Ife Planning Journal Vol. 1 no 1. pp 15 – 26

AN ANALYSIS OF RENTAL VALUE STRUCTURE OF RESIDENTIAL BUILDINGS IN

MINNA, NIGER STATE (1980-1996)

By

WOLE MORENIKEJI

INTRODUCTION

Housing problems in urban centres have often been viewed in

terms of quantitative deficiency 'and qualitative inadequacy

with little or no attention to the problems of increasing rent.

As there are many urban residents struggling to get

accommodation, most of those that already have a roof over their

heads In rented accommodation, especially the

majority low income urbanities, are not comfortable because of

sprawling rent increases.

The problem reached a crisis stage in the early 1970s

which led the then Federal Military Government to set up a Rent

Panel to review, among other things, the level and structure of

rents in urban centres. Various long and short term

recommendations were made and all stale governments were

directed to implement them.

Today, the rent situation has not improved rather it has

been further worsened

by the equally sprawling inflation which has tremendously shot

up the cost of building

materials. The purpose of this study is, therefore, to

explicitly show, through empirical investigation, the annual

trend and spatial variations in rental values of houses in

Minna, Niger State between the period 1980-1996.

OBJECTIVES

The objectives of this study are to identify:

a. the types of residential accommodation in Minna;

b. the rent each category of house attracts;

c. how the rents vary from year to year;

d. how the rents vary from neighbourhood to neighbourhood;

e. factors accounting for the observed temporal and spatial

variations in rental

values.

SCOPE OF STUDY

Many factors determine the rent which a tenant pays for his

accommodation.

While some tenants pay little or nothing on account of their

relationship with the landlord, others pay through their nose, or

even through their stomach, for the same

quality of accommodation.

For the purpose of this study, data will be collected on

the trends of inflation in

the country, rents in Minna and attempts will be made to rate

the quality of various

neighbourhoods in Minna and the relationship among these

variables will be found.

Rent data collected from the professional estate surveyors

and valuers in the town will form the basis of the analysis

other than those quoted by the various landlords or the tenants.

The reason for this is that such data will represent the true

economic rents consistent with the economic situation in the

country and thus the real value of the houses.

STUDY AREA

Minna became the capital of Niger State in 1076 following

the creation of the state out of the former North Western State.

Though the town is mainly a Gwari settlement, is

heterogenous in terms of

people of various ethnic origin - Yorubas, Igbos, Hausas,

Fulanis, Nupes, Edos among

others. Diversity of ethnic composition has impact on housing

types in the town. The

Gwaris who are mainly farmers detest urbanization culturally and

hence they build their

traditional compound houses in isolated locations outside the

high density areas. The

Igbos and Yorubas who are mainly traders, drivers and federal

civil servants live in room and parlour apartments or modem

flats depending on their status, the Nupes who are also traders,

fanners and civil servants are mainly found in compound houses.

The population of the town was put at 12,870 and 59,000 by

the 1952 census

and 1963 census respectively. The 1991 provisional census figure

for Minna local government of which Minna is the only settlement

(municipal local government) is 157,000.

The demand for housing in the town rose significantly as a

result of physical and social transformation witnessed by the

town in recent years. The need to give the town a modem facelift

befitting a state capital occasioned the massive construction

works roads, public buildings, residential quarters, drainage

works being witnessed lately which have consequently given rise

to Ihe influx of migrants to the town in search of employment.

Workers of the multinational construction firms and those of the

federal

establishments now present in the town enjoys relatively higher

wages and thus constitute the highest bidders for the little

available houses.

During the period of study, the federal government has

reviewed upward the

civil servants wages about three times and this has had ripple

effects on virtually all

aspects of life in terms of inflation. The deregulation of the

nation's economy and the

massive devaluation of the country's currency during the period

were to deal a greater

blow especially to the vulnerable low and middle income workers.

The growing number of institutional tenants has also posed

greater problems to

individual private tenants. The construction firms and

institutions like the Federal University of Technology. Upper

Niger Basin Development Authority, National Board

for Education and Measurement, Airport Authority are always ready

to pay attractive

rents to landlords to secure accommodation for their workers.

Consequently, the landlords are more willing to let their houses

to them rather than individual tenant.

All these factors have affected housing market in Minna as

in the other parts of

the country. This paper will attempt to examine empirically the

spatial and temporal pattern of rent in the city over a period of

16 years period. (1980-1996).

