the failure rate of startups in Nigeria is unbecoming of a nation and an embarrassment. We should respect agreements signed in this 21st century. That is the only way this country can grow. I am a child of trust economy, so I must keep strictly to agreements to grow. We have world class locally owned legal firms to guide us in these partnerships. I have had at least one major public quoted company as foreign investor and the experience is rewarding. They remain my best friends till today and can vouch for me on major international transactions and they have done this severally even though I bought them out few years ago. We need these people to scale. Nigeria doesn’t have the real financial capacity to build globally rated companies. Trust me on that. Thank you.’’

READ: Why Nigeria’s external reserves is stuck at $35 billion

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Exclusives

Exclusive: I put up my house as collateral to save HealthPlus – Bukky George

Bukky George sits with Nairametrics to discuss the crisis that has rocked HealthPlus Limited.

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HealthPlus: More facts emerge as Bukky George reveals she owns 48.9%

The founder and ‘CEO’ of HealthPlus Ltd, Mrs. Bukky George, revealed she put up her house as collateral to help fund operations of the company she founded in 1999. She revealed this to Nairametrics, in an exclusive interview granted to our Analyst, at Southern Sun, Ikoyi, Lagos.

The Nairametrics’ Lead Analyst sat with Mrs. George, to get a first-hand account of her side of the story, that has pit Private Equity investors from the UK, against the Founder of a business seeking cash to expand their operations.

READ: Meet Bukky George, The CEO of HealthPlus who just raised $18 million

Nairametrics asked a range of questions, some of which she preferred not to respond to as the matter was still in court. However, in one of the remarks, she confirmed that she had to put up her house as collateral, to get funding from a financial institution. She also implied that the Private Equity firm’s modus operandi was to starve her company of funds, so they can watch the business falter, allowing them to buy on the cheap.

“When the funds stopped coming, I had to put my house as collateral, and my personal guarantee is also collateral too. Apart from the money they invested, they don’t have much to lose, but I have everything to lose. When the funding never came, I invested my life savings.”

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She emphasized that the modus operandi of some of these investors is, “They come, they pledge, give you some money, and stop. When the business dies, they buy at peanut.”

READ: Just in: FG bars Air France, KLM and other foreign airlines

According to Mrs. George, the failure of the private equity firm, Alta Semper, to disburse the balance of the $18 million, hampered the operations of a once-thriving business. They paid less than half of the total sum.

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“The agreement is to fund our operations without delay. The objectives are the premise of the balance funds. However, 18 months on, the balance is still outstanding. We could not meet our target, because more than half of the funds has not been released to us. We were doing well in the first year of the deal, but the DNA changed after 1 year,” she said.

She also hammered on how Alta Semper starved them of working capital, resulting in their inability to stock their shelves with drugs. Saying, “We had board meetings, they are the financial gurus. They saw the working capital and our cash flow and made no comment. I would not fight if I am not sure of winning the case. They were watching us dwindle. We needed to buy drugs on our shelves, but we couldn’t get the fund. We spoke every week, but they kept promising that they will fund me in two weeks. Our agreement indicates that we were joined at the hips, that is, they can’t make decisions without my consent and vice verse.”

READ: HealthPlus: More facts emerge as Bukky George reveals she owns 48.9%

Mrs. George insisted that the technical agreement she had signed with Alta Semper, required that they perform certain obligations, which they have failed to fulfill, leading to her decision to go to court.

“We signed a technical agreement, they had obligations but failed to achieve one. I can’t go into details, because we are in court. When I put it down in writing, they compelled me to retract it. When I complained about what is not going right, they stayed mute. I had no choice but to go to court,” she stated.

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She also provided her own view of why the other two directors, former Chairman, Dr. Ayo Salami, and Mr. Deji Akinyanju had resigned from the board.

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READ: NCR to leverage MSMEs lending by over N1.23 trillion

Saying, “The Chairman resigned last week Thursday, another Director resigned 5 weeks ago (that is my nominee Director). A day after the Chairman resigned, they swooped in when we didn’t have a constituted board. They had asked the banks to hijack our account, but they denied it, requesting board resolution, and approved minutes for the meeting. They have not been able to provide that.”

Mrs. George also claimed that the employees of HealthPlus were on her side because she is a ‘good boss’, which is why they avoided meeting with representatives of Alta Semper.

“When they called staff for a meeting on Friday, everybody ignored the call. They tried a zoom meeting, everyone ignored it. If I am not a good boss, don’t you think they would have rushed to the meeting?” she asked.

Nairametrics maintains a neutral stance in this matter. We have also reached out to the representatives of Alta Semper to get their own side of the story. We will keep you updated, as it unfolds in the coming days.

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