Effects of Tenant Selection Criteria on Rental Housing Market in Federal Capital

Territory (FCT), Abuja, Nigeria

P. O. IRUOBE , S. C. UGWUEJIM2, J. C. NWORAH2 and G. A. IRUOBE3
1*

1
Department of Estate Management, University of Benin, Nigeria
2
Department of Estate Management, University of Nigeria, Enugu
3
Department of Sociology, Lagos State University, Ojo, Lagos
*
Corresponding author’s email – [email protected]
Abstract
The problem studied in this research was the consequences of different tenant Received 4 June 2020
selection criteria on the rental housing market in Federal Capital Territory Revised 28 Sept 2020
23 Oct 2020
(F.C.T.) Abuja. This study dwelt on the assessment of the processes leading Accepted 30 Oct 2020
to tenant selection, for prospective tenants by professionals and non-
professionals in the rental housing market, within F.C.T. Abuja. The
objectives of the research include the identification of priorities in tenant
selection criteria often utilized by professionals and non-professionals, their
assumed importance to property management as well as the probable effects
of the strategy on the rental housing market in the study area. The study
adopted the questionnaire survey approach, while the method of sample
selection was non-probability sampling. A total of 185 questionnaires were
administered to professionals (registered estate surveying and valuation and
valuation firms) and non-professional in real estate business in the study area
using a non-probability purposive sampling technique. A total of 125
questionnaire were administered (professionals - 85, non-professionals - 40);
and a 67.7% response rate was achieved. Frequency and percentage
distribution tables, Chi-square test statistics, ANOVA, one-way ANOVA and
discriminant analysis were employed in the analyses of data. It was
discovered that the priority attached to independent factors that make up the
selection process was different for both professionals and non-professionals.
Professionals’ prioritization of sustainability of use above other factors and
non-professionals prioritization of financial stability reflects their value
perspectives. These differences exposed the managerial edge and foresight
professionals may be having over non-professionals who often pride in
agency alone. Finally, the study rested on the opinion that the difference in
factors for tenant selection criteria appears insignificant and may only be a
matter of chance.
Keywords: Tenant Selection Criteria, Rental Housing, Prospective Tenants, Professional and
Nonprofessional, Federal Capital Territory.

Introduction
With the increased rate of urbanization and population, there has been a corresponding
increase in demand for rental housing in Nigeria. Ogu (2001) opined that the colonial
administration was able to effect development through rapid urbanization. Such urbanization
provided jobs and created labour, which led to an increased demand for office and residential
accommodation. With the rapid urbanization rate, the cycle of real estate investments
increased tremendously in Nigeria. With an ever-growing population, government support to
match the need for shelter and its availability has been burdened with the duo problem of
overpopulation and a substantial housing shortfall of 600,000 units (Igbinoba, 2017). Real
estate as an investment option, with rental housing applicable in this context, is an

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 Iruobe et al. 73

opportunity that history has afforded us its lessons, over and over again. With a long-term
value growth that is better and consistent than any other investment asset, real estate in form
of rental housing has maintained its form in securing better returns for lesser risks to home-
owners (landlords, developers and investors). Hoesli (1984) notes that the characteristic of
real estate as an inflation hedge, in relation to investment income, makes real estate an
attractive investment vehicle. The increasing demand for rental housing has led investors to
capitalize on the opportunity of providing real estate for rent/sale to a teeming population.

Housing markets in Abuja have witnessed, over time, shifts in its rental demand for
accommodation types. These shifts have been two-sided in its effects; as a drop in demand for
certain accommodation, types spell windfall for another. Onwuanyi (2018) observed that the
Abuja market possessed a higher level of unlet and unsold developments. The study traced
this to poor market knowledge, varying market conditions and unrealistic investment
expectations. As a result, they produce abnormal situations which include land resource
misallocation and the creation of slums. It is no doubt that these effects have their origins in
the unstable economic prices in the nation. However, we find that the price of finding a
quality tenant that meets the property owner’s standard, especially in this recessionary period
is inherent in how detailed and arduous the process of tenant selection is structured. This is
often time-consuming for rental housing managers. Therefore, this study aims to understand
what may be the effect of tenant selection criteria adopted by real estate property managers
(professionals and non-professionals) in Abuja rental housing market.

Literature Review
The Development of Rental Housing Market in Abuja
In building a proper foundation as to what and how the Abuja rental housing market had been
shaped, we would have to look into its origin and its constituent development. The origin is
hinged on how Abuja came to be, in the first place, and the constituents, which highlights the
nature of population, urbanization and migration.

Obiadi and Onichie (2018) noted, that with the overcrowding and congested nature of Lagos,
with little or no lands for expansion, the need to transfer the capital of Nigeria from Lagos to
Abuja arose in 1975 (effective from 5th February 1976), hence the immediate forecast of the
rental housing market for the new territory. In the artificial creation of this need however, a
Master Plan of the Abuja Federal Capital Territory had to be developed. Based on the details
of the Abuja Master Plan (1979), the development of the city was designed to be in four (4)
phases with a clearly defined target population of three million (3,000,000) inhabitants. This
was, ipso facto, the announcement of an explosion in the rental market as Government did not
have a corresponding provision for Social Housing to accommodate those personnel that were
to relocate to Abuja at the time the creation of the FCT became a reality.

Jibril (2006) speculates on how the problem of housing has been compounded by non-
adherence to plans in the form of policy summersault. The study observed that the Abuja
Master plan was not followed as planned. It notes that between 1976 and 2003, distortions
appearing as policy changes had affected the original purpose of the Abuja Master Plan. It
was further stressed that these major shifts in policy direction can be said to be the root cause
of problems of squatters and land administration within F.C.T. With that, we see that the
effects of uncontrolled migration and urbanization led to an overuse of resources, originally
provided for a population of three million as stated in the Master Plan. The over-bloated
increase in population therefore created a market incentive for private developers who cashed
in on the opportunity to fill the gap created by policy inconsistency.

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74 Effects of Tenant Selection Criteria on Rental Housing Market

Ujoh et al. (2010) indicated that since Abuja became Nigeria’s Federal Capital Territory in
1976, it has been experiencing rapid expansion, urbanization and significant changes in its
physical landscape. Adeponle (2013) also observed that Abuja City is growing faster (13%)
than the provisions of its master plan. Developments are springing up rapidly in gross
isolation of zoning and other planning codes. This mainly is a result of the unnecessary
distortions in the implementation of its master plan. The crisis of improper development has
led to the expansion of the demand for all types of housing, some of which are regarded as
low-quality housing sandwiched with inaccessible houses built by politicians and other
bourgeois merchants.

