Why tenants in Africa pay rent years in advance

Unlocking padlock on a wooden door. [Courtesy]

In most of the West and East African countries, landlords often demand for advance rent payments, ranging from several months to years.

This is mainly occasioned by severe shortage of affordable housing, which then creates a landlord-dominated market.

Engineer Collins Nyang'wara Oneko and Economist Fred Owiti said even though rental practices vary across African countries, they are all influenced by factors like housing shortages, economic conditions, legal frameworks and cultural norms.

The duo, who are currently based in Nigeria said this tendency allows landlords to minimise risks of tenant default, reduce administrative costs associated with monthly collections, and secure lump sums for personal investments, loan repayments, or hedging against inflation and economic instability.

"Weak enforcement of rent control laws exacerbates this, as tenants have limited bargaining power and often face eviction threats if they cannot comply," said Oneko.

He further noted that countries with stronger tenant protections, like South Africa, favours monthly payments with regulated deposits, unlike most parts of the continent.

Owiti, an Economic Policy Analyst with Africa Development Bank in Nigeria said low supply of affordable housing brings about all the housing challenges. "For instance, in Nigeria and Ghana, tenants compete fiercely for limited units, allowing landlords to demand annual or multi-year advances" Owiti noted.

The experts further observed that economic and financial incentives required landlords to use lump sums to fund the construction of more houses, repay loans, or combat inflation.

He says that in Nigeria, it is common as many properties are built on borrowed money.

On legal gaps and enforcement issues, the duo argued that many countries have laws limiting rent advances but poor enforcement of the said laws gives room for violation. However, there are countries such as Ethiopia and Egypt that are working towards advancing rent controls.

"In Kenya, tenants typically pay one month’s rent in advance plus a one-month deposit sometimes up to three months total upfront, with some realtors requesting quarterly payments for stability", says Charles Ayoro, the Managing Director of Real Estate Associates Limited.

Ayoro says rent deposits are refundable minus damages, and laws require receipts. 

Patterns emerging in Africa shows that West African countries often require longer advances, North Africa leans toward monthly payments with deposits, and Southern Africa has emphasised on regulated monthly terms.

"Balanced regulations are part of broader Southern African pro-tenant trend," said Oneko.