Project – Short-Let Conversion, Long-Term Rental Supply and Housing Affordability: A Neighbourhood-Level Analysis of Selected Areas in Lekki, Lagos State.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Housing is one of the basic necessities of human life because it provides shelter, security, privacy and a suitable environment for personal and family development. Beyond its social importance, housing is an important component of urban development and economic activity, contributing to employment, investment, wealth creation and the general quality of life of residents. In urban areas, the availability of housing is influenced by population growth, household formation, income levels, land availability, construction costs, investment decisions and the activities of property owners and real estate developers. Where the demand for accommodation grows faster than the supply of suitable housing, rental costs may increase and households may experience difficulties securing affordable accommodation. This challenge is particularly significant in rapidly expanding cities where residential properties serve both as homes and as investment assets. The United Nations Human Settlements Programme (UN-Habitat, 2020) identifies access to adequate and affordable housing as a central component of sustainable urban development, while the World Bank (2016) emphasises the importance of well-functioning housing markets in responding to urban housing demand.

The development of digital platforms and changing patterns of travel, tourism and business activities have contributed to the expansion of short-term rental accommodation in many urban property markets. Short-term rentals, commonly referred to as short-lets, involve the letting of furnished residential properties for relatively brief periods, often ranging from a few days to several weeks. These arrangements differ from conventional long-term residential tenancies, which generally involve longer occupancy periods and periodic rental payments. Short-let accommodation is commonly marketed through online platforms and property-management channels, offering visitors, business travellers, tourists and temporary residents flexible accommodation outside the conventional hotel system. For property owners, short-lets may provide opportunities to earn higher gross rental income, respond to changing demand and maintain greater flexibility over the use of their properties. Guttentag (2015) explains that peer-to-peer accommodation platforms have changed the structure of tourist accommodation by connecting property owners directly with temporary users, while Gurran and Phibbs (2017) discuss how the expansion of short-term accommodation creates new challenges for urban housing and planning systems.

Although short-let accommodation provides investment and hospitality opportunities, its expansion may also influence the supply of properties available for conventional residential tenancy. When landlords or investors convert properties previously occupied by long-term tenants into short-let apartments, some residential units may be withdrawn from the traditional rental market. The extent of this effect depends on whether the short-let property represents an additional housing unit, a previously vacant property, an owner-occupied property or a unit that would otherwise have been available for long-term letting. Where substantial numbers of existing rental units are converted, the stock of accommodation available to households seeking annual or multi-year tenancies may decline. This can intensify competition among prospective tenants, particularly in neighbourhoods where residential demand is already high. Horn and Merante (2017), in their study of Airbnb and rental housing in Boston, found evidence that increased short-term rental activity was associated with higher rents in affected neighbourhoods. Similarly, García-López et al. (2020) examined the effects of Airbnb on the housing market in Barcelona and found that short-term rental activity contributed to increases in rents and property prices, with effects varying across locations.

The relationship between short-let conversion and long-term rental supply is therefore an important issue in understanding contemporary urban housing markets. Long-term rental supply refers to the number of residential housing units available for occupation under conventional tenancy arrangements, including annual and other extended rental agreements. It is affected by new housing construction, the conversion of existing properties, demolition, vacancy rates, investment decisions and changes in the preferred use of residential buildings. Short-let conversion may alter the composition of rental housing supply even where the physical number of residential buildings remains unchanged. For example, an apartment that previously accommodated a household under an annual tenancy may be operated as a furnished short-let property for multiple temporary occupants. This does not necessarily mean that the total housing stock has reduced, but it may mean that fewer units are accessible to households searching for long-term accommodation. Barron, Kung and Proserpio (2021) demonstrate that the growth of Airbnb listings can affect both house prices and rents, illustrating how the reallocation of residential properties to short-term use can influence conventional housing-market outcomes.