Rental Housing Market in Abuja

With the rise in demand for housing and social amenities in an around Abuja city, it has led to
the rise of slums thriving in locations between opulence and squalor. Odinaka (2017) posited
how Koroduma, the slum near Asokoro in Abuja stands out amongst all other slums in Abuja.
Growth of informal settlements is on the increase in the Federal Capital Territory. High rents
have been observed, as well as other factors as the potential reason for the clustering of many
of Abuja’s City’s suburban slums.

Alao (2009) identified that the ranges of housing options in the city (Abuja) do not support all
income groups. Even though there are different housing designs, they have been developed by
private individuals and investors who have obtained parcels of land at very high rates from
both government and owners alike and therefore the cost of rent for these buildings are often
on the high side, coupled with the cost of construction and finishing by the residents. This
itself is considered true, as the barrier of housing affordability has resulted in the emergence
of informal settlement, slums and shantytowns in the capital city. Thus, no matter the type of
housing that is available for Abuja residents, the owners of the houses want returns on
investment having invested so much. Thus, to actualize this dream and to get the right tenant
to guarantee the continuous inflow/returns is a major problem that residential property
investors grapple with, day after day.

Northcourt (2019) observed that in the last quarter of 2018, vacancy rates in areas like Apo,
Gwarinpa, Jabi, Katampe, Lugbe, Maitama, Utako and Wuse II were 13%, 4%, 10%, 28%,
4%, 3%, 13% and 8% respectively. These rates were more pronounced in commercial and
multi-purpose properties like Jabi lake, Grand Towers, Gateway Mall and Ceddi Plaza, which
stood at 40%, 15%, 38% and 21% respectively. This was perceived to be a result of high
rentals. Abuja’s average monthly rent per square metre was pegged at $39 (Thirty-nine
Dollars) or ₦14,040 (Fourteen thousand and forty Naira). Thus, despite the inability of
private developers to fill the housing deficit in Abuja, there is still the problem of vacancies in
the existing housing units, although the vacancy rate is more pronounced in commercial and
multi-purpose buildings. This goes to show that property managers are only interested in
returns on investment and not to play the welfarist capitalist. Property managers are also
mindful of losing clients (tenants), therefore the need to predict tenant’s turnover and adhere
to proven tenant selection criteria that is more appropriate in guaranteeing tenant loyalty and
less resistant persons.

The life of tenants in Abuja is comparable to that described by Nubi (2000) as dehumanizing
when he opined that most urban population live in a dehumanizing housing environment,
while those that have access to average housing do so at an abnormal cost. Most landlords do
not wish for this but are often constrained by the high cost in producing adequate or quality
housing aimed at filling the gap created by a deficit in housing nationally. Thus, although

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 Iruobe et al. 75

Nubi (2000) identified one of the problems of housing, it is not certain that the plea would be
able to force the landlord to build their houses with ‘conditions’ that would reduce the
“dehumanization” speculated on; neither is it possible under the present condition of the
nation’s inability to provide social housing, to reduce the cost of housing for the common
man.

Speaking under the influence of support for affordable housing, Okafor and Onuoha (2016)
noted that prices of capital values for housing properties had been appreciating from 1999 up
to the year 2009. They likened such rising prices as a characteristic of inflation with an
average inflation rate estimation of 50.1% for leased property and 39.3% for sale properties.
One factor that gives rise to inflation is when demand outweighs supply. However, with the
drawback of economic activities experienced in 2017 and its wake in late 2017/early 2018,
one can only wonder why the inflation persists, even with the deliberate steps by the
government through the agencies of mortgage banks, commercial banks, Nigeria Mortgage
Refinancing Company (NMRC) and Real Estate Investment Trusts (REITs) to provide mass
housing facilities to the citizens of the country. But under a strict economic consideration, a
landlord is happy that the prices for his capital are increasing relative to other goods and
services. In other words, because real estate has been incentivized by the inflation in the
nation, it is normal for investors in real estate to consider themselves fortunate. Thus, as the
tenant loses resources to high rents, the landlord and the managing agents get a worthy return
on their investment by the inflationary trend not created by them. Aside from the inflation of
housing prices, another question put forward is the emergence of slums in the wake of
property development and the cost-averse nature of prospective tenants in taking up
apartments in the Federal Capital Territory.

The gain in housing development for landlords and the agents is better helped by an ability to
predict tenant’s loyalty. To guarantee loyalty, Fonseca et al. (2018) asserted that choosing a
tenant is a key issue in the housing rental market. They posit that knowing whether a
prospective tenant will pay the rent in time, be able to hold a good relationship with the
neighbours or take care of the property is not an easy endeavour. They maintain, however,
that if properly executed, it saves time, money and conflicts that often would end up in court.

Tenants’ Selection Criteria

Housing business affects all in society. This stresses its importance or attention to it. Carter
(2011) opined that the acquisition of shelter is an economic activity in which virtually all
members of society participate, either in the rental or owner-occupied markets. Landlords,
therefore, are often scared of having too many persons to care for at a time. Gbadegesin and
Oletubo (2013) noted that no landlord wishes to bear the problems that a bad tenant can bring.
It is expected that the relationship between the landlord and the tenant be long-term.

Olawande (2011) observed that tenant selection is the most successful part of property
management. Most mistakes can be corrected; however, taking wrong tenants in possession
may not only cost lots of money, but also endless frustrations. Without proper tenant selection
criteria, the landlord and or property manager can find themselves stuck with potentially bad
tenants.

Dabara et al. (2012) noted that one of man’s basic need (shelter) is satisfied in either of two
major ways. That is, by occupying one’s own property or by renting from another. This is
especially true in areas prone to rural-urban migration, of which the immigrants are left with
the option of purchasing or renting shelter. In most developing nations, however, most

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76 Effects of Tenant Selection Criteria on Rental Housing Market

persons would prefer to rent apartments when they move to cities in search of greener
pastures than buy them. For a place like Abuja, the influx of persons not having enough
capital to rent a property, let alone, buy one, the gap filled by investors in residential property
is enormous. Huge capital outlay is often tied down in those structures leased out for those
that can afford it. The human face deficit attributable to the apartments notwithstanding, the
investors are also under pressure to recoup their invested funds. They have to be socially
responsible to their respective families who have waited long enough for such funds to
comeback as the dividend of starvation, frugality, prudence and self-denials. How to sustain
the returns on investment is what the landlord or investors worry about more often. They are
not the government who should engage in welfare economics.

