INTRODUCTION

On the 30th of January 2020, the World Health Organisation (WHO) declared the coronavirus (COVID-19) outbreak a Public Health Emergency of International Concern (PHEIC). The virus which was first discovered in China in December 2019, and since then has infected more than 2,000,000 (two million) people globally.[i] The virus has had an exacerbating effect on the socio-economic growth of many countries. Affected countries have introduced several strategic regulations aimed at flattening the curve and stabilising the economy.

The International Monetary Fund (IMF), in its April Economic Outlook, stated that since the Great Depression, this is the first time that both advanced economies and emerging market and developing economies are in recession.[ii] Nigeria is not left out of the above IMF’s projection. However, the Nigerian Government has introduced several policies aimed to assuage the exacerbating impacts of the virus on the country’s economy.

In its recent report, the International Labour Organisation (ILO) warned that not less than 195,000,000 (one hundred and ninety-five million) people globally are expected to lose their jobs to COVID-19.[iii] With businesses closed and unemployment rate rising at an exponential rate, policy makers around the world have introduced polices aimed to ease the impacts of COVID-19 on tenancies. This article examines the impacts of the outbreak on tenancies, the steps taken by countries and recommendations for Nigeria.

IMPACTS OF COVID-19 ON LEASES

· Default in rental payments
Policy makers all over the world are enforcing the stay at home and social distancing regulations to forestall the further spread of COVID-19. This has greatly affected social life and businesses globally and has led to, in some cases, an employer – employee negotiation on payoff, pay-cut or lay-off. According to a report by the New York Times, a United States of American (USA) news agency, it reported that due to the pandemic not less than 31% of people living in America are unable to pay rent.[iv] In Ghana, John Mahama, former President of Ghana, urged the president of Ghana to freeze rental payments and evictions due to the number of people he discovered could not pay for February and March rents and are faced with eviction.[v] There is no doubt that the situation in Nigeria is far worse than that experienced in USA, especially in Lagos, where businesses have been shut for more than a month and families made to sit at home due to the pandemic. Currently, there is an urgent need for government to intervene in the difficulties faced by tenants and landlords.

· Loss of jobs and closure of businesses
According to a report by the New York Times, it reported that due to the pandemic nearly 10,000,000 (ten million) people have filed unemployment claims over the past weeks in USA.[vi] The COVID-19 outbreak and the policies introduced to curb its spread have contributed greatly to the current situation. With regards to the current situation, Guy Ryder, the ILO Director-General, said workers and businesses are facing a catastrophe in both developed and developing countries.[vii] The ILO stated that the sectors most susceptible to this risk include accommodation and food services, manufacturing, retail and business and administrative activities. [viii] The situation is far worse in Africa where we have a high level of informality in the labour market.

Default in mortgage payments
With the current unemployment rate coupled with pay-cuts there is a high possibility that landlords are most likely going to default in their mortgage payments. Prior to the outbreak, landlords make their payments from rents collected from tenants, but with tenants out of job and unable to pay rents, it will be more onerous for landlords to keep up with their monthly mortgage payments.

Loss of income for Landlords
According to Malaymail, an international news agency, reported that four of Norwegian Air subsidiaries in Denmark and Sweden have filed for bankruptcy thereby affecting 4,700 pilots and crew as a result of the pandemic.[ix] The spiral effect of this pandemic does not only affect residential tenants but also commercial tenants. With businesses winding up and tenants losing their jobs, there is no doubt that Landlords are going to lose income from rents. In a recent interview with two dozen landlords carried out by the New York Times in USA, property owners said their collections have plunged as much of the economy has shut down to prevent the spread of the deadly coronavirus.[x]

ACTIONS TAKEN BY SOME COUNTRIES

In response to the effects of the pandemic in relations to tenancies, policy makers have introduced several strategies in order assuage the impact of the pandemic on landlords and tenants. These strategies will be examined hereunder.