Housing affordability is another important consideration in the expansion of short-let accommodation. Housing affordability concerns the ability of individuals and households to obtain and maintain suitable accommodation without sacrificing an unreasonable proportion of their income or compromising other essential needs. In rental markets, affordability is commonly assessed by comparing rent with household income, with the rent-to-income ratio serving as one of the widely used measures. When rents rise faster than household earnings, tenants may be forced to occupy smaller accommodation, relocate to less accessible neighbourhoods, share housing with others or devote a larger proportion of their income to rent. Short-let conversion may contribute to affordability pressures where it reduces the availability of long-term rental properties or encourages landlords to compare conventional rent with the potentially higher returns obtainable from short-term letting. However, affordability is also influenced by inflation, construction costs, land values, household income, interest rates, infrastructure and general housing supply. Consequently, the relationship between short-let activity and rental affordability requires empirical examination rather than the assumption that short-let conversion is the only cause of rising rents. Akinwande and Hui (2024), in their examination of affordable housing provision in Lagos, identify socioeconomic, land-related and urbanisation constraints as important factors affecting access to affordable accommodation.

In Nigeria, the growth of short-term rental accommodation has become increasingly visible in major urban centres, particularly Lagos and Abuja, where business activities, tourism, entertainment, commercial development and population movement generate demand for flexible accommodation. Lagos is an important property market because of its concentration of economic activities, employment opportunities, commercial establishments and residential developments. The growth of online booking platforms and property-management services has made it easier for property owners to advertise furnished apartments to temporary occupants. In a study of the short-term rental housing market in Lagos, Oyedeji, Oyesomo, Ogunleye, Adedamola, Oyedeji and Ogunyinka (2025) found that conversion of residential properties was a major source of short-term rental supply and reported that the market required improved regulatory attention. A related comparative study by Oyedeji, Ogunyinka and Kuo (2025), covering Lagos and Abuja, also identified the conversion of investment residential properties and long-leased housing as important sources of short-term rental supply. These Nigerian studies establish the relevance of examining how short-let operations interact with the conventional residential rental market.

Lekki, within the Eti-Osa and Ibeju-Lekki axis of Lagos State, provides a significant setting for examining the relationship between short-let conversion, long-term rental supply and housing affordability. The area has experienced substantial residential and commercial development, supported by its connection to major business districts, hospitality facilities, shopping centres, educational institutions, leisure destinations and emerging infrastructure. Its neighbourhoods contain different categories of residential accommodation, including apartments, terraces, detached houses, gated estates and serviced apartments. These characteristics create opportunities for both conventional residential letting and short-term accommodation investment. However, the attractiveness of the area to investors and temporary visitors may also influence landlords’ decisions about the most profitable use of residential properties. Research on housing development in the Lekki and Ikorodu peri-urban areas by Adedire, Iweka and Adebamowo (2017) demonstrates the importance of land affordability, accessibility and housing investment in shaping residential development patterns in Lagos. In addition, Oyedeji et al. (2025) provide evidence that conversion of residential properties is an important source of short-term rental supply in Lagos.

Despite the increasing visibility of short-let accommodation in Lagos, the implications of its conversion for long-term rental supply and housing affordability may differ from one neighbourhood to another. Neighbourhoods vary in property types, rental values, accessibility, infrastructure, security, commercial activity, population characteristics and demand from temporary occupants. These differences may influence the extent to which landlords convert residential units to short-lets and the consequences for households seeking conventional rental accommodation. A neighbourhood-level analysis is therefore important because state-wide or city-wide assessments may conceal variations between individual residential areas. It is necessary to establish the extent and pattern of short-let conversion in selected Lekki neighbourhoods, examine whether such conversion is associated with changes in long-term rental supply, and assess its relationship with rental affordability. This study is consequently designed to investigate short-let conversion, long-term rental supply and housing affordability through a comparative assessment of selected neighbourhoods in Lekki, Lagos State.

1.2 Statement of the Problem

The expansion of short-let accommodation has introduced new investment opportunities into the residential property market, particularly in urban locations with strong demand for temporary accommodation. Property owners may prefer short-term letting because it offers flexibility, frequent rental payments and the possibility of generating higher gross returns than conventional residential tenancy. However, when existing residential properties are converted from long-term rental use to short-let accommodation, the number of housing units available to households seeking conventional tenancies may decline. This creates a potential conflict between the profitability of short-let investment and the need to maintain an adequate supply of long-term residential accommodation. Although international studies have established that short-term rental expansion can influence rental prices and housing supply, the extent of these effects depends on local housing-market conditions and the proportion of properties being converted (Horn & Merante, 2017; Barron et al., 2021).