Dabara et al. (2017) observed that in most developing economies, most tenants default in
payment of subsequent rents, after the payment of the initial rent. This in turn affects the
investment expectations of property owners and breeds conflict amongst the players and
stakeholders in the rental housing sector. These defaults in subsequent rent payment have
been identified to be caused by poor housing facilities, breach of the tenancy agreement,
unemployment, retrenchment, poor property maintenance, bad landlord/tenant relationship
and harsh landlord’s policy (Ankeli et al., 2015). No matter how magnanimous with rent that
the landlord or managing partner designs, the fact that he cannot go below certain levels in
rents stand. The best tenants, therefore, are those who can put themselves in the shoes of the
landlord who feel the gap in earnings as compared with what has been invested into providing
housing; not those who complain and grumble of rents and lack of maintenance of the
property.

Dabara et al. (2012) observed that the tenancy agreement gives protection to stakeholders in
the rental housing sector only on paper. This is because many rental agreements between
landlords and tenants in Nigeria are virtually personal and informal, without aligning to the
requirements of the formal legal system. This had led to difficulties in dealing with landlord-
tenant conflicts, either in rent control or recovery of premises. This suggests that when due
processes are skipped in property management matters, it is cumbersome and detrimental to
the relationship of the landlord and tenant involved. Thus, landlords operate under hostile
‘eco-legal’ conditions. The risk to the tenancy is enormous since there is no legal framework
that is adhered to strictly. Therefore, much of the tenant/landlord relationship is based on
informal arrangements with a little formal document that is often not utilized for any legal
claims. It is worse for the tenant as he or she may not be able to enforce any legal claim
against his landlord when maintenance services are not provided as and when due.

In a study of the rental housing market in Kaduna, Sani and Gbadegesin (2015) identified the
claim of a “breach of the tenancy agreement and harsh landlord’s policy” as major factors
responsible for rent default in the study area. Therefore, one can say rent default thrives
where commitments by both the landlord and tenant are not adhered to.

The importance of a worthwhile tenant selection criterion is not just only for the landlord or
the management agency. It is also in the interests of the tenants already occupying a property.
This is also a major reason why the concept of tenant associations is weak in many residential
rental properties. A tenant association is only as strong as the members commit themselves to
adhere to the criteria or standards set by the landlord.

The need to evolve a selection criterion for proper management of residential property,
notwithstanding its weaknesses, has been identified. Olukolajo, Ogunbero and Adewusi

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 Iruobe et al. 77

(2015) opined that even though the records of prospective tenants can be accounted for
historically, there is a tendency for a change in behaviour to occur in some aspects, over time.
Say, for instance, a well-performing tenant defaulting in rent payment, due to unstable
changes in the economy of the country. This makes it difficult to rely solely on records of
tenants to be.

Oni (2011) identified ten (10) criteria commonly considered by property managers in the
selection of prospective tenants for properties in the Lagos market. They include; income,
occupation/employment status, advance rent payment, marital status, job prospects, tribe,
household size, physical appearance, sex and religion. While Gbadegesin and Oletubo (2013)
noted with reference to the Ilorin metropolis that the four (4) major criteria considered for the
selection of prospective tenants for residential properties include; Tenant’s personalities
report, Tenant’s impact record, Tenancy report and size of the current need.

The process of tenant selection criteria can be ugly and defeating if it embodies housing
discrimination. Gbadegesin and Ojo (2013) noted that the introduction of ethnic sentiment to
tenants’ selection process can jeopardize the property investor’s aim and lead to rental
default.

Risk assessment of prospective tenants is very important in property management as it saves

both the landlord/property manager and the tenant of the cases of rental default. Thus, Short
et al. (2003) opined that having access to reliable information about tenants was essential if
the risk were to be assessed; by this, the ability to afford the asking rent, capacity to pay
regularly without interruption and the likelihood that they would not damage the property will
be premised.

The Study Area

This study included urban, suburban districts and satellite towns. Some of the urban districts
include Maitama, Central Areas, Wuse Zones and Garki Areas. AbujaCityDotCom (n.d.)
noted that Abuja is the Federal Capital Territory of Nigeria and is located in the North
Central. It is a planned city and characterized by monoliths. It has the nation’s second-largest
urban area, the hub of financial planning and arguably the most important city of the country.
Wikipedia (n.d.) observed that Abuja is subdivided into 6 Area Councils namely; Bwari,
Municipal Area Council, Kuje, Gwagwalada, Abaji and Kwali. It has nine (9) urban districts,
five (5) suburban districts and nine (9) satellite settlements in total. Urban districts are the
main business, financial centre and residential areas of Abuja. As a planned city, it is host to
major business headquarters and prime properties. It is host to a good number of consulates,
embassy branch offices and deputy high commissions of other nations.

Recently, the nature of developments witnessed in the suburbs and the relocation of
homeowners and home seekers from the city axis to towns, has heightened interest in the
short-sightedness of the Abuja Master plan and the processes of reception into rental housing
by landlords.

This study covers all residential and commercial properties located in the study area.

Data and Methodology

Kothari and Garg (2014) observed that research methodology are principles underlying any
given research which logically involves obtaining information via peculiar fieldwork, data

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78 Effects of Tenant Selection Criteria on Rental Housing Market

collection, sample size and frame, sampling procedure, data requirements through primary
sources and secondary sources and method of data analysis.
In this study, the survey research approach was adopted. Survey research approach refers to
the field approach to research. Simply put, it takes into account all the steps involved in a
survey concerning a phenomenon to be studied. Virtually every data used in the study is
obtained directly from the field survey conducted in 2019. This approach possesses the
characteristics of objectivity and reliability, as well as fosters an informed prediction of
relations between variables.

