RENT VS BUY IN LAGOS: BEST GUIDE TO MAKING THE RIGHT CHOICE FOR YOU

Nigeria’s commercial capital, Lagos is one of the fastest growing cities in the world, experiencing rapid growth over the years and emerging as one of the most vibrant economies on the African continent. With a population of over 20 million people, Lagos is a melting pot of cultures, religions, and traditions making from all over Nigeria and Africa, making it a top destination for investors and those seeking better life. Precisely, this reason is why so many people want to stay in Lagos, and it is why many are constantly torn in-between renting or buying apartments in Lagos.

Undoubtedly, making the decision to rent vs buy in lagos, when it comes to securing a place to live is a critical one, often determined by several factors, including financial capability, long-term goals, and other personal circumstances.

In this article, I will show you the pros and cons of renting versus buying property in Lagos, while providing insights to guide you in making informed decisions based on your unique needs and financial capabilities.

Let’s start with the Lagos Housing Market.

Before we compare renting and buying apartments in Lagos, a good place to start is to understand the dynamics of Lagos’ housing market. Properties in Lagos are generally expensive, especially in prime locations like Victoria Island, Lekki, Ikoyi, and Yaba. For many average income earners, buying an apartment in Lagos in Lagos can be prohibitively expensive. Although to mitigate this, many people build over a long period of time.

However, whether you are in the upper or middle economic class, rent is often seen as a relatively more attainable option for many individuals, especially expatriates and those who are in temporary or mobile employment situations. So what are the pros and cons of renting an apartment in Lagos?

Pros and Cons of Renting in Lagos

Pros of Renting in Lagos

1. Lower Initial Cost

To rent a property in Lagos generally requires a significantly lower initial investment compared to buying.

Typically, a renter pays a year’s (or maybe two or three years’) rent in advance, which is generally more affordable than the substantial down payment required for a mortgage or the full cost of purchasing a home outright. Thus, the initial financial commitment involved in renting is far less demanding compared to buying, which inbolves a large initial financial commitment.

2. Flexibility and Mobility 

Renting an apartment generally gives an individual greater flexibility. As a renter or tenant, you have the freedom to move at the expiration of your rent, a situation that is ideal for those who may need to relocate for work or other reasons. This flexibility is of huge advantage in a dynamic city like Lagos, where job opportunities, business ventures, and personal circumstances can change rapidly.

3. Maintenance and Repairs

When you rent an apartment in Lagos, you are typically not responsible for the upkeep or repairs of the property. Hence, whenever issues such as power outages, plumbing problems, and security concerns arise, you as the tenant have the benefit of not worrying about the cost and hassle of maintaining the property, unless in isolated situations.

4. Less Risk

In Lagos’ volatile real estate market, renting apartments in the city can also be less risky. In Lagos, property values can fluctuate due to factors such as economic downturns, changes in government policy, or shifts in demand. Some renters avoid the risk of property devaluation by not being tied to the ownership of the property. In this aspect, renting an apartment in Lagos gives peace of mind.

Cons of Renting in Lagos

1. Not Financially Smart in the Long Run

Even though renting an apartment in Lagos may be financially manageable in the short term, it can be a less cost-effective option over the long run. Unlike mortgage payments, which build ownership of the property over time, rent payments do not contribute to building equity,

Therefore, a tenant may pay rent for many years and, in the end, have no asset to show for all the payment, because rent does not build equity.

2. High Cost of Rent

The cost of renting an apartment in Lagos can be extremely high, especially in choice locations of the city. For example, a two-bedroom apartment in central locations like Lekki or Victoria Island can cost well over N3 million annually. It’s worse because many owners arbitrarily increase their rent from time to time. Unfortunately for many, this constant escalation of rent prices can be burdensome, forcing them to pay increasingly unaffordable rates from time to time.

3. Lack of Stability

Apart from arbitrary rent hikes, a renter may face the issue of sudden ejection from bis apartment by the landlord in Lagos, especially as renters are not protected by strong laws in the state or country as a whole.

In Lagos, rent agreements are usually subject to the discretion of the landlord, and tenants have limited power to negotiate once they have entered into a contract. This lack of stability can be a source of problem for the renter particularly in a city where moving homes can be expensive and disruptive.

4. No Customization 

Renting a property in Lagos also comes with limitations regarding personalization and modification of the apartment. Oftentimes, tenants are restricted from making alterations to the property, such as repainting walls or even renovating spaces. This lack of control can be a source of discouragement for those who prefer a more permanent and customized living environment.

