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Rent review is the process of reassessing and adjusting the rent of a leased property by the landlord with the consent of the tenant. A rent review is often prompted by changes in the market value of the property and prevalent economic realities. The goal of rent review is to ensure that the rent payable remains fair and reflects the current market value of the property, thereby protecting the landlord’s investment.[i] On the other hand, a rent review clause in a lease agreement helps protect the tenant from arbitrary increases in rent by the landlord.
This article outlines the position of the law on rent review in Nigeria, specifically focusing on the Tenancy Law of Lagos State and relevant judicial decisions.
WHAT DOES THE LAW SAY?
To lawfully review rent in Nigeria, there must be an agreement between the Landlord and Tenant specifying how and when the rent will be adjusted. This is usually done with the help of a rent review clause in the lease agreement. The rent review clause protects tenants from arbitrary increases by the Landlord, setting clear guidelines about when and how rent can be raised in order to promote fairness in the landlord-tenant relationship.
In the absence of a rent review clause, a landlord cannot increase house rent while the tenant is in occupation of the property without first consulting with the tenant and reaching an agreement being reached.[ii]
In Udih vs. Izedonmwen[iii], the court held that whatever unilateral increase of this type can only amount to an offer, which the tenant is free to accept or reject. Where the tenant rejects the offer, the landlord must either go back to the original terms or determine the tenancy in accordance with the provisions of the law.
This was further affirmed in Jovinco Nigeria Ltd & Anor v Ibeozimako[iv], where it was stated that an increase of rent is an offer which the tenant is at liberty to accept or reject.
Thus, for a rent review to be effective, there must be an agreement between the Landlord and the Tenant. The inclusion of a rent review clause helps to protect the landlord’s investment and helps tenants understand the expectations regarding rent increments.
The landlord cannot unilaterally increase rent on their own without following due process of law. The process usually involves serving a notice on the tenant of increase in rent, then discussing the terms of such an increase with the tenant. The tenant must expressly approve the terms of the new rent before the increase can take effect. A unilateral increase in rent by a landlord is contestable by the tenant.[v]
By virtue of S.37 of the Tenancy Law of Lagos State 2011, an existing tenant may apply to the Court for an Order declaring that the increase in rent payable under a tenancy agreement is unreasonable. Where it is satisfied that the increase is unreasonable, the court may order that the increase in the rent be changed to a specific amount. It shall be unlawful for a landlord to eject a tenant from any premises pending the determination of the action.
WHAT DOES A RENT REVIEW CLAUSE CONTAIN?
When drafting a rent review clause, there are certain elements that must be included.[vi] They are as follows:
Frequency of review: The rent review clause should specify how often the rent can be reviewed, e.g, annually or biannually.
Method of review: The rent review clause should identify how the revised rent will be calculated.
Notice: The clause should also outline how, when, and the manner in which notices will be communicated.
Dispute Resolution: In the event that a dispute arises, it should state the means by which such a dispute will be resolved.
FINAL THOUGHTS
A landlord-tenant relationship is founded on a contract requiring mutual agreement. Consequently, all terms, including rent review provisions, must be explicitly agreed upon by both parties. A standard tenancy agreement should outline the rent review process, including notification methods, frequency of review, method of review, and provision for dispute resolution.
Where a landlord unilaterally (arbitrarily) increases rent, a tenant may seek legal recourse with the assistance of a lawyer. Potential remedies may include a court order to reduce the revised rent, damages for unlawful eviction, or other relevant compensation.
[i] Enugus, “Rent Review Clause in Nigeria” https://enugus.com/blog/rent-review-clause-in-nigeria Accessed March 4, 2025
[ii] Olamide Oyetayo & Co Legal Practitioners, “Rent increment in Nigeria: What Tenants and Landlords Must Know” https://olamideoyetayolegal.com/rent-increment-in-nigeria-what-tenants-and-landlords-must-know/#:~:text=Rent%20Negotiation%20Process,of%20increase%20with%20him%2Fher. Accessed March 3, 2025
[iii] (1990) 2 NWLR (Pt. 132) 357
[iv] (2014) LPELR-23599(CA)
[v] Section 37 of the Tenancy Law of Lagos State 2011
[vi] Enugus, “Rent Review Clause in Nigeria” https://enugus.com/blog/rent-review-clause-in-nigeria Accessed March 4, 2025
Written by Adeife Omolumo for The Trusted Advisors
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