The data used in this study were obtained from a primary source through structured
questionnaire and the population of study comprises registered real estate professionals
(Estate Surveyors and Valuers) and non-professionals in the business of real estate in Abuja.
According to the Nigerian Institution of Estate Surveyors and Valuers (NIESV) Directory,
there are 142 registered Estate Surveying and Valuation in Abuja, out of which of 125 were
reached with a questionnaire; while 60 non-professionals were distributed with the
questionnaires since a membership list was not available at the time of the survey. In total,
185 questionnaires were distributed using non-probability purposive sampling in the six (6)
Area Councils of the study area (Abuja) namely; Bwari, Municipal Area Council, Kuje,
Gwagwalada, Abaji and Kwali by research assistants; while one hundred and twenty-five
(125) (professionals = 85 and non-professionals = 40) representing 67.57% response rate
were retrieved and used for the analysis (see table 1).

Table 1. Administration of Questionnaire

Questionnaires Questionnaires Percentage Questionnaires Response
Administered Retrieved (%) Analysed Rate (%)
Professionals 125 85 68.00 85 45.95
Non-Professionals 60 40 66.67 40 21.62
Professionals and
Non-Professionals 185 125 125 67.57

Data collected were analyzed using statistical tools such as Frequency and Percentage
Distribution tables, Discriminant Analysis, ANOVA, One-Way ANOVA, and the Chi-square
(X2) test statistic.

Result and Discussion

From table 2, male and female professionals are 75% and 25% (of the 85 respondents)
respectively, while male and female non-professionals are 87.5% and 12.5 (of the 40
respondents), respectively, showing that majority of the study respondents are males. The
professionals’ age bracket is not less than 20 – 25 years. This could be as a result of the
number of years required to attain educational and professional qualification for the
profession. This is unlike that of the non-professionals who go into the business without
necessarily undergoing any formal training. The minimum educational qualification of the
professionals, as the table revealed, is HND (41%), while a large number of them has higher
degrees, BSc (40%) and MSc (19%). This enabled them to become registered Estate
Surveyors and Valuer. For the non-professionals, the majority are school leaving certificate

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 Iruobe et al. 79

(35%) and OND (30%) holders with only a few with HND (15%), BSc (15%) and MSc (5%)
degrees which might be making them less proficient for the business. 84% of the
professionals are Associates and 16% are Fellows of the profession which make them
professionally qualified and provides a platform for a higher probability of proficiency in
rendering quality services to their clients. On the other hand, the non-professionals have none
of these professional qualifications and hence may not be competent to render the services
required for the profession.

Table 2. Background Information on the Respondents (Professionals and Non Professionals

in Real Estate Business in the Study Area)
Professionals Non-Professionals
Characteristics of Respondents Frequency (%) Frequency (%)
Gender
Male 64 80 35 87.5
Female 21 20 5 12.5
Total 85 100 40 100
Age
15-20 years - - 2 5
20-25 years 5 6 4 10
25-30 years 15 18 8 20
30-35 years 30 35 11 27
35years and above 35 41 15 38
Total 85 100 40 100
Educational Background
MSc. 16 19 2 5
BSc. 34 40 6 15
HND 35 41 6 15
OND - 12 30
School Leaving Certificate - - 14 35
Total 85 100 40 100
Professional Qualification
Associate 71 84 - -
Fellow 14 16 - -
Others - - 40 100
Total 85 100 40 100
Years of Experience
3-5 Years 10 12 12 30
5-10 Years 22 26 14 35
10-20 Years 24 28 9 23
20-30 Years 20 23 04 10
30-Above Years 9 11 01 03
Total 85 100 40 100

The table also revealed that a large number of the professionals have long years of experience
(between 10 – 20 years and 20 – 30 years); while large numbers of the non-professionals are
within 3 - 5 years and 5 – 10 years of experience; which again arms the professionals with the
requisite skills.

Table 3 shows that 100% of the respondents who are professionals were fully aware of the
use of selection criteria in tenant selection as compared with 62.5% that are aware of the non-
professional category. A total of 25.5% of the non-professionals seem not to be aware; while

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80 Effects of Tenant Selection Criteria on Rental Housing Market

others, representing 12.5%, did not respond to the issue of awareness of tenants’ selection
criteria. This can be taken as a normal trend as ‘to whom much is given, much is required’.

Table 3. Awareness of Tenant Selection Criteria

Are you aware of tenant selection Professionals Non-Professionals
criteria? Frequency % Frequency %)
Yes 85 100 25 62.5
No - 5 12.5
No Response - 10 25.0
Total 85 100 40 100.0

The professionals would be more meticulous about succeeding in the business of tenant
selection and would consider the stakes more cogently. This also shows that the interest of
professionals is often different from that of the non-professionals. Whilst the professionals are
keen about observing rules and adhering to ethical issues, the non-professionals are more
likely to take these for granted. The goal of secured returns on investment for landlords may
be the driving force in the non-professional approach while the professional may be looking
more at what is sustainable.

Table 4. Necessity of Tenant Selection Criteria for Effective Property Management

Do you consider Tenant Selection Professionals Non-Professionals
Criteria necessary for effective
property management? Frequency (%) Frequency (%)
Yes 85 100 25 62.5
No - - - -
No Response - - 15 37.5
Total 85 100 40 100

Table 4 reveals that 100% and 62.5% of the professional and non-professional respondents
concur to the necessity of tenants’ selection criteria for effective property management in the
study area. 37.5% of the non-professionals did not respond to the issue. This shows that
generally, having a selection criterion in place as a way of tenant recruitment is very much
believed and favoured by the professionals and so they are keener about it. However, some of
the non-professionals do not also accept it as ideal for good property management probably
because of their interest that could be different from the core professional practice.

Table 5. Effect of Tenant Selection Criteria on Abuja’s Rental Housing Market (Hypothesis
one question)
Do you feel Tenant Selection Criteria Professionals Non- Professionals
affects the Abuja Rental Market? Frequency Percentage (%) Frequency Percentage (%)
Yes 85 100 25 62.5
No 0 0 0 0
No Response - - 15 37.5
Total 85 100 40 100

From table 5, the professional respondents agreed in totality (100%) that tenants’ selection
criteria have an effect on rental housing, in Abuja, the study area, as well as 62.5% of the
non-professionals. However, 37.5% of the non-professionals had no response to the issue.
This again showed the importance attached to tenant selection criteria by the professionals

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 Iruobe et al. 81

which could be as a result of their desire for effective and efficient property management for
maximum and continuous returns for investment goals. The non-professionals may not be so
interested in property management and hence may not see its importance.