METHODOLOGY

Typology of houses in Minna was done based on the field

investigation using a

questionnaire survey method. A total of 470 questionnaires were

administered in nine

broad residential districts in the town. These were Bosso,

Kpakungu, Chanchaga, Tunga, and Maitumbi.

Others were Dutsen-Kura, G.R.A., F-Layout and Zarumai.

Questions were asked about the physical conditions of the house,

age, internal and external facilities e.t.c. Each building was

scored 1,0.5 and 0.1 depending on the quality and present state

of the variable being considered e.g. wall materials, condition

of the roof, floor ceiling door, window etc. The average score

for each residential district was then calculated. Also for

the purpose of this analysis, the average rental value attracted

by each housing type

collected from three Estate Firms were used to derive a single

table of rental values.

RENTAL VALVES AND RENT CONTROL IN NIGERIA

One common assumptions in some land use theories and models

is that man is

an economic man. Taking off from this common assumption, it is

expected that any

property owner will want to derive maximum returns on investments

on that property.

This applies to housing where landlords are more willing to

charge economic rent.

Vagale (1985,p.134), has distinguished between the economic

rent (or what he

dubbed anti-social rent) and social rent. According to him, the

economic rent usually consumes 25 % - 40% or more of the annual

family income and is charged to transfer the cost of tenement

rates, repairs, insurance etc. to the tenant whereas social rent

is the rent that a family can pay for shelter without foregoing

other essential requirements and this is normally 10% or less of

the annual family income.

It has been argued that if every man cannot be a landlord,

he should not pay

landlords more than they deserve (Uyanga 1982). Observations

however, have shown that tenants in fast growing urban centres in

Nigeria are always under the yoke of the ‘shylock’ landlords,

Onibokun (1976), for instance, has noted that in 1960, about

11.2%

of the income of urban workers went into rent but 15 years later,

this jumped to 30%.

In Lagos as observed by Uyanga (1982), rent have literarily

jumped through the

roof to the extent that the Victoria Island/Ikoyi areas now fully

deserves the nickname

the millionaires suburb because only a millionaire can afford to

pay the rents being demanded there.

Like every other commodity, housing market is subject to

the laws of demand and supply. In this sense, the astronomical

rise in rents is attributable to the widening gap between the

demand and supply of housing. In Nigeria, scholars (Onokerhoraye

1984, Abiodun 1985) have observed that the provision of housing

has remained very low relative to the ever increasing demand by

the population.

The consequence of this shortfall in housing supply is seen

in the overcrowding of the existing accommodation in the urban

centres. Even houses under construction are being sought after to

the extent that tenants are willing to make five years advance

rent payment.

Similar problems exist in different parts of the world.

Rent control measures are

now being taken by many governments with varying degrees of

strictness. A comprehensive study by the World Bank indicates

that rent regulations differ in important ways from country to

country. In some towns for instance, Kumasi and Cairo, strict

control is enforced: Attempts are made to fix fair rent for each

housing unit or freeze rents at some particular level. As noted

by the World Bank expert, Malpezzi (1991), the freeze is almost

never total but rents are allowed to rise after a certain time

without the hike' keeping up with inflation. In other cities like

Riode-Janeiro, liberal rent control is enforced which allows some

rent hikes by either fully or partially indexing them to

inflation or setting a ceiling on annual increases. The study

further shows that other cities like Bangalore practice a mixture

- a tightly control segment (enjoyed by public servants), less

strictly controlled sector and one that is currently controlled.

In Nigeria, the Federal Government in 1975 set up an Anti-

inflation Task Force

to look into the causes and consequences of inflation as it

related to housing. This subsequently led to the setting up of a

Rent Panel to examine rent structure, rent control

measures, the adequacy of the existing housing programmes and

suggest appropriate

remedial measures to tackle the rent problems.

As noted by Okpala (1985), the panel recommendations

contained long and short term remedies. The long term remedies

included active participation of the government in the provision

of houses, the establishment of a mortgage bank and other

financial institutions, encouragement of private efforts, the

establishment of a land review commission to study land tenure,

take stock of the land situation in the country and control

future uses of land as well as establish land tribunals.

The recommended short term remedies are that urban centres

should be divided into zones and rents should be fixed in such a

way that no low or middle income earners should spend more than

20% of his income on house rent, state, government to

compulsorily acquire any property whose landlord has been fined

twice by a rent tribunal. To solve the problems of advanced

payment, the panel recommended maximum of three months and one

year for individual and institutional tenants respectively.

