Understanding Landlord and Tenant Laws for Short-Term Rentals

Short-term rentals have become a popular option for property owners looking to generate extra income and for travellers seeking more affordable and flexible accommodations.

Platforms like Airbnb, Vrbo, and local Nigerian platforms such as Shortlet Homes and Gidi Stays have made it easier than ever to rent out properties for short stays.

However, while short-term rentals offer convenience and profitability, they also come with legal complexities.

Understanding landlord and tenant laws in Nigeria is crucial to avoiding potential disputes, penalties, or even the risk of having a rental shut down due to non-compliance.

In this blog post, we will break down the key aspects of landlord and tenant laws for short-term rentals in Nigeria, covering everything from legal classification and lease agreements to local laws, tenant rights, and risk management strategies.

Legal Classification of Short-Term Rentals in Nigeria

Before renting out a property on a short-term basis, landlords must understand how these rentals are classified under Nigerian law.

1. Short-Term Rentals vs. Long-Term Rentals

In Nigeria, short-term rentals are typically classified as accommodations rented for a period of fewer than 90 days. This classification is crucial because rental laws and regulations apply differently to short-term and long-term leases.

For instance:

Long-term rentals are covered under the Tenancy Law of Lagos State 2011 and similar laws in other states, which provide tenant protections such as notice periods for eviction.
Short-term rentals may not be classified under tenancy laws but instead fall under contract law, meaning agreements between landlords and guests are governed by contract terms rather than tenancy protections.

2. Different Regulations Based on Location

Short-term rental regulations vary by state in Nigeria. Some areas have emerging rules governing short-term rentals, particularly concerning taxation, zoning, and business licensing.

For example:

Lagos State has introduced stricter regulations on real estate, including taxation on rental income.
Abuja, as a federal capital, has zoning laws that may restrict short-term rentals in residential areas.

Failure to comply with local laws can lead to fines, penalties, or even closure of the rental property.

Read This: How to Create a Business Plan for Your Short-Term Rental

Lease Agreements and Rental Contracts

Even though short-term rentals are often facilitated through online platforms, having a solid lease agreement is essential.

1. Importance of a Rental Agreement

A rental agreement protects both landlords and tenants by clearly outlining the terms of the stay. While platforms like Airbnb provide standard terms of service, a separate contract can offer additional protection in case of disputes.

2. Key Clauses to Include

A short-term rental agreement in Nigeria should cover:

Duration of Stay: Specify the exact dates of check-in and check-out.
House Rules: Include policies on noise levels, smoking, pets, and visitor restrictions.
Security Deposit: Define the amount, conditions for deductions, and refund policy.
Cancellation Policy: Detail whether refunds are full, partial, or non-refundable based on cancellation timing.
Liability & Damage Terms: Outline who is responsible for property damages and how they will be handled.

Having a legally sound agreement in place reduces misunderstandings and strengthens legal standing in case of disputes.

Local Laws and Licensing Requirements

1. Licensing and Registration

Some states in Nigeria, such as Lagos, require short-term rental operators to register their businesses. Requirements may include:

Registering the property as a short-term rental with local authorities.
Obtaining a tax identification number (TIN) for tax purposes.
Complying with hospitality and lodging industry regulations.

2. Zoning Laws and Restrictions

Some Nigerian cities have zoning laws regulating where short-term rentals can operate. Property owners should verify if their rental location is zoned for short-term stays.

3. Tax Implications

Short-term rental operators in Nigeria may be required to collect and remit various taxes, including:

Rental Income Tax: Short-term rental income is subject to taxation under the Nigerian tax system.
Value-Added Tax (VAT): If a property is rented for business purposes, VAT may apply.
Hotel Occupancy & Tourism Tax: In states like Lagos, short-term rental operators may be required to pay tourism-related levies.

Consulting a tax professional is advisable to ensure compliance with local tax laws.

See This: How to Get Your First Booking Fast in the Short-Term Rental Business

Tenant Rights and Landlord Obligations

Both landlords and short-term renters have legal rights and responsibilities.

1. Right to Privacy vs. Landlord Access

Tenants have the right to privacy, even for short stays. Landlords should:

Provide notice before entering the property, except in emergencies.
Respect agreed-upon check-in and check-out times.

2. Maintenance and Repairs

Landlords are responsible for maintaining the property in a habitable condition. This includes:

Ensuring all appliances and utilities are functional.
Responding promptly to repair requests.

3. Eviction Rules and Dispute Resolution

For short-term rentals, landlords must establish clear policies for handling disputes, cancellations, and potential evictions. Some key points include:

Outlining conditions under which a guest can be removed (e.g., violating house rules or failing to pay).
Following local dispute resolution mechanisms to avoid illegal removals.

Risks and Legal Challenges in Short-Term Rentals

Despite the opportunities, short-term rentals come with legal risks.

1. Common Legal Disputes

Landlords often face issues such as:

Property Damage: Tenants may damage furniture, appliances, or other parts of the property.
Late Payments: If the rental is managed outside a platform, enforcing payment policies can be challenging.
Unauthorized Guests: Some renters bring additional guests without approval, violating occupancy limits.

2. Insurance Considerations

Regular homeowner’s insurance may not cover short-term rentals. Landlords should consider:

Short-term rental insurance: Covers damages and liability claims.
Host protection insurance: Some platforms offer limited coverage for property damage and liability.

3. Handling Guest Misconduct

To avoid legal troubles:

Screen guests carefully before confirming bookings.
Install security measures like smart locks and noise monitoring devices.
Set clear penalties for rule violations.

Best Practices for Compliance and Risk Management

To mitigate legal risks, landlords should follow best practices for compliance.

1. Staying Up to Date with Laws

Since short-term rental laws are constantly evolving in Nigeria, landlords should:

Regularly check government updates on property laws.
Join local real estate associations to stay informed.
Consult legal professionals for compliance guidance.

2. Drafting a Solid Rental Agreement

Using a well-structured rental agreement with clearly defined terms minimizes legal risks. Consider hiring a lawyer to draft or review agreements.

3. Hiring Property Managers and Legal Consultants

For property owners managing multiple rentals, hiring a property manager or legal consultant can ensure smoother operations and compliance with regulations.

See This: How to Use Social Media to Market Your Short-Term Rental

Conclusion

Short-term rentals in Nigeria can be a lucrative business, but landlords must navigate complex legal requirements to operate successfully. Understanding the distinction between short-term and long-term rentals, drafting strong agreements, complying with licensing and tax regulations, and staying informed about evolving laws are crucial for avoiding legal troubles.

By taking proactive steps such as proper guest screening, maintaining the property, and securing the right insurance, landlords can mitigate risks and create a profitable, legally compliant rental business.

Would you like help drafting a sample rental agreement for short-term rentals in Nigeria? Let us know in the comments.