Table 6. Property Management Aspect that Requires Tenant Selection Criteria

In your opinion, which aspect of Professional Non-Professional
property management requires
tenant selection criteria more? Frequency (%) Frequency (%)
Residential 28 33 30 75
Commercial 20 23 5 12.5
Industrial 10 12 0 -
All of the above 27 32 5 12.5
Total 85 100 40 100.0

In table 6, 33% and 75% of both the professionals and non-professionals respondents are in
agreement that management of residential properties requires more of standardized tenant’s
selection criteria. This is followed by 23% and 12.5% of both who believe that commercial
properties required it. While 12% of professionals believe it is required for industrial
properties too, none of the non-professionals believes the same. Also, a large number of
professionals (32%) believe that all the property categories required tenants’ selection criteria
for tenants’ recruitment, only 12.5% of the non-professionals believe same. Clearly, more
importance is given to the utilization of a selection criteria scheme in housing (Residential).
This is understandable since housing is more personally related to the individual than a
commercial or industrial property. It is very likely therefore that more attention would be
given to selecting an appropriate tenant who occupies a house than the one who occupies an
office or a shop. Sometimes, landlords live within the premises of the housing facility and
would not want anyone with doubtful character to live there with him irrespective of the gains
in tenant’s loyalty or rent receivable.

However, the non-professionals are more particular about applying selection criteria in
residential property (30/40x100 =75) than in other segments, in contrast to what we have of
professionals = (28/85x100=33%) who view the need for such criteria cutting across the
various types of properties (33, 23, 12, 32%). The use of selection criteria appears more
evenly distributed between the various types of properties requiring tenants. It may also give
us a clue to the segment of property management concerns that non-professionals are more
likely to flock into – residential, whilst the professionals may be having monopolies in the
commercial and industrial segment.

Table 7 reveals that for the professionals the basis for rejecting tenant; socio-economic status
rank highest (39%), Profession is ranked second at 29%, while health status and tribe rank
third and fourth respectively having 18% and 5%. Marital status ranked fifth with 5%,
followed by religion having 2%. For the non-professionals, socioeconomic also ranked
highest (30%) followed by tribe and profession ranking second with 25% each. Health came
third (10%) while marital and religion ranked fourth having 5% each. None of the
respondents (professionals and non-professionals) believes that tenants are rejected based on
sex. The import of the foregoing is that most prospective tenants were rejected not on one

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82 Effects of Tenant Selection Criteria on Rental Housing Market

criterion. It was often from a subjective assessment of their socio-economic status that ranked
highest.

Table 7. Basis for Rejecting Prospective Tenants

On what basis do you reject Professional Non-Professional
prospective tenants? Frequency (%) Frequency (%)
Tribe 6 7 10 25
Profession 25 29 10 25
Health Status 15 18 4 10
Marital Status 4 5 2 5
Religion 2 2 2 5
Sex 0 - 0 -
Socio-economic 33 39 12 30
Total 85 100 40 100

A socio-economic assessment often takes cognizance of profession, income, taste etc. Some
however were rejected based on their profession and health status. Only a few were rejected
on the bases of marital status or religion. However, no one was discriminated against due to
sex status. Perhaps the nature of Abuja as a cosmopolitan society may have levelled the
ground where there is no gender discrimination in the selection of who occupies a property as
a tenant or not as long as they can meet the necessary criteria. The results from the table
clearly show there is no significant difference between the choices made by both
professionals and non-professionals based on the rejection of tenants.

Inferential Statistics
Rank in terms of priority, the selection criteria according to most landlords’
preference(s)?
Table 8 shows the perception of the professional about the ideals that landlords should pursue
and demonstrates that in term of priority, most landlords prefer sustainability of use which
ranked topmost followed by character and financial stability ranking second and third; while
tenancy agreement, family size, personal relationship and urgency of need followed in that
order respectively. The professionals, therefore, are more concerned about satisfying their
respective landlords in terms of ‘sustainability of house/apartment use than they are
concerned about all other factors necessary for returns on investment. Therefore, the concern
of the professionals in managing a property on behalf of their respective clients/landlords
goes beyond the monetary gains that most landlords openly seek. The professional is often
preoccupied with issues beyond immediate gains of rent payable. This factor significantly
differentiates the quack as a landlord’s ‘attorney in property management’ from a professional
who assumes the same duty. The professional sees beyond the ‘financial gains’ to property
while the non-professional who is like a hireling that is not like to bother about what happens
after the property is let out. The agency fee is so attractive to the non-professional because he
may not be called upon to do any other job afterwards. But the professional is mindful of
taking care of problems that may arise in future about a particular tenancy because he/she is
interested in the day to day management of clients and not just in the collection of rents.
Thus, their preoccupation is often what has been prioritized by them: Sustainability of

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 Iruobe et al. 83

Property Use, Character of the prospective tenant, before financial stability and on to other
factors. Common-sense and training teach them that it is worthwhile to do this.

Table 8. Priority Ranking of Tenant Selection Criteria (Professional)

OPTIONS RANKS
1 2 3 4 5 6 7 POSITION TOTAL
PERSONAL RELATIONSHIP 0 0 0 5 20 35 25 6 85
CHARACTER 20 40 10 15 0 0 0 2 85
FINANCIAL STABILITY 10 20 30 15 10 0 0 3 85
FAMILY SIZE 0 5 5 15 30 15 15 5 85
SUSTAINABILITY OF USE 45 20 10 5 5 0 0 1 85
TENANCY AGREEMENT 5 0 15 35 20 5 5 4 85
URGENCY OF NEED 0 0 0 10 15 20 40 7 85

Discriminant Analysis
We would deal with 2 categories for our criterion variables. They are;
1. Present Classification
2. Future Classification

Table 9. Classification of Tenant Considerations

Present Considerations Future Considerations
Tenancy Agreement Character
Urgency of Need Financial Stability
Personal Relationship Sustainability of Use

In table 9, specific factors were used to represent both the present and future time
considerations. The present considerations include tenancy agreement, urgency of need and
personal relationship. The future considerations include character, financial stability and
sustainability of use.