By 1978, most state governments have enacted their Rent

control Edict

stipulating the amount of rent different categories of

accommodation can attract and

setting up of Rent Tribunal to adjudicate between tenants and

landlords.

The recommended short term remedies are that urban centres

should be divided

into zones and rents should be fixed in such a wav that no low

or middle income earners should spend more than 20% of his income

on house rent, state, government to

compulsorily acquire any property whose landlord has been fined

twice by a rent tribunal.

To solve the problems of advanced payment, the panel recommended

maximum of three months and one year for individual and

instructional tenants respectively.

By 1978, most state governments have enacted their Rent

control Edict

stipulating the amount of rent different categories of

accommodation can attract and setting up of Rent Tribunal to

adjudicate between tenants and landlords.

The impact of the rent edicts have not been felt. In fact,

as rightly state by

Uyanga (1982) these edict were quickly forgotten as desperate

house seekers begged landlords to name a price.

TYPOLOGY OF HOUSING IN MINNA

Generally there are three distinguishable housing types in

Minna.

These are:

1. Traditional Compound Housing: This is common among the

Gwaris - the indigenous ethnic group of the town. It is

private dwelling place with rooms for

the head of household wives and children and spaces for

domestic animals,

kitchen and toilet. There is hardly any demand for this type

of housing. The

building are constructed with mud and they are found-in

isolated places outside

the city.

2. Modern Compound Housing: This comprises of room and parlour

apartments

opening out to common courtyard. It usually houses between

four to seven

different households all sharing common toilets and

kitchens. It is commonly

found everywhere except in the G.R.A.s and housing estates

3. Modem Flats: These are self contained bungalows ranging from

one bedroom

to five-bedrooms. They are mainly found in planned areas

within the town. One-and two-bedroom flats are usually

preferred.

DATA ANALYSIS AND INTERPRETATION

TEMPORAL ANALYSIS OF RENTAL VALUES IN MINNA

From table 1, it could be observed that the average rental

value (combined) of

houses increased from about N8,000 in 1980 to about N21,000 in

1996 representing a

percentage change of about 157%. The percentage change, however,

varies from about 761% for Room and parlour to 88% for five

bedroom flat over the period of 16 years.

Wole M

or enikeji

TABLE 1: ANNUAL RENTAL VALUES HOUSE TYPES IN MINNA (1980-1996)

1980 1984 1988 1989 1990 1992 1993 1994 1995 1996 Percent

Change

1980-

1996

Room & Parlour 360 480 840 840 1200 1200 1200 2400 2400 3000 761

One bedroom 600 1750 2300 2400 2500 2700 2960 2960 5000 6000 900

Two bedroom 1600 2340 2800 3500 4280 6000 6100 6600 8000 12000 650

Three bedroom 5780 6020 8130 9700 9700 1106

0

13590 13210 15000 22500 289

Four bedroom 1130

0

1285

0

1575

0

1730

0

1780

0

1830

0

18300 19100 23550 27000 139

Five bedroom 2930

0

3205

0

3697

0

3827

0

3934

0

4047

0

41070 44540 48500 55000 88

Mean 8162 9248 1113

2

1200

2

1247

0

1330

2

14003 15310 17075 20916.

67

One interesting observation concerns the pattern of

percentage change in rental values of different house types.

While the room and Parlour and I - Bedroom flat

experienced a 1980- 1996 percentage change of about 761 and 900

respectively the

pattern for the other types tend to reflect "the higher the

number of bedroom, the lower

the percentage change over the years’.

Another observation that could be made is in respect of the

percentage change

difference between one house type and the nest higher ranking

house type, as shown in table 2.

Table 2: Trends in percentage change difference in rental values

between one house type and another. .

House type 1980 1984 1988 1992 1996 Rm & Parl & I-

Bed

66.6 264.

6

173.

8

125 93.5 I-Bed & 2-Hed 166.6 133.

7

21.7 122.

2

100 2-Bed & 3-Bed , 261.2 157.

3

190.

4

84.3 87.5 3-Bed & 5-Bed 95.5 113.

5

93.7 65.5 20.0 4-Bed & 5-Bed 159.5 149.

4

134.

7

121.

1

103.7

The difference, which was very glaring in 1980 has been

narrowing down since

1988 except the difference between the I - and 2 - Bedroom which

experienced sudden

jump in 1982 and 2 - and 3 - Bedroom difference that witnessed

slight increment in 1996.

EFFECT OF INFLATION ON RENTAL VALUES

An attempt was made to show the relationship between

inflation and rental value. In table 3, it could be seen that

percentage changes in inflation and rental values are not

proportional. While there is a marked variation in inflation

rate.