In Lagos State, the growth of short-term rental accommodation has become an important development in the property market. The availability of online booking platforms, increasing commercial activities, demand for furnished accommodation and investment opportunities has encouraged property owners and managers to participate in short-let operations. Research by Oyedeji et al. (2025) identified the conversion of residential properties as a major source of short-term rental supply in Lagos, while their comparative study of Lagos and Abuja also identified the conversion of investment properties and long-leased residential properties as important sources of short-let accommodation. Despite these findings, the actual implications of such conversions for the availability of conventional long-term rental housing require further investigation, particularly within individual neighbourhoods where property-market conditions may differ.

Another problem concerns the affordability of residential accommodation in selected areas of Lekki. The area has attracted considerable residential investment and commercial development, making it an attractive location for property owners, investors, professionals and temporary visitors. However, the attractiveness of the neighbourhoods to short-term occupants may create incentives for landlords to convert properties previously offered for long-term tenancy into furnished short-let apartments. Where this practice becomes widespread, households seeking conventional accommodation may face fewer available rental options and increased competition for suitable properties. This may place additional pressure on rental values, especially for households whose incomes do not increase at the same rate as housing costs. Nevertheless, rental affordability is influenced by several other factors, including household income, inflation, property location, construction costs, infrastructure and general housing demand. It is therefore necessary to examine the specific contribution of short-let conversion rather than attribute all rental increases to short-term accommodation activities (Akinwande & Hui, 2024; García-López et al., 2020).

Furthermore, there is a need for neighbourhood-level evidence that compares the extent of short-let conversion, the availability of long-term rental properties and housing affordability across selected areas of Lekki. Broad assessments of the Lagos property market may not adequately reveal differences between neighbourhoods in terms of the number of converted properties, rental values, property types and the experiences of conventional tenants. Without such comparative evidence, property owners, estate surveyors and valuers, housing policymakers and urban planners may find it difficult to understand the extent to which short-let conversion is affecting the conventional rental market in particular locations. This study therefore seeks to investigate short-let conversion, long-term rental supply and housing affordability in selected neighbourhoods of Lekki, Lagos State, with a view to providing empirical evidence that can support informed property investment decisions and more balanced urban housing policies.

1.3 Objectives of the Study

The main objective of this study is to examine the relationship between short-let conversion, long-term rental supply and housing affordability in selected neighbourhoods of Lekki, Lagos State.

The specific objectives are to:

1. Examine the extent and pattern of conversion of residential properties from long-term rental accommodation to short-let apartments in selected neighbourhoods of Lekki.

2. Assess the effect of short-let conversion on the availability and supply of long-term rental accommodation in the selected neighbourhoods.

3. Examine the relationship between short-let conversion and the affordability of long-term rental housing in the selected neighbourhoods.

4. Compare variations in short-let conversion, long-term rental supply and housing affordability across the selected neighbourhoods of Lekki.

1.4 Research Questions

The following research questions will guide the study:

1. What is the extent and pattern of conversion of residential properties from long-term rental accommodation to short-let apartments in selected neighbourhoods of Lekki?

2. What effect does short-let conversion have on the availability and supply of long-term rental accommodation in the selected neighbourhoods?

3. What relationship exists between short-let conversion and the affordability of long-term rental housing in the selected neighbourhoods?

4. What variations exist in short-let conversion, long-term rental supply and housing affordability across the selected neighbourhoods of Lekki?

1.5 Research Hypothesis

The following null hypothesis will be tested at a 0.05 level of significance:

H₀: There is no statistically significant relationship between short-let conversion, long-term rental supply and housing affordability in selected neighbourhoods of Lekki, Lagos State.

1.6 Significance of the Study

This study will be significant to property owners and real estate investors because it will provide information on the implications of converting residential properties into short-let accommodation. Property owners will gain a better understanding of how short-term letting may influence the availability of conventional tenants, rental income opportunities and the long-term use of residential properties. The findings may also assist investors in evaluating the advantages and possible market implications of short-let investment before making property-use decisions.