Table 10. Professional Rating Scales for Tenant Choice(s)

Groups Based On Priority 1st Choice 2nd Choice Other Option
Present Considerations
Tenancy Agreement (TA) 5 - 80
Urgency of Need (UN) - - 85
Personal Relationship (PR) - - 85
Group Mean 1.66 - 83.33
Future Considerations
Character (CH) 20 40 25
Financial Stability (FS) 10 20 55
Sustainability of Use (SU) 45 20 20
Group Mean 25 26.66 33.33
Difference between Group Means -23.44 -26.66 50

Table 11. Professional Cross Analysis Table

Present Considerations Future Considerations
Person TA UN PR CH FS SU
X1 (First choice) 5 0 0 20 10 45
X2 (Second choice) 0 0 0 40 20 20
X3 (Third choice & upwards) 80 85 85 25 55 20

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84 Effects of Tenant Selection Criteria on Rental Housing Market

From table 10 and 11, we can see that professionals place a premium on future considerations
above the present, as we see a bulk of their priorities in the 1st and 2nd choices of the future
consideration criteria. Sustainability of use stands out among the options under future
considerations with the largest number of selection (45), followed by Character (20) before
financial stability (10).

Figure 1. Third Choice at Cut-Off Score of 15

Looking at figure 1 at a cut-off score of 20 and figure 2 at a cut off score of 45 the
distinctions in both present and future considerations of the criteria considered by prospective
tenants are still not so clear in both the first and third choice. This is evidenced in the
overlapping of the present and future consideration variables. However, we see that in the
second choice, the distinction becomes clearer, as present considerations are all below the
cut-off score of 20 and future considerations are above it.

Figure 2. Third Choice at Cut-Off Score of 15

At a cut-off score of 15, the distinctions in both present and future considerations of the
criteria considered by prospective tenants are still not so clear in both the first and third

Journal of Property Research & Construction, 4(1), 2020

 Iruobe et al. 85

choice. However, we see that in the second choice, the distinction becomes clearer, as present
considerations are all below the cut-off score of 15 and future considerations are above it.

Figure 3. Third Choice at Cut-Off Score of 15

In figure 3, we see that the third choice has the greatest number of selections for the factors
under present consideration. This confirms the professional’s position as regarding the value
of future considerations above the present.

Rank in terms of priority, the selection criteria according to most landlords’ preference(s)?

Table 12. Priority Ranking of Tenant Selection Criteria (Non-Professional)

OPTIONS RANKS
1 2 3 4 5 6 7 POSITION TOTAL
PERSONAL RELATIONSHIP 0 0 0 0 5 10 25 7 40
CHARACTER 10 30 0 0 0 0 0 2 40
FINANCIAL STABILITY 35 5 0 0 0 0 0 1 40
FAMILY SIZE 0 5 5 20 10 0 0 4 40
SUSTAINABILITY OF USE 0 5 25 10 0 0 0 3 40
TENANCY AGREEMENT 5 0 0 13 15 7 0 5 40
URGENCY OF NEED 0 0 0 0 5 20 15 6 40
.
Table 12, demonstrates that in term of priority, as to most landlord’s preference for tenant
selection criteria, financial stability ranked topmost followed by character and sustainability
of use ranking second and third; while family size, tenancy agreement, the urgency of need
and personal relationship followed in that order respectively. From the perception of non-
professionals in the real estate industry, most landlords would consider the ability to pay rent
as and when due as the most important criteria. In their view, most landlords often show
preference and drive for monetary returns as against other advantages from the tenant-
landlord relationship. It is a clear money-driven assessment of prospective tenants. This may
be dangerous for Landlords who might be lured into harbouring armed robbers or racketeers
and bunkers. Ability to pay rent and sustain such payment would be ideal if marched by other
personal characteristics of the prospective tenant.

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86 Effects of Tenant Selection Criteria on Rental Housing Market

Discriminant Analysis
We would deal with 2 categories for our criterion variables. They are;
1. Present Classification
2. Future Classification

Table 13. Classification of Tenant Considerations

Present Considerations Future Considerations
Tenancy Agreement Character
Urgency of Need Financial Stability
Personal Relationship Sustainability of Use

In table 13, specific factors were used to represent both the present and future time
considerations. The present considerations include tenancy agreement, urgency of need and
personal relationship. The future considerations include character, financial stability and
sustainability of use. From tables 14 and 15, we can see that non-professionals place a
premium on financial sustainability and character, as we see a bulk of their priorities in the 1st
and 2nd choices of the future consideration criteria. However, there is a low figure for
sustainability of use. Financial stability stands out among the options under future
considerations with the largest number of selection (35), followed by Character (30) before
sustainability of use (10).

At this juncture, it is important to point out that financial stability to non-professionals

represent the ability to meet the initial payment/capital towards a rent.

Table 14. Non-professional Rating Scales for Tenant Choice(s)

Groups Based On Priority 1st Choice 2nd Choice Other Option
Present Considerations
Tenancy Agreement (TA) - 5 35
Urgency of Need (UN) - - 40
Personal Relationship (PR) - - 40
Group Mean 0 1.66 38.33
Future Considerations
Character (CH) 10 30 -
Financial Stability (FS) 35 5 -
Sustainability of Use (SU) - 5 35
Group Mean 15 13.33 11.66
Difference between Group Means -15 -11.67 26.67

Table 15. Non-professional Cross Analysis Table

Present Considerations Future Considerations
Person TA UN PR CH FS SU
X1 (First choice) 0 0 0 10 35 -
X2 (Second choice) 5 0 0 30 5 5
X3 (Third choice & upwards) 35 40 40 0 0 35

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 Iruobe et al. 87

Figure 4. First Choice at Cut-Off Score of 15

For non-professionals, financial stability and character rank foremost in future considerations
as regarding tenant selection criteria. Figure 4 and 5 does not show us a clear cut distinction
in both the present and future considerations, even at a cut-off score of 15. This is so, as all
variables belonging to the present and future considerations are below the cut-off mark of 15,
save sustainability of use.

Figure 5. Second Choice at Cut-Off Score of 15

At a cut-off score of 15, the distinctions in both present and future considerations of the
criteria considered by prospective tenants are still not so clear from the first to the third choice
(Figure 5). However, we see that in the third choice (Figure 6), all the components of present
consideration and sustainability of use from future consideration is rated high. The third
choice reveals that sustainability of use is the least in the order of priority for future
considerations by non-professionals.