The Pros and Cons of Buying Property in Lagos

Like renting, buying properties in Lagos has its pros and cons. First let’s start with the pros.

Pros of Buying in Lagos

1. Building Equity

One of the most significant benefits of buying property in Lagos is that it comes with the ability to build equity over time. By buying through mortgage, each payment made contributes to the ownership, gradually increasing the value of the property. Paying mortgage, therefore, offers a major long-term financial benefit as opposed to renting, where payments only serve to provide temporary housing without any asset accumulation.

2. Capital Appreciation

Lagos’ real estate market has consistently shown upward trends, especially in developing areas like Lekki, Ajah, and Sangotedo. The value of properties in these areas are known to appreciate quickly and consistently too because of demand.

Hence, for those who can afford the upfront costs, buying a property in Lagos especially in any of these areas could lead to significant capital appreciation over the years. If the market continues to grow as projected, property owners could see a substantial increase in the value of their investment.

3. Long-Term Stability

Homeownership in Lagos provides long-term stability in terms of living arrangements. By buying an apartment in Lagos, you gain control over your living environment, eliminating unwarranted situations such as arbitrary rent increases, fear of sudden eviction by the landlord.

You also have the advantage of renovating or customizing your property as you wish, which gives you a sense of permanence and autonomy.

4. Potential to Earn Rental Income

Another advantage of buying property in Lagos is its potential to create passive income through rental. If the property is in a high-demand area, homeowners in Lagos can explore renting out part or all of it to generate income. In Lagos, the demand for rental apartment is quite high so a homeowner can make good business out of renting the property to people. This rental income could help offset mortgage costs or contribute to the overall profitability of the property.

5. Flexible Payment Options

While conventional mortgages are becoming more expensive to access and thus can be a drawback, there are flexible and more accessible mortgage options that make house acquisition in Lagos worthwhile. An example of such option is the PWAN Stars Easy Pay Scheme, which allowsfor investors and aspiring home owners who wish to enjoy the convenience of monthly payment to acquire their desired properties at relatively cheaper prices on the basis that they fulfil the conditions, which include being a Nigerian in paid or self-employment, and being 21 years old and above.

With the Easy Pay (FHF) you are better placed to invest in, for instance, The Cynosure Apartments by paying around N170k monthly, subject to terms and conditions reviewable from time to time by PWAN Stars.

Cons of Buying in Lagos

There are some disadvantages to buying apartment in Lagos, however. They include:

1. High Initial Costs

The most obvious drawback of buying property in Lagos is the significant upfront investment required. Like initially stated, the cost of acquiring real estate in Lagos can be astronomical; most people cannot afford it without taking out large loans or securing substantial amounts of capital. In addition to the purchase price, buyers must also account for closing costs, legal fees, and other hidden expenses such as property taxes and insurance.

2. Maintenance and Upkeep

Maintenance and Upkeep can often present a drawback for home ownership in Lagos.

As a homeowner, the responsibility for property maintenance and repairs falls squarely on you, the buyer. In Lagos, homeowners can often find themselves dealing with frequent maintenance issues, such as poor roads, erratic water supply, and electrical problems. These costs and inconveniences can add take its toll on your finances as a property owner in Lagos.

3. Market Volatility 

Another con with buying apartment in Lagos is its susceptibility to volatility. While the Lagos real estate market has historically been profitable, it can also be subject to volatility. Economic downturns, changes in government policy, and shifts in demand can lead to property values stagnating or even declining in certain areas. For homeowners, this can lead to financial losses, especially if they are unable to sell their property at a favorable price.

Conclusion: Rent vs. Buy in Lagos –How should you decide?

The decision to rent or buy property in Lagos is deeply personal and should be based on a clear understanding of your financial situation, long-term goals, and lifestyle preferences. Against this background, it is recommended that you rent an apartment if you prioritize flexibility, lower initial financial commitments, and the ability to avoid the complexities of property maintenance and market risks.

On the other hand, you should consider buying an apartment in Lagos if you have the financial capacity to manage high initial costs and ongoing maintenance while also looking for long-term investment opportunities. If you’re planning to live in Lagos for an extended period and are ready to build equity, buying property can offer stability, potential for capital appreciation, and the freedom to customize your space.

Ultimately, the decision to rent or buy hinges on your personal circumstances.