Market Offers Rent-Now, Pay-Later Answer to Tenants

August 17, 2023 11:25 am

Prospective renters in Nigeria can now breathe a sigh of relief as a rental solution that simplifies renting and facilitates access to residences has entered the real estate market. The Rent Now Pay Later solution is a rent-financing initiative that provides low-interest, collateral-free loans of up to N3 million.

Spleet, a property technology (proptech) company, is promoting the solution, which, according to its representatives, was designed to help renters locate a home and pay monthly, quarterly, or annually. The company has raised $2.6 million in funding, led by MaC VC, to expand its property management offerings.

In Nigeria, it is challenging to rent an apartment. In addition to the tension of finding a suitable residence, there is also the financial burden of exorbitant rent that must be paid one or two years in advance. A low-to-moderate income apartment can cost between $1,000 and $5,000 per year in rent.

Nationwide, rents are generally high, especially in urban areas, because landlords and developers also face challenges deriving from inflation and rising construction costs, resulting in price increases for housing in major cities. The majority of tenants in the country spend up to forty percent of their income on housing costs alone. Akinderu Moruf-Fatai, a former commissioner for housing in Lagos, verified this at a recent real estate forum.

“Rent Now, Pay Later was designed to provide current and prospective Spleet members with access to credit facilities in order to make advance payments for their homes on a flexible repayment schedule. Akintola Adesanmi, co-founder and chief executive officer of Spleet, explained in Lagos that members can access up to N3 million with a 12-month repayment schedule.

“At Spleet, we believe that people should be able to affordably rent a suitable residence, and all of our efforts are geared toward making this a reality. This program is available to all current and prospective Spleet members,” he added.

Adesanmi explained further that existing or prospective tenants must create a Spleet account and then visit the Spleet Marketplace to view their carefully curated apartment options in order to become members of Spleet and take advantage of the credit facilities it provides.

“When a member discovers an apartment he likes, he should click on ‘Pay with RNPL’ under the payment options; fill in the required information, including his bank statement and employment history, to assist the team in determining his eligibility. This requires between 24 and 72 hours,” he explained.

When the applicant’s loan application is approved, he will be able to relocate into his Spleet home, he stated. The CEO disclosed that RNPL is designed for young to middle-aged salaried individuals seeking a flexible and convenient way to pay for an apartment, and that 4 percent per month interest is levied on the loan amount or approved amount on a reducing balance basis.

“We recoup the loan we extend through a clearly defined procedure. Applicants for loans agree to monthly direct debits from their associated bank account. The applicant must also make an equity contribution equal to 16,67% of the monthly rent in order to satisfy the eligibility requirements, he explained.

Continuing, he stated, “We provide a two-month grace period (interest will continue to accrue daily for each missed payment), but if the applicant is unable to repay the loan after the grace period expires, Spleet will initiate the eviction process.”

The rental market in Nigeria is very active, and a variety of products that facilitate renting and homeownership have emerged. One of these products is Rent-to-Own, which allows a lessee to move into a house that has already been paid for by a seller, and then continue to pay rent on the house until he has paid enough to own it.

Alpha Mead Development Company (AMDC), a subsidiary of Alpha Mead Group, has a product on the market called ‘Rent4Less’ that was created in response to the country’s economic challenges.

In recognition of the fact that more than 80 percent of Nigeria’s growing population lives in rented housing, the company’s former managing director, Damola Akindolire, stated in an interview, “we are happy that we have not only solved a major problem with Rent4Less, but also demonstrated that we can accelerate growth and replicate this success across Africa.”