Click to watch🍔Quick Bite: In Nigeria, annual rent payments rely on trust, scarce housing, and weak credit systems. Proptech startups are trying monthly models, but the reception from Africa’s rent market is still uncertain.
🧠 The Breakdown
In major cities like Lagos and Abuja, renting a flat feels like a full-time job. Rent prices are steep, and most landlords demand a year’s payment upfront, sometimes even two. Add agency and agreement fees, and you’re looking at a serious financial hurdle before you even get the keys.
This is the complex web that proptech startups are trying to untangle with technology. But the trail of failed ventures, including Fibre, a Nigerian startup that raised $790,000, and MyPadi, an Echo VC-backed platform for student accommodation that shut down in 2018, suggests the market may not yet be ready for certain innovations.
In 2022, Spleet raised $2.6 million from investors, including MaC Venture Capital and HoaQ Fund. Its model allowed tenants to pay rent monthly while Spleet paid landlords upfront. By 2024, though, the company had laid off staff and removed its co-founder and CEO, Adetola Adesanmi, after a financial audit. Spleet’s biggest challenge wasn’t demand; it was unit economics. The company struggled to balance high landlord payouts with slow tenant repayments in an economy battling inflation, currency depreciation, and rising living costs. The model became too expensive to sustain.
A case for annual rent
Africa faces a shortage of at least 51 million housing units. Nigeria alone needs 28 million more homes. When supply is this tight, landlords hold all the leverage. Every comfortable empty flat often has multiple applicants competing, especially in popular cities like Lagos and Abuja, and with more GenZs joining the country’s workforce and yearning for independence, the demand for houses is only bound to continue to increase.
For decades, Nigerian rentals have operated on relationships, not systems. Most landlords prefer annual payments, not because it’s efficient, but because it guarantees commitment. A tenant who pays a year upfront is less likely to default. The model is old-fashioned, but in a country with no reliable credit scoring or eviction protections, it’s also practical. The tenant gets security of tenure for a full year. Monthly payment models assume you can replace these institutional functions with technology. That’s a big assumption.
Without solving the massive housing shortage, landlords have no incentive to modify a system that works perfectly for them. Because the startups found themselves subsidising the difference between what tenants could pay monthly and what landlords demanded upfront, that’s not a sustainable business model.
Culture and trust make annual payments stick
Interestingly, a 2024 survey shows that 63% of Lagos renters actually prefer paying annually over monthly instalments. The preference isn’t just about accepting reality. There’s genuine cultural logic behind it.
In Nigeria, annual rent payments have less to do with discipline and more to do with practicality. Many renters prefer to “pay once and rest,” given how unpredictable income and expenses can be. It’s a mindset shaped by survival, not convenience.
There’s also the social dimension. Friends and families sometimes pool resources to help loved ones secure housing. This works well with large upfront payments. It’s harder to coordinate 12 monthly contributions from various relatives.
Trust in Nigeria’s rental market is deeply personal and built through relationships. Landlords want to know a tenant’s family, workplace, and personal references before handing over keys. Unlike developed countries, Nigeria lacks a reliable data verification system to support these checks. Decisions depend heavily on word of mouth and personal connections.
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Annual payments reinforce this trust-building. When you hand over a year’s rent, you’re making a significant commitment that your family and community likely witnessed or supported. It creates accountability beyond what any contract can provide. Monthly payments lower the stakes of each transaction. A tenant who defaults loses less. A landlord who needs to verify 12 separate payments has 12 opportunities to worry.
Even proptech’s rent financing models don’t disrupt this system. Platforms pay landlords the full annual rent upfront, then you repay them in instalments with interest. The landlord still gets their year’s rent. The yearly payment system remains intact. You’ve simply traded one financial burden for another, now with added fees.
The realistic future
The housing deficit is projected to reach 130 million units by 2030, requiring an estimated $1.4 trillion to address. That shortfall will only worsen the supply-demand imbalance. Tighter supply means more landlord power, which means less incentive to accommodate tenant preferences.
Even in developed markets where monthly rents are common, landlords exercise extreme caution. According to a 2024 report by the New York State Homes and Community Renewal Agency, over 70% of NYC landlords use credit reports as a key screening tool. They demand proof of income at 40 times the monthly rent, employment verification, and often a guarantor with assets.
In Nigeria, where data infrastructure is not as robust, expecting landlords to offer flexible monthly rent without similar safeguards seems unlikely.
That being said, proptech startups that offer rent financing will probably carve out a niche. Young professionals with stable salaries will use these platforms. That might represent a decent percentage of the urban rental market in major cities over the next decade. But the bulk of Nigeria’s rental market will stick with annual payments because the conditions that created the system haven’t changed.
If Nigeria’s proptech story were to be told a decade from now, it might sound less like Silicon Valley’s fast-scaling fairytales and more like a patient game of trust-building. Technology will help smooth the rough edges, but landlords will still want assurance, tenants will still want flexibility, and the bridge between them will still be built one verified transaction at a time.
The market will evolve, but slowly. And maybe that’s fine. Because in a country where even trust has an exchange rate, progress—no matter how slow—is still movement.
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