Table3: Annual Trends in Mean Rental Values and Inflation

(Standard Deviation = 182.6), changes in rental values exhibit

lesser variation (Standard

Deviation = 5.7).

A correlation analysis using Pearson Product Moment

correlation technique was

YEAR MEAN

RENT INDEX RATE % CHANGE CHANGE

- 1980= 100 ANNUAL ANNUAL RENT INFL

1980 8162 100 9.91984 9248 113 39.6 13.3 300198S 11132 136 38.3 20.4 -3.31989 12002 147 40.9 1.8 6.81990 12470 153 7.5 3.9 -81.11992 13003 159 44.5 4.3 4931993 14003 172 57.2 7.7 28.S1994 15310 188 57 9.3 -0.4

.. 1995 17075 208 74.3 u.s 30.41996 20917 256 N.A 22.5 N.A

employed to show the strength of the relationship between bath

variables. This yielded

a strong positive correlation value of r = 0.772.

The question that came to mind at this stage of analysis was

that on the strength

of the strong association between rental values and inflation

rates, an we reasonably

predict the rent based on inflation rates?

A technique of simple regression analysis was carried out.

This yielded the

equation

Y 7839 + 120x

Where

Y rental value

X inflation rate.

This can be interpreted to mean that when inflation rate is

0.0% the mean rent

in Minna will be N7839.00, while a unit increase inflation will

push up mean rent by

NI20.00.

The next question is how well does inflation rate explain

variations in rent?

Other things being equal, the expectation is that rent

should respond faithfully

and proportionally to changes in inflation rate. However, in,

this case study, while

inflation trend has shown marked positive and negative changes,

rental values have

continued to maintain a steady positive changes from year to

year.

This observation partially lends credence to the general

notion in the country that when prices of commodities go up they

don not come down or remain stable even when the conditions that

made the prices to go up have been removed or minimized.

The Coefficient of Determination (R2) was calculated to show

the percentage of

variations in rental values accounted for by the inflation rate.

An R2 value of 59.5 % was

Obtained meaning that inflation accounts for 59.5% of variations

invent in Minna while other factors are responsible for the

remaining 40.5 of the variations.

ANALYSIS OF SPATIAL VARIATIONS IN RENTAL VALUES

A noticeable inter-zonal variation in rental values can be

observed in table 4.

For instance, three bedroom flat varies from N 10,00 in

Maikunkele to as high as N30,000 in the G.R.A. on the average.

All other house type exhibit similar variations.

The cheapest part of the city to live in is the areas around

the city centre comprising Mobil, Yoruba road, Kwangila, Lagos

street, Ibo road, etc. The mean rental value here is about

N15,400 compared with about N24,600 in the G.R.A.

Wole M

or enikeji TABLE 4: SPATIAL VARIATIOSN IN Rental Values in Minna

Neighborhoo

d

Room and

Parlor

1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom 5 Bedroom Mean

Boss0 3000 5000 10000 20000 25000 30000 15500

f-layout 5000 6000 15000 25000 35000 40000 21000

G.R.A None 8000 20000 30000 40000 50000 24666.67

Tunga 4200 6000 12000 25000 35000 45000 21200

Kpakungu 2400 4000 10000 20000 25000 30000 15233.33

Maikunkele 2000 3000 8000 10000 18000 25000 11000

Dusten Kura 3600 6000 15000 25000 30000 40000 19933.33

Minna

Central

2400 5000 12000 18000 25000 30000 15400

Maitumbi 3000 6000 10000 18000 25000 35000 16166.67

Zarumai None None None 25000 35000 40000 16666.67

Chanhaga 2400 5000 10000 12000 24000 30000 13900

An attempt was also made to account for these observed

variations. The quality of these neighbourhoods was measured

and means environmental sources derived for each of them

taking into account the soundness of the physical structure of

systematically selected houses, availability of internal and

external facilities, sanitary condition, parking facilities

etc. A comprehensive list of factors considered and the

scoring method is included in the appendix. The derived scores

were correlated and regressed against the rental values.

The mean rental values and mean environmental scores are

reported in Table 5 below.

