1.1 Introduction
Properties renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another person or company. The owner of the good, service or property may be referred to as the lessor and the party paying to use the property as the lessee or renter. There is typically an implied, explicit, or written rental agreement or contract involved to specify the terms of the rental, which are regulated and managed under contract law. When renting real estate, the person(s) or party who lives in or occupies the real estate is often called a tenant, paying rent to the owner of the property, the lessor, often called a landlord (or landlady). The rental agreement for real estate is often called a lease, and usually involves specific property rights in real property, as opposed to chattels.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Since the middle of the 20th century, house owners, housing investors and house users have struggled to identify the basic factors that influence residential property prices in the global housing market (Fernandez et al., 2011). This problem has attracted a lot of interest from researchers, real estate surveyors and other relevant stakeholders concern with housing development, investment and management. For instance, rental values of a residential properties in a particular residential neighborhood in most cases differs significantly with rental values of similar residential properties in another residential neighborhood within the same metropolis. Similarly, rental values of similar houses within the same residential neighborhood also differ due to various silent reasons.
Housing according to Golubchikov and Badyina (2012) is one of the basic social conditions that defines the quality of life and welfare of the people and places. Housing is globally accepted as second most important human need after food and is considered as one of the most valuable economic asset of every nation (Jiboye, 2013). Housing being an essential ingredient that stimulates the growth of Gross Domestic Product (GDP) of any nation encompasses various attributes which jointly function to determine the market value of the commodity.
Since housing units are fixed in location, they differ in terms of their surroundings, the kind of neighbourhood in which they are located, and their nearness to employment and shopping places. Locational area also means that a dwelling's surrounding is possibly of great importance in affecting its value (Aluko, 2011).
Most event rental service firms today still use manual information system because their information needs are of moderate size and managers of such firms have probably been enjoying the manual system as regards to their relatively and comfortable low level of transaction activities. With the high level of social activities been experienced, it is only the rental firms with very large information or high capacity of rental service with rapid rate of renting per item that are likely to survive pressure, and therefore should link information system to business strategy. With this pressure, there is a need to improve corporate effectiveness through their own involvement in system planning to ensure that business strategy is developed in the context of the computerized environment.
Despite the growing concern on the issues from both the foreign and local housing market, only a harmful of studies in that regard have been conducted in Nigeria, with no particular study found to have statistically analyzed the combined effect of dwellings, location and neighborhood attributes on rental values of residential properties.
Different rental service centers at various levels of activities with different critical level will agree that stress, confusion and errors increase with increase in volume of information as the transaction activities rises, and there is a great point where manual information system will not operate successfully. It may also help in aiding their decisions as to the choice of the type of residential accommodation to invest and where to invest that will produce higher rental value. Policies makers will also benefit from the information because it will arose their interest and encourage them to carry out proper environmental and neighborhood planning as well as providing adequate amenities that may lead to higher property taxes through enhanced value from property rating assessment and consequently stimulate economic growth.
Therefore, in Ogun State where the research was carried out, the activities that was conducted is to know the Effect of Rental Variation in Industrial and Residential Properties.
1.3 Statement of Problems
Investigation revealed that location of economic properties has been a difficult concept to understand. Although the primary objective of commercial properties is the derivation of financial gains, while that of residential properties is for habitation, shelter and comfort, the demand for land is a reflection of the profitability or utility derivable from its use.
The greater the benefit to be obtained from a particular use, the higher the rent that the user will be willing to pay for it. There appear to be wide ranging differences in the levels of rent passing on residential and commercial properties in Enugu and Nigeria generally. This research is seeking among other things to find out the Effect of Rental Variation in Industrial and Residential Properties using Sagamu as a case study.
1.4 Aim and Objectives of Study
The aim of the study is to analyze the Effect of Rental Variation in Industrial and Residential Properties using Sagamu as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To identify the current level of rents for commercial and residential properties in the study area;
- To ascertain and examine the factors influencing the rents being commanded by these properties;
- To specify the implications of rental variation on decisions to acquire those properties; and
- To determine the trend in rental values for residential and commercial properties in the study area.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Are there factors influencing the rents being commanded by these properties?
- What are the implications of rental variation on decisions to acquire those properties?
- What is the trend in rental values for residential and commercial properties in the study area?
- What is the current level of rents for commercial and residential properties in the study area?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: The trend of residential and rental property in the study area is low
- H1: The trend of residential and rental property in the study area is high
Hypothesis Two
- H0: The level and price of rent on commercial property in the study area is low
- H1: The level and price of rent on commercial property in the study area is high
1.7 Significance of Study
The relevance of this study will enable investors not only to understand how occupier thinks, but also why and the things they consider before acquiring properties for certain uses. It will also help to determine the factors influencing, commercial and residential properties which is an essential pre-requisite to successful development as well as stimulating interest in the students to carryout out further research on the topic.
This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on Analysing the Effect of Rental Variation in Industrial and Residential Properties using Sagamu district in Ogun State as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Operational Definition of Terms
Renting: Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another.
Residential Property: A residential area is a land used in which housing predominates, as opposed to industrial and commercial areas. Housing may vary significantly between, and through, residential areas.
Rental Property: Also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership.
1.11 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.
