CHAPTER 1

 INTRODUCTION

1.1     Background to the Study

Housing problems in urban centers have often been viewed in term of qualitative and quantitative inadequacy with or without attention to the problem of increasing rent. As there are many urban residents struggling to get accommodation, most of them will have a roof over their heads in rented accommodation. However, the majority of the low-income earners are not comfortable because of galloping rent increases (Aribigbola, 2006).

The problem reached a crisis in the early 1970s which led the federal military government to set up a rent panel to review among other things, the level and structure of rents in urban centres. Various long and short term recommendations were made and all state government were directed to implement them.Today, the rent situation has not improved rather it has been further worsened by the equally sprawling inflation which has tremendously shot-up the cost of building materials.

The importance of home and comfort can never be over-emphasized, as man’s preoccupation, among other utilities and livelihood, depends on shelter- a place to lay the head. Undoubtedly, for a long time- dating back to pre-history times- man has availed himself the opportunity of elements in his environment skillfully to provide dwelling units for himself and his family. Although a house is not a home, it exerts an enabling influence through its natural and physical location, on a variety of services made available, some of which includes health, education and recreation, public utility services such as power supply, transportation, sewage disposal and economic services such as work opportunity and income. Monetary value placed on these variables is usually in form of house rent or house sales. It is therefore, expected that differences in these services as regards house to house would also result in differences in their rents. Market forces of demand and supply could also cause differential in house rent in the Nigeria housing market today. (Ojetunde, 2013).

According to the law of demand and supply “the higher the demand for particular goods or services, the higher the price for that goods or services”, that is under a price system. Competition for housing unit tends to increase the price of rent placed on such housing unit (Ibrahim, 2005).

Housing problem in Nigeria, like those other developing countries are essentially urban-oriented. This is necessitated by man’s craving for greener pasture and better livelihood, causing  an enormous demand for housing in urban centres far exceeding the available number in existence. Rapid urban growth caused by migration of people from rural areas and other towns to urban centres, rents pressure on the available housing units, and since supply cannot equate demand immediately, the house rent skyrockets because of the shortages. Port-Harcourt as a whole, like every other city in Nigeria, has a high level of attraction for both indigenous and foreign migrants, not only is it because of its high economic activities but also it has a conducive weather for learning and the demand for housing  is  high to meet up with the increasing population (Aribigbola, 2006).

1.2     Statement of Problem

Port Harcourt city is growing by leaps and bounds every day. With the high influx of people into the city in their quest to look for a better means of living, there is demand pressure on  residential accommodation. The town centre and older suburbs are choked up and cannot accommodate the pressure. New suburbs are opening up to receive the mass influx of people. These new suburbs includeEgbelu and Ogbogoro .With the increased security challenges in the city centre and other high density location in the city of Port Harcourt, some residents found Egbelu/Ogbogoro to be safe haven. Thus, there is a high influx of people indigenes and non-indigenes into the area . Hence, there is high demand for residential accommodation in Egbelu/Ogbogoro, and this has impacted on the housing rents . This study therefore, aims at examining  through empirical investigation the annual trend and variation in rental values of residential properties in Egbelu and Ogbogoro , Port Harcourt within the last five years -2013 to 2017.   

1.3     Aim and Objectives

The aim of this study is to examine the rent differential of residential properties in Egbelu and Ogbogoro, Port-Harcourt, with a view to identifying the causes of variation in rents of residential accommodation.

To achieve this aim, the specific objectives of the study one:

i.        To identify different types of residential properties at Egbeluand Ogbogorocommunities.

ii.       To determine  the rental values of residential properties in the study area.

iii.      To determine the differentials in the rental values of residential properties in the study area.

iv.      To determine the factors that affect the rental values of residential properties in the study area.

v.      To identify and examine the factors that account for the differentials in the  rental values of residential properties in the study area.

1.4             Research  Question

          The research questions to aid this study is as follows:

1.       What are the different  types of residential properties?

2.       What are the rental values  of residential properties in the study area?

3.       What are the differentials in the rental values of residential properties in the study area?

4.       What are the factors that affect rental values of residential properties?

5.       What are the factors that account for differences in rental values of residential properties?

1.5      Scope of the Study      

The purview of this study is specifically restricted to 3 streets in Egbelu and 4 streets in OgbogoroPort-Harcourt, Rivers state, in order to set a proper view of rental value of residential properties. This study covers the rent differentials for residential properties in the study area. The study further examines the type of residential properties available within the study area.