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88 Effects of Tenant Selection Criteria on Rental Housing Market

Figure 6. Third Choice at Cut-Off Score of 15

On the strength of this information, we can see that with respect to tenant selection criteria for
non-professionals, a premium is placed on financial stability and character.

Testing of Hypotheses
In the study, two hypotheses were postulated and the analyses were done using the Chi-square
test statistics and One-Way ANOVA.

Hypothesis One
H0: Tenant selection criteria do not affect the rental housing market
H1: Tenant selection criteria affect the rental housing market

In testing the hypothesis, the chi-square statistics were employed and presented in table 16:

Professional (Estate Surveyors and Valuers)

Table 16. Do you feel tenant selection criteria have an effect on the rental housing market in
Abuja?
Brand Observed Expected ( − ) ( − ) ( − )
Frequency Frequency
Yes 85 75 10 100 1.33
No 0 75 -75 5625 75.00
Total 76.33

Chi-square Result: 76.33

Degree of freedom is calculated by the formula:
d.f = (Number of rows - 1) x (Number of columns – 1)
= (2 - 1) x (2 - 1)
= 1

Therefore, at a 0.05 level of significance and a degree of freedom (1), the critical value of the
chi-square is 3.841.

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 Iruobe et al. 89

Decision Rule: Since the computed chi-square result of 76.33 is greater than the tabulated
chi-square value of 3.841, the null hypothesis is rejected which states that tenant selection
criteria do not affect the rental housing market in Abuja, while the alternate hypothesis is
accepted which states that tenant selection criteria affect the rental housing market in Abuja.
In other words, from the chi-square test tenants’ selection criteria affects Abuja rental housing
market.

Non-Professionals
Table 17. Do you feel tenant selection criteria have an effect on the rental housing market in
Abuja?
Brand Observed Expected ( − ) ( − ) ( − )
Frequency Frequency
Yes 40 35 5 25 0.71
No 0 35 -35 1225 35.00
Total 35.71

Chi-square Result: 35.71

Degree of freedom is calculated by the formula:
d.f = (Number of rows - 1) x (Number of columns – 1)
= (2 - 1) x (2 - 1)
= 1

Therefore, at a 0.05 level of significance and a degree of freedom (1), the critical value of the
chi-square is 3.841.

Decision Rule: Since the computed chi-square result of 35.71 is greater than the tabulated
chi-square value of 3.481, the null hypothesis is rejected which states that tenant selection
criteria do not affect the rental housing market in Abuja, while the alternate hypothesis is
accepted which states that tenant selection criteria affect the rental housing market in Abuja.
In other words, from the chi-square test (Table 17), non-professionals maintain the
perspective that tenants’ selection criteria have an effect on Abuja rental housing market.

Hypothesis Two
H0: The effects of factors in tenant selection criteria are the same.
H1: The effects of factors in tenant selection criteria are not the same.

In testing the hypothesis, One-way ANOVA was used. The aim was to examine the
perspectives of both professionals and non-professionals as regarding the impact of the
factors in tenant selection criteria:

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90 Effects of Tenant Selection Criteria on Rental Housing Market

Professionals
Table 18. One-way ANOVA Test for Professionals
OPTIONS RANKS
1 2 3 4 5 6 7 TOTAL SAMPLE MEAN MEAN OF SAMPLE MEAN
PERSONAL RELATIONSHIP 0 0 0 5 20 35 25 85 11.43 12.14285714
CHARACTER 20 40 10 15 0 0 0 85 12.14
FINANCIAL STABILITY 10 20 30 15 10 0 0 85 10
FAMILY SIZE 0 5 5 15 30 15 15 85 14.29
SUSTAINABILITY OF USE 45 20 10 5 5 0 0 85 14.29
TENANCY AGREEMENT 5 0 15 35 20 5 5 85 10.71
URGENCY OF NEED 0 0 0 10 15 20 40 85 12.14
TOTAL 80 85 70 100 100 75 85 595

Calculation of Sum of Squares Between and Within

Sum of Squares Between: ( ̅ − ̿ )2 + ( ̅ − ̿ )2 +… ( ̅ − ̿ )2
Sum of Squares Within: ∑( − ̅ ) + ∑( − ̅ )2 + ∑(
2
− ̅ )2
Sum of Squares for Total Variance = (n-1): (k-1) + (n-k)
Mean Squares: S.S (Between and Within) ÷ D.F
SS Between: 114.58
SS Within: 7,428.69
SS for total Variance: 7543.27

Table 19. ANOVA Table for Professionals

Source of Critical Value at F
S.S D.F M.S F-Ratio
Variation (5%) From F-Table
Between Sample 114.58 (7-1) = 6 114.58/6 = 19.09 19.09/176.87 = 0.11 F (6, 42) = 2.34
Within Sample 7428.69 (49-7) = 42 7428.69/42 = 176.87
Total 7543.27 (49-1) = 48

In analyzing the ANOVA Table for Professionals - Table 18, table 19 shows that the
calculated value of F is 0.11 which is less than the table value of 2.34 at 5% level with df.
being v1 = 6 and v2 = 42 (approximate to 40) and hence could have risen to chance. This
analysis supports the null hypothesis that the effects of factors in tenant selection criteria are
the same. Therefore, the professionals maintain the perspective that the differences in factors
for tenant selection criteria is insignificant and only a matter of chance.

Non-Professionals
ONE WAY ANOVA ANALYSIS
Table 20. One-way ANOVA Test for Non-professionals
OPTIONS RANKS
1 2 3 4 5 6 7 TOTAL SAMPLE MEAN MEAN OF SAMPLE MEAN
PERSONAL RELATIONSHIP 0 0 0 0 5 10 25 40 7.14 5.714285714
CHARACTER 10 30 0 0 0 0 0 40 6.43
FINANCIAL STABILITY 35 5 0 0 0 0 0 40 4.29
FAMILY SIZE 0 5 5 20 10 0 0 40 6.14
SUSTAINABILITY OF USE 0 5 25 10 0 0 0 40 5
TENANCY AGREEMENT 5 0 0 13 15 7 0 40 5.29
URGENCY OF NEED 0 0 0 0 5 20 15 40 5.71
TOTAL 50 45 30 43 35 37 40 280

