Rent reform: Lagos Assembly slashes agent fees

As the housing crisis in Lagos deepens, the State House of Assembly is considering legislation that could significantly reduce the cost of renting for millions of residents.

A proposed bill aims to cap agency fees on annual rent at 5 percent down from the current 10 percent, a move legislators say is urgently needed to protect the growing population of renters.

“The objective is clear to create a fair and balanced relationship between landlords and tenants,” said Speaker of the Lagos State House of Assembly, Mudashiru Obasa, during a public hearing held on Thursday. Obasa, who was represented by lawmaker Stephen Ogundipe, stated that the proposed law would make it a criminal offence for any agent to collect more than five percent in commission.

According to Obasa, “Section 3(4) of the bill stipulates that exceeding the five percent limit would attract a penalty, which could include a refund, up to two years imprisonment, or a fine of one million naira.”

The Speaker linked the proposal to broader housing challenges in the state. “Over 70 percent of Lagos residents are tenants,” he said. “Many are spending between 40 and 60 percent of their income just on rent. We have to take steps to ease that burden.”

Data presented at the hearing painted a concerning picture. The state’s housing deficit has jumped from 2.95 million units in 2016 to 3.4 million units in 2025 a 15 percent increase in less than a decade. Legislators argue that the combination of rising demand and unchecked agency charges is pushing housing even further out of reach for ordinary Lagosians.

The bill, formally titled the Lagos Tenancy Regulation Bill, contains four parts and 45 clauses. It lays out detailed provisions covering tenancy agreements, rent payments, property maintenance, rights and obligations of both parties, and processes for the recovery of premises.

Chairman of the House Committee on Housing, Olusegun Ege, explained that the proposed legislation also aims to protect tenants from unlawful eviction. “The bill introduces clear procedures for eviction,” Ege said. “This is especially crucial for families and small businesses that need housing security and business continuity.”

He also emphasized the importance of dispute resolution mechanisms embedded in the law. “We want to make it easier to resolve landlord-tenant conflicts without expensive and prolonged court battles,” he added.

The key provision in the draft Section 3(4) states that “a commission or agency fee in respect of any tenancy shall be agreed upon by the agent and the landlord or tenant who engaged the agent, and the amount shall not exceed five percent of the amount paid as one year’s rent.”

However, not everyone at the hearing supported the proposal. Representatives from several professional real estate associations argued that the five percent limit clashes with their industry’s standard practices and could undermine the quality of services rendered by agents.

“There needs to be a balance,” one participant said. “While affordability is important, professionals also need to be compensated fairly for the work they do, especially in high-value transactions.”

Despite the concerns, lawmakers maintained that the intent of the bill is to protect vulnerable tenants and bring fairness to a system many view as unregulated and exploitative.

“This is a state where the majority are tenants,” Obasa said. “We must ensure that the system works for them not just for landlords or agents.”

As the bill advances through further deliberations, its passage could mark a significant shift in how Lagos manages one of its most pressing urban challenges: housing affordability.