Table 5: Rental Values and Mean Environmental Scores

Neighbourhood Mean Rent Environmental

Score Bosso 15500 49.52 F-Layout 21000 57.54 G.R.A. 24666 62.63 Tunga 21200 51.33 Kpakungu 15233 44.98 Maikunkele '11000 48.61 Dutsen-Kura 19933 52.45 Minna Cent 15400 49.15 Maitumbi 16166 49.72 Zarumai 16666 52.95 Chanchaga 13900 46.37

A strong positive correlation (r = 0.834) was found to be

existing between the

two variables. The regression analysis also yielded an

equation

Y = -16066 + 650x

Where:

Y = means rental value

X = means environmental score

A Coefficient of Determination (R2) value of 69.3% was

obtained. This means

that about 69 % of the variations in rental values is

accounted for by the quality of the

neighbourhoods. According to the regression equation, a unit

increase in environmental

score gives rise to a N650 increase in rental value.

CONCLUSION AND RECOMMENDATIONS

This study has revealed an uncomfortable trend in the

rental values of house in Minna. The situation in bigger

cities like Lagos, Portharcourt, Warri, Kaduna etc is

worse.

Though the Federal Government has put in place many policies

and programmes including direct housing construction

programmes, these have not had significant impact on housing

problems in the country. Inability of the government to

control Inflations responsible for the sudden upward review by

as much as 200% of the delivery cost of the houses produced

under the National housing Programme despite the fact that

several hopeful would - be house owners had paid the earlier

required deposits.

Policies aimed at making rents affordable to the low income

earners will have

more far reaching effects. So far, only half-hearted efforts

have been made to control rent.

It is not enough to make decrees to control rent without

making serious efforts at

controlling the variables affecting rent. To this end, every

efforts should be made to bring down the cost of land by

removing all obstacles often encountered in the processing of

certificate-of-occupancy. The cost of building materials and

building services should also be regulated. Little or no

reference has been made to the issue of rent in the various

housing policies, programmes, decrees etc. forgetting that:

Even if the cost of building a house is brought down, many

people will still be unable to afford to build one and hence

still depend on rented accommodation.

Even if many are able to build their own house, many more

people who are geographically and/or occupationally mobile

will still demand rented accommodation in various urban

centres where they may be working except if they are buoyant

enough to build a new house or take up hotel accommodation.

Consequently, as attempts are being made to increase the

supply of housing, efforts should also be made to control the

rental values of the existing houses. As already noted, rents,

as well as the prices of other commodities hardly obey

strictly the economic principles, there is therefore the need

for strong public intervention.

It is believed that if serious efforts are made by the public

authorities, as are

being made in some state in tackling the problems of

artificial fuel scarcity, arbitrary rent increases can be

controlled.

In conclusion, it is important that government should see

housing as a social

service which should not be denied the citizens, Citizens'

access to housing should be enhanced through provision of

subsidies, improvement of indigenous building technology and

the use of local/traditional materials for the construction of

houses truly meant for the low income earners, encouragement

of housing cooperatives/building societies, provision of sites

and services, putting in place realistic minimum planning

standards rather than technically derived standards. As it is

now fashionable for landlords and estate firms to demand for 1

to 5 years rent, bulk housing allowance should be paid to

civil servants as it is being done in some private companies

and some public parastatal and corporations. Finally, there is

also the need to have a long term plan for the establishment

of new towns to decongest the existing sprawling and decaying

urban centres.

ACKNOWLEDGEMENT

The author sincerely wishes to acknowledge the

cooperation of tile following

Minna-based Estate Firms:

Alagbe and Partners

Babatunde and Company.

Ayo Olatunji and Co. Usman and Co.

REFERENCES

1. Abiodun J. Olu (1985); The Provision of Housing and Urban

Environmental Problems in Abiodun J. Olu (ed), Urban and

Regional Planning Problems in Nigeria. University of lfe

Press, lle . lfe.

2. Central

Bank of Nigeria (1992); Statistical Bulletin Vols. I & 2. .

3. Malpezzi Stephen (1991); Rent Control: Pros and Cons.

Urban Edge Vo1.15, No.6 June/July.

4. Okpala, D.C.I. (1985); ‘Rent Control Reconsidered’ in

Onibokun Poju (ed), Housing in Nigeria, NISER, Ibadan.

5. Onokerhoraye Andrew G. (1984); Social Services in

Nigeria: An Introduction. Kegan Paul Int., London.

6. Uyanga Joseph (1982); Toward a Nigerian National Urban

Policy. Ibadan University Press, Ibadan.

7. Vagale, L.R. (1985); ‘Rent Control in Nigeria’: A policy

Framework’ in Onibokun Poju (ed) Housing in Nigeria,

NISER, Ibadan.