Long Leases Offer a Cheaper Entry into Lagos Real Estate as Property Costs Rise

Long leases offer an alternative route into Lagos property ownership and investment

Long lease arrangements are gaining attention in Lagos as rising property prices and construction costs increase the capital required to buy residential real estate outright. The model allows buyers to secure the right to occupy or generate rental income from a property for a specified period, without paying the full purchase price.

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Sanni Faruq, Lead Consultant at Senior Homes and Properties, said long leases could reduce the initial cost of accessing a property by 60–70% compared with outright acquisition in the same neighbourhood. In an interview with Nairametrics published on 10 October 2026, he attributed the growing interest to affordability pressures, rent increases and investors’ search for ways to deploy less capital across multiple properties.

Long Leases Attract Buyers Priced Out of Outright Ownership

Faruq identified young professionals, technology workers, diaspora Nigerians and experienced property investors among the groups exploring long-lease arrangements.

He said some younger buyers target properties priced between ₦9 million and ₦25 million in mainland locations such as Yaba, Palmgrove, Shomolu and Ikeja. These buyers seek accommodation close to employment centres or opportunities to earn rental income without committing the much larger sums required to purchase properties outright.

Faruq also cited demand from Nigerians living abroad who want a property they can use during visits and potentially rent out at other times. Some older buyers, he added, are considering long leases as an alternative to spending substantial sums building homes that their families may not occupy permanently.

The reported demand reflects the search for lower-cost ways to access residential property. However, the affordability of a long lease depends on the upfront payment, remaining lease term, service charges and the rights granted under the agreement.

Mainland Locations Lead Interest in Long-Lease Properties

According to Faruq, demand is particularly strong in Yaba, Shomolu, Gbagada and Surulere, where proximity to universities, technology businesses and transport connections supports demand for compact residential units.

He also identified Maryland, Mende and Ikeja as locations attracting interest because of their access to the airport, commercial districts and government offices around Alausa.

Studios and mini-flats are prominent in this segment because they generally require less capital than larger apartments. Some buyers also use leased units for serviced accommodation and short-let operations.

For the wider housing market, this could create additional demand for compact units in accessible urban areas. Yet the commercial performance of each property will depend on its location, occupancy, maintenance costs and the rent the market can sustain.

Long Leases Cost Less Upfront Than Outright Purchases

Faruq illustrated the price difference by comparing long-lease interests with outright purchases in parts of Lagos Mainland.

He said a finished one-bedroom apartment in areas such as Ikeja or Surulere could cost ₦80 million to more than ₦110 million to purchase outright, while comparable 18-to-20-year lease interests could cost between ₦18 million and ₦26 million.

He also cited a mini-flat in Shomolu offered under an 18-year lease for ₦20 million, against an estimated annual rental value of ₦3.5 million.

These figures are examples supplied by a consultant whose company specialises in long leases, rather than independently verified market-wide averages. Actual prices and rental income will vary by property, location, lease conditions and market demand.

The distinction between a lease and outright ownership is central: a leaseholder acquires rights for a defined period, not permanent ownership of the property. Buyers therefore need to compare the upfront saving with the duration and conditions of the rights they receive.

Investors Pursue Rental Income With Less Initial Capital

Faruq said some investors are using long leases to spread their capital across several units rather than committing a large amount to a single property. He cited investors who might allocate ₦150 million to ₦200 million across five to seven leasehold units, potentially diversifying their rental income across different locations.

He also estimated annual yields of 15–22% or more for well-managed long-lease properties, compared with 6–9% for traditional outright purchases. These estimates reflect his assessment and should not be treated as guaranteed returns.

Realised returns depend on occupancy, rent collection, repairs, service charges, taxes, management fees and the ability to sublet legally under the lease. Investors must also consider the risk that demand or rental values may fall during the term.

The model may reduce the amount of capital required to enter the market, but lower upfront cost alone does not establish that an investment is more profitable or less risky.

Lease Terms, Transfer Rights and Expiry Require Careful Review

Long-lease agreements define the rights and obligations that apply throughout the term, including whether the leaseholder can occupy, sublet or transfer the remaining interest to another buyer.

Faruq said agreements used in the market may include an assignment clause permitting the transfer of unexpired lease years, as well as a first right of refusal that allows the existing leaseholder to negotiate a renewal before the property is offered to others.

These provisions should not be assumed to apply to every long lease. Buyers should verify the actual contract, confirm the lessor’s authority to grant the interest, investigate the property’s title and establish whether required consents and registrations are in place.

They should also understand what happens at expiry. Unless the agreement provides for an extension or other arrangement, the leaseholder’s rights are time-limited and possession may revert to the underlying owner.

Independent legal advice and a clear understanding of maintenance obligations, service charges, default provisions and dispute-resolution mechanisms are important before committing funds.

What Long Leases Could Mean for Lagos Housing

Long leases provide another way for buyers and investors to access residential property in a market where outright acquisition requires substantial capital. For developers, the structure may help broaden the pool of prospective customers and support the sale or allocation of leasehold interests in smaller units.

However, the model does not automatically increase the number of homes available. Its contribution to housing supply depends on whether it supports new construction, improves the use of existing buildings or simply changes how existing properties are marketed and financed.

Affordability also remains a separate question. A lower upfront payment may improve access for some buyers, but the total cost over the lease term, the affordability of recurring charges and the rights retained by the leaseholder will determine the arrangement’s practical value.

Outlook

Interest in long leases highlights how buyers and investors are adapting to the high capital requirements of Lagos real estate. The model may offer a practical alternative for people seeking defined-term residential use or rental-income opportunities without purchasing a property outright.

Its long-term role in the market will depend on transparent contracts, secure property titles, realistic rental assumptions and clear rules governing transfers and expiry. For buyers, the key consideration is not simply how much less a lease costs at entry, but whether the rights and potential income justify the price over the period covered by the agreement.

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