AN EXAMINATION OF THE EFFECTIVENESS OF TENANT’S SELECTION IN OSOGBO RESIDENTIAL PROPERTY MARKET

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ABSTRACT

Choosing a tenant is a key issue in the housing rental market. Knowing, a priori, whether a tenant will pay the rent on time, be able to hold a good relationship with the neighbors or take care of the property (i.e. whether s/he will be   a “good” tenant) is not a simple endeavor. It is crucial, however, as it can help save time, money and conflicts that can end up in court. This study aims to address the effectiveness of tenant’s selection in Osogbo Residential Property Market. Simple random sampling technique was used in participant selection because of the difference in the characteristics of the samples. A total of 545 respondents who were either tenants residing in multi-tenanted low-income residential properties, estate surveyors and valuers, and some property owners were randomly selected. Only 230 out of the participants responded, representing 100% of the distributed questionnaire. Being a survey design that tested the correctness of the observed frequency of responses, percentage distribution was initially used to describe the pattern of responses of the participants while non parametric binomial test statistics was used to test the statistical significance of the observation. Results of the study revealed that a significant number of the participants do not know what property management practices are and therefore it is not sought for or used. The importance of a correct classification and selection of tenants, and the evaluation system created can serve as a decision support for the decision making of landlords and real estate agents. The research concluded that property management is as important as property development as the lack of it eventually diminishes the national housing stock, apart from constituting a waste of scare economic resources. This is because effective property management takes into consideration the tenant selection process, to promote better living relations and conditions.

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

The recent economic crisis significantly affected Europe, driving down almost all economic activities; and the real estate industry was no exception. This is of relevance, because the real estate market not only has an undeniable importance for economic development, but is also   a cornerstone of other economic activities: the real estate market provides shelter to other domestic services (Goodhart & Hofmann, 2007). Although signs of recovery from the crisis are beginning to emerge, the unique characteristics of the conjuncture it created in the real estate market cannot be overlooked, namely: a lack of liquidity; heterogeneity of assets; and decreasing sales in almost all segments of the real estate industry (Cheng, Lin, & Liu, 2008; Lin & Liu, 2008; Cirman, Pahor, & Verbic, 2015). In the residential rental market, in particular, understanding these unique characteristics is important to ensure minimum rent/price volatility, regardless of the economic conjuncture. Although it is the foundation of almost all the other markets, the real estate market is quite distinct from other economic activities, in particular due to “the fact that its ‘product’ is not portable” (Case, Goetzmann, & Rouwen- horst, 2000, p. 2). Yet, as noted by Carter (2011, p. 159), “acquiring shelter is an economic activity in which virtually all members of society participate, either in the rental or owner-occupied markets”. This is true not only of individuals, but also organizations, such as firms, hospitals, police departments, government buildings and farms, among many others, that depend on the real estate market to physically exist. The real estate market is not only a basis for other economic activities, but also plays a decisive role in the.