The study will benefit estate surveyors and valuers, property managers and real estate consultants by providing neighbourhood-level information on the relationship between short-let conversion and conventional rental housing. Such information may support property-market analysis, rental valuation, investment advisory services and property-management decisions. It may also assist professionals in understanding how differences in neighbourhood characteristics influence the demand and supply of short-let and long-term rental accommodation.

The findings will be useful to housing policymakers and government agencies responsible for urban development, housing and property-market regulation in Lagos State. Evidence concerning the conversion of residential properties and its possible implications for housing affordability may support the development of appropriate policies for balancing short-let investment with the need to maintain sufficient long-term rental accommodation. The study may also provide information for considering registration, monitoring and regulatory measures for short-let operators.

The study will also benefit tenants and prospective residents of Lekki by providing information on factors that may influence the availability and affordability of long-term rental accommodation. Greater understanding of the relationship between short-let conversion and the conventional rental market may encourage informed housing decisions and create awareness of the changing nature of residential accommodation in the selected neighbourhoods.

Finally, the study will serve as a reference material for students, researchers and academics in estate management, urban planning, housing studies and property development. It will contribute to the literature on short-term rental accommodation in Nigeria, particularly by focusing on the neighbourhood-level relationship between property conversion, long-term rental supply and housing affordability. It may also provide a basis for future studies examining short-let regulation, rental-market changes and the sustainability of urban housing systems.

1.7 Scope of the Study

The study will focus on short-let conversion, long-term rental supply and housing affordability in selected neighbourhoods of Lekki, Lagos State. It will examine residential properties converted from conventional long-term rental accommodation to short-let apartments, the factors influencing such conversions and the implications for the availability of long-term rental housing.

The geographical scope will cover selected neighbourhoods within the Lekki axis. The specific neighbourhoods will be identified during the research design based on their residential characteristics, presence of short-let accommodation, accessibility and availability of relevant property-market information.

The content scope will cover three major variables: short-let conversion, long-term rental supply and housing affordability. Short-let conversion will be examined through the extent, pattern and reasons for conversion. Long-term rental supply will be assessed through the availability of properties for conventional tenancy, changes in the number of available rental units and landlords’ decisions concerning property use. Housing affordability will be examined through rental values, household income and the proportion of income committed to rent.

The study will involve relevant stakeholders, including property owners, estate agents, property managers, tenants and other persons with knowledge of the selected neighbourhoods’ rental markets. It will not cover the entire Lagos State property market or all categories of temporary accommodation, such as hotels and conventional guest houses, except where they are relevant for distinguishing short-let residential properties from other accommodation types.

1.8 Operational Definition of Terms

Short-Let Accommodation: Furnished residential properties made available for temporary occupation, usually for periods ranging from a few days to several weeks, rather than under conventional long-term tenancy arrangements.

Short-Let Conversion: The process through which an existing residential property previously used or intended for conventional long-term rental accommodation is changed to short-term rental use.

Long-Term Rental Supply: The number of residential housing units available for occupation under conventional tenancy arrangements, usually involving extended rental periods such as six months or one year and above.

Housing Affordability: The ability of individuals or households to obtain and maintain suitable residential accommodation without committing an unreasonable proportion of their income to rental payments.

Rental Value: The amount of money payable by a tenant to occupy a residential property for an agreed period under a tenancy arrangement.

Neighbourhood-Level Analysis: An examination of housing-market conditions and variations across distinct residential areas rather than treating the entire city or state as one uniform market.

Residential Property: A building or housing unit designed or used primarily for human habitation, including flats, apartments, terraces, detached houses and other residential accommodation.

Property Owner: An individual, company or organisation with legal ownership or recognised authority over a residential property and the right to determine its permitted use, subject to applicable laws and agreements.

Property Manager: A person or organisation responsible for managing residential properties, including tenant relations, rent collection, maintenance, occupancy arrangements and other property-related activities.

Rent-to-Income Ratio: The proportion of a household’s income spent on rental accommodation, used in assessing the affordability of housing.

Selected Neighbourhoods: The specific residential areas within the Lekki axis of Lagos State that will be chosen for investigation in this study.

Project – Short-Let Conversion, Long-Term Rental Supply and Housing Affordability: A Neighbourhood-Level Analysis of Selected Areas in Lekki, Lagos State.