Australia
The premier issued a notice under section 22 of the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020, which banned landlords from any form of increase in rent for an initial period of 5 months. The initial 5 months is subject to an extension depending on the progress made by the country after the initial period. Introduction of six months’ moratorium on evictions of tenants, except in limited circumstances.

United States of America
The Coronavirus Aid, Relief and Economic Security Act offers property owners with federal backed mortgage a foreclosure moratorium and a right for forbearance.[xi] Kathy Kraninger, director of the Consumer Financial Protection Bureau, confirmed that lenders are offering property owners delay in mortgage payments for up to 180 days and no documentation is required to request for a coronavirus-related deferral of mortgage payments.[xii] As at 1st of April, Bank of America had deferred mortgage payments for more than 50,000 homeowners, according to Bill Haldin, a Bank of America spokesperson.[xiii] The rationale behind this is to assist landlords, with tenants who are unable to pay rents.

New Zealand
New Zealand also took a similar step as that taken by Australia. Increases in rent were prohibited for the next six months. Tenants are protected from any form of termination of tenancies unless for justified reasons. Also, the Regulation provided that fixed tenancies that ended during the lockdown shall be converted to periodic tenancies. Notice of rent increase given prior to this time were declared to be of no effect.

Ghana
Ghana was also hit by the pandemic and the government has also enforced the stay at home and social distancing policies in the country. John Mahama, the former president of Ghana, in his interactions with some people in the outskirt of Ghana discovered that most people were unable to raise money to pay their February and March rents. The case in Ghana is even more serious, considering the fact that rents are paid in advance and properties are mostly privately owned. John Mahama urged landlords and government to devise a scheme to relive tenants of the current hardship. He also urged government to grant a moratorium on eviction.[xiv] Tax reliefs for landlords was also recommended.

RECOMMENDATIONS

The recommendations stated below have been drawn from those that have been applied in various jurisdictions including those examined above. Tax reliefs can be granted to landlords in return for forbearance or rent waivers by the Landlord. A short rent waiver could also be negotiated with landlords by the government or tenants. A moratorium on increase in rent or eviction could also be declared by government. Tenants and landlords could also negotiate on a reduced rent scheme.

In conclusion, considering that, as at the time of writing this article, the pandemic has caused the death of more than 160,000 people globally and with no vaccine in sight, it’s more important than ever to ensure that tenancies are sustained and tenants do not have to face the prospect of homelessness during a global pandemic. It’s also critical from a public health perspective that people are allowed to self-isolate in their own homes by ensuring that they can remain in their rental properties for the duration of this crisis. While the efforts of the Nigerian governments, at all levels, in combating the pandemic is commendable, there is no doubt that more needs to be done, not only to flatten the curve but also stabilize the economy.

Author:
Chizoba S. Okonkwo
[email protected]

[i] https://www.worldometers.info/coronavirus/?utm_campaign=CSauthorbio? Last accessed 19 April 2020

[ii] https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/ Last accessed 19 April 2020

[iii] https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_740893/lang–en/index.htm%E2%80%8B last accessed 19 April 2020

[iv] https://www.nytimes.com/2020/04/08/business/economy/coronavirus-rent.html last accessed 20 April 2020

[v] https://www.modernghana.com/news/996307/covid-19-mahama-urges-govt-to-freeze-rent-ban.html last accessed 20 April 2020

[vi] https://www.nytimes.com/2020/04/08/business/economy/coronavirus-rent.html last accessed 20 April 2020

[vii] lbid

[viii] lbid

[ix] https://www.malaymail.com/amp/news/money/2020/04/20/norwegian-air-cuts-4700-staff-in-subsidiary-bankruptcy last accessed 20 April 2020

[x] https://www.nytimes.com/2020/04/08/business/economy/coronavirus-rent.html last accessed 20 April 2020

[xi] https://www.usatoday.com/story/money/personalfinance/2020/04/14/mortgage-deferment-relief-coronavirus-covid-19/2983675001/ last accessed 20 April 2020

[xii] lbid

[xiii] lbid

[xiv] Lbid