1.6     Significance of the Study

The significance of this study is as follows:

The study is significant to Estate Surveyors and Valuers, Town planners, Quantity surveyors etc. because improved residential property development will enhance their professional performance.

It will guide those who want to seek rental accommodation at Egbelu and Ogbogoro to know the trends of different types of accommodation.

It will assist in the forecasting of future trend in rental value of residential property and therefore provide a guide for prospective investors and policy makers.

This study will also serve as a reference material to researchers who will be carrying out research on similar topic subsequently.

1.7     The Study Area

1.7.1 Population and Human Activities

Egbelu and Ogbogorobeing the study area  are suburbs of Port-Harcourt in Obio-Akpor  Local Government Area in Rivers State. It has a population of 649,600 persons according to information obtained from National Population Commission of Nigeria, National Bureau of Statistics and it is 15km South of the State Capital. With the many activities in Rivers State, most especially in  Obio-Akpor   Local Government Area makes it popular. Also its commercial and tourist centre  haslead to the influx of migrants into the area, mostly Igbos and the Yorubas who constitutes more than half of the population because of the commercial activities within the study area.

1.8.2 Location

Egbelu/Ogbogorois located at 90 48’00” N, 80 52’ 00”E  and it has an area of 260km2 . The Local Government Area, is an area in the metropolis of Port-Harcourt, one of the major areas of economic activities in Nigeria. Obio-Akpor has its headquarters at Rumuodomanya. The original indigenous occupants of the area are the Ikwerre people (Rivers State Ministry of Landsand Survey)

1.8     Limitations of the Study

The researcher encountered a lot of problems in the course of this research work. They include the following

1.       Misunderstanding: This is a result of uncooperative attitude of the respondent during the data collection. Some landlords thought that I am a government agent that the data collected is going to be used to tax them.

2.       Lack of cooperation: Some people bluntly refused to grant interview or accept the questionnaire and where they accept, the information supply will be false information. During the process some  did not declare the actual rent collected on their property

3.       Finance: Shortage of finance was a major challenge to this work in term of transportation to the study area and typing of the project work.

4.       Secrecy: some people bluntly refused to grant the questionnaire on the ground that they did not want to disclose their identity.

5.       Time:  This work was thoroughly researched and this took a lot of time.

6.       Lack of proper and adequate records on the rental value trends of properties in the study area.

1.9     Definition of Operational Terms

The following definitions is pertinent for a better understading of the research topic

•        Agent: This is one who acts on behalf of another; a person appointed to conduct the affairs of a principal. (Champman, 2002)

•        Authority: a body or person given legal power to carryout certain specified tasks, such as local authority, highway authority. (according to Champman, 2002)

•        Covenant: a clause in a lease etc. whereby a party binds himself to do or not to do certain thing. (according to Champman,  2002 )

•        Estate: despite its common meaning of an area of landed property but in this context, it is the interest a person holds in land. (Shittu, 2004)

•        Landlord: a person, or body of person who grants a lease of land or tenements to a tenant under a contract of tenancy(Champman  2002).

•        Lease: lease is a property transfer arrangement, where the landlord (lessor) transfers the use and possession rights of his property to the lessee for a definite period of time in consideration for payment of rent, which can be periodically or any other period subject to the arrangement between the lessee and the lessor (Kuye,  2003)

•        Property: in a wide legal sense, anything that is the subject matter of ownership  (Okoh, 2001)

•        Rent: a periodic payment usually in money, although it may be in kind made by a tenant to a landlord for the use of land, house etc. (Kuye, 2000)

•        Tenant: a person, or body of persons, who holds trends or tenements from a landlord in lease hold tenure (Champman,  2002)

•        Valuer: one who values all types of property for purchase, sale, letting, rating and other purpose. (Kuye,  2000)

•        Values: value is the highest price estimated in terms of money which a property would bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with the knowledge of all the uses to which it is adopted and for which it is capable of being used. (Kuye 2000)