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 Iruobe et al. 91

Calculation of Sum of Squares Between and Within

Sum of Squares Between: ( ̅ − ̿ )2 + ( ̅ − ̿ )2 +… ( ̅ − ̿ )2
Sum of Squares Within: ∑( − ̅ ) + ∑( − ̅ ) + ∑( − ̅ )2
2 2

Sum of Squares for Total Variance: Sum of Squares Between + Sum of Squares Within.
Degree of Freedom for Total Variance = (n-1): (k-1) + (n-k)
Mean Squares: S.S (Between and Within) ÷ D.F

SS Between: 38.08
SS Within: 3779.46
SS for total Variance: 3817.54

Table 21. ANOVA Table for Non-professionals

Source of Critical Value at F
Variation S.S D.F M.S F-Ratio (5%) From F-Table
Between Sample 38.08 (7-1) = 6 38.08/6 = 6.34 6.34/89.98 = 0.07 F (6, 42) = 2.34
Within Sample 3779.46 (49-7) = 42 3779.46/42 = 89.98
Total 3817.54 (49-1) = 48

In analyzing the ANOVA Table for Non-professionals – Table 20), table 21 shows that the
calculated value of F is 0.07 which is less than the table value of 2.34 at 5% level with df-
being v1 = 6 and v2 = 42 (approximate to 40) and hence could have risen to chance. This
analysis supports the null hypothesis that the effects of factors in tenant selection criteria are
the same. Therefore, the differences in factors for tenant selection criteria is insignificant and
only a matter of chance.
Conclusions and Recommendations
In the appreciation of the effects of tenants’ selection criteria on the rental property, it has
been adjudged to be very significant to gaining consistent returns on investment (Oni, 2010)
and necessary for a long time loyalty of tenants. This has been particularly proven in real
estate businesses especially residential and commercial property type.

Selecting prospective tenants for residential properties is not an easy task as its success or
failure is contingent on the information made available to the property owners or managing
agents. In line with the data collected and its analyses, the following are the conclusion of the
findings. The profile of the respondents reveals that all the professionals (Estate Surveyors
and Valuers) have undergone educational and professional training to practice real estate
business (agency, property management, valuation, project management etc.) proficiently for
their clients (Property owners/investors). Majority of the non-professionals, on the other hand,
did not undergo any previous formal education, and in particular, the professional training or
qualification that should equip them with the requisite skills to practice the profession
competently. It has been established from the study however, that tenant selection is a notion
familiar to most landlords/managing agents. Hence, most landlords who are risk-averse
and/or their managing agents would go through lengths to ensure that their tenant-to-be is
capable of not defaulting on the terms and conditions of the lease/tenancy agreement.

From a non-professional perspective, the influence that financial stability has in priority
rankings of tenants, in terms of the selection criteria applied on them by home-owners
(landlords) and/or property managers, has towered above all other factors that have been
considered as part of management’s strategies to select, motivate and sustain the loyalty of
tenants. However, professionals (Estate Surveyors and Valuers) appear reluctant to rely on the
prospects of a tenant’s financial stability alone but are likely to identify more with the

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92 Effects of Tenant Selection Criteria on Rental Housing Market

prospective tenant’s sustainability of use and character potential. This is understandable since
from a professional perspective, it isn’t the volume of entries or requests that matter but the
quality and reliability of that prospective tenant or property user.

In considering the effects that tenant’s selection criteria have on rental housing in Abuja
rental market, the findings revealed that tenants’ selection criteria are believed (by both
professionals and non-professionals) to be having a significant effect in tenant’s loyalty and
returns on investment as a broader goal. From the study also, it was found out that the
differences in factors for tenant selection criteria is largely insignificant and only a matter of
chance, meaning that tenant selection criteria as utilized by both professionals and non-
professionals were based on what suited them. The edge the professionals may have in their
selection criteria is the prioritization of sustainability of uses above all other factors.

On a closer look at the bases for rejecting prospective tenants, most of the respondents noted
that socioeconomic status was a top consideration in letting properties, done primarily for the
unmitigated flow of returns on investment, especially when such properties were located in
the urban areas. This shows that there was class consideration or class differentials or unequal
access to tenancy opportunities. It is also acknowledged here that this situation is likely to
make the chances of getting prospective tenants slimmer, thus directly impacting on the
investment market. The study also showed that prospective tenants may have also been
rejected based on tribe or ethnicity and religion. This means that opportunities were removed
from some tenants by some stereotyped criteria not necessarily attached to individual
variability of capacity or health status.

Recommendations
Given the above conclusions, the following recommendations are provided:
The confidence or premium often placed on the financial stability of tenants as an option for
allowing prospective tenants into the premises appears very risky for landlords who may be
housing robbers and fraudsters who have the money to pay the hike in rent for apartments.
Therefore, another criterion that must be considered paramount above others is the virtue of
character as an economic value, which could guarantee peace for the landlord/managing
agents throughout the client’s tenancy as well as keeps the property in good condition.

Predicting a tenant who would be responsible and take the property as his is not an easy task.
However, certain indicators may show such an attitude of nonchalance in tenants at the outset.
Thus, ‘stress interview’ may be recommended at the very beginning to bring out the hidden
characters of prospective tenants. It may also be good to dig into the tenant’s past to find out
what made him/her exit the past apartment and how the tenant can be influenced by co-
tenants or other mischief-makers. Sometimes, the maintenance of the landlord’s property can
be traced to the strength of the tenant association with peers in his premises and what their
attitudes are.

It is also advised that due to the foresight and long-term goals of real estate sustainability that
professionals possess, they are better equipped to make efficient decisions as regarding tenant
selection criteria than their non-professional counterparts. The tenant allowed into premises is
a reflection of the quality of tenant selection criteria undertaken by the property
manager/agent. Therefore, to engage a tenant that sustains character, use and payment are
better selected by professionals than non-professionals as they have acquired the skill and
expertise required through their educational and professional qualification and training to be
able to do so.

Journal of Property Research & Construction, 4(1), 2020

 Iruobe et al. 93

Although there are more discussions about being scientific about tenant’s selection, it has
been observed that much is still given to chance factors of intuitiveness. The respondents also
displayed this. The issue of extra-scientific measures is corroborated by Bello (2008) as it was
emphasized that in rating a prospective tenant over another is often intuitively undertaken,
without any recourse to serious scientific measures (Bello, 2008).

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Journal of Property Research & Construction, 4(1), 2020