Your Guide to Legally Operating a Shortlet in Nigeria’s Hot Market

Short-term rentals (often referred to as shortlets) are booming in cities like Lagos, Abuja, and Port Harcourt, as well as in smaller markets like Ilorin. But unlike hotels, shortlets must navigate a patchwork of rules.

Nigeria has no single national “shortlet license,” so you must juggle federal registration with state and local requirements. In practice, that means registering your business (CAC), getting a Tax ID and paying federal/state taxes, securing any local council permits, and meeting safety or zoning rules.

Key states are already tightening the rules, as key states like Lagos, Abuja, and Port Harcourt have started implementing policies to regulate the industry. Read on for a practical breakdown of what to do (and what to watch out for).

1. Register Your Business and Tax Identity

First, set up your shortlet as a legal business. You must register with the Corporate Affairs Commission (CAC). Having a registered company or business name protects you and shows you’re serious. You’ll also need a Federal Tax Identification Number (TIN) and must file returns with the Federal Inland Revenue Service (FIRS). In other words, your rental earnings are taxable. Registering for tax lets you pay the right income (or company) tax on profits, and avoid penalties. (Hosts often underestimate this: one expert stresses that “tax compliance is non-negotiable,” meaning you file under your TIN and remit taxes on rental income.)

Tip: The finance police also require some hospitality businesses to get a Special Control Unit Against Money Laundering (SCUML) certificate. This is a formality for many lodging businesses. In short: before renting out, get your CAC certificate, SCUML (if needed), and TIN in hand.

2. Permits & Zoning: Local Government Rules

Nigeria has no single shortlet permit, but local rules matter a lot. Many local governments treat shortlets as commercial lodging. For example, Lagos has a Hotel Occupancy/Consumption Law that effectively brings short-let homes under the hotel regulations. This means you may need a lodging permit or certificate from Lagos State (and possibly from your Local Government). In other states and cities, check with the relevant tourism or development agency.

You should also confirm the zoning and estate rules: Is your area zoned for guest housing? Some estates or residential areas forbid “hotel use” without special approval. Always get written consent if you’re a tenant; a landlord’s permission is usually required for subletting. In gated communities or planned estates, you may have to register with the homeowners’ association. In short, treat your shortlet like a small hotel: ask the LGA/Township office if any license is needed and obey building/zoning rules.

3. Taxation and Local Levies

Running a shortlet means tax and levies at multiple levels. All rental income must be declared on your tax return. If you operate as an individual, pay Personal Income Tax on the profits; if you are incorporated, pay Company Income Tax. Lagos and other states also impose a Land Use Charge or property tax on the value of the building (this has replaced old ground rent and rates); make sure your property is registered in your name so the state can bill you.

Beyond income tax, remember these:

• VAT (Value-Added Tax): If you charge for services (cleaning fees, breakfast, concierge, etc.), you must account for 7.5% VAT on those fees.
• Withholding Tax: Sometimes, platforms or agents deduct 5–10% on your behalf if they consider your rental as a “service.” Treat that as advance tax paid for you.
• Local Government Levies: Your LGA may have small business levies (e.g., a neighbourhood tax or a shop signboard fee if you advertise your shortlet). It varies by local council.
• In practice: get your TIN (if you haven’t already), file monthly/annual returns as required, and pay all applicable dues. Staying registered with FIRS avoids headaches, especially now that Lagos officials plan tighter tax enforcement on shortlets.

4. Safety Standards and Insurance

Shortlets aren’t regulated like hotels, but safety cannot be ignored. Lagos regulators have already warned operators to up their safety game. At minimum, install fire extinguishers, smoke alarms, and working locks on all exits. Check that electrical installations meet the Nigerian code. Think like a hotel: if guests have a family emergency, you don’t want gaps in safety.

Insurance is strongly recommended. Most hosts aren’t legally required to buy insurance, but it’s your fallback against theft, fire, or accidents. As one expert puts it, “Insurance is your safety net against unforeseen damages”. A decent property/occupiers insurance and a liability policy (to cover guest injuries) will protect your investment if something goes wrong.

5. Common Regulatory Tensions

Because shortlets blur the line between homes and hotels, expect some friction. Lagos’s market report notes stricter scrutiny is coming: the government will enforce heavier taxes, safety checks, and guest-verification protocols on shortlet operators in 2025. (In other words, the honeymoon is ending – compliance is crucial.)

Violating rules can trigger action: local authorities or homeowner associations could levy fines or even seek eviction suits.

Watch for pushback from established hospitality interests. While Nigeria has no official ban, some hotel associations quietly lobby for new rules on shortlets. On the ground, irritated neighbors or estate managers might complain about noise or security. To avoid trouble, be transparent: register your business, display any required permit, collect guests’ IDs, and follow tenancy laws. Keeping organized records (bookings, receipts) will also help if any tax or compliance questions arise.

For city-specific tips, Lagos owners must abide by Lagos state laws (and pay Lagos’s new Land Use Charge). In Abuja/FCT, shortlet operators often liaise with the FCT Tourism Board and pay FCT taxes as directed. Rivers State (Port Harcourt) has a Tourism Development Agency, and while it mainly promotes travel, it’s wise to check with them about licensing. Even in places like Ilorin (Kwara State), the same CAC registration, TIN filing, and local council business permit rules apply; enforcement may be lighter, but the requirements are similar.

Quick Compliance Checklist

• Register your business with CAC (as Ltd or business name) and obtain a TIN.
• Get any anti-money-laundering clearance (SCUML certificate) if you advertise or manage payments.
• Secure local permits: trade/business permit from LG, signboard license, etc. In Lagos, also follow the Hotel Occupancy Act.
• Check zoning/estate rules: confirm your area allows short stays; get landlord/HOA approval in writing.
• File and pay taxes: declare all rent income. Stay up-to-date on income tax (PITA/CIT), VAT on services, and state levies like the Land Use Charge.
• Maintain safety & insurance: equip your property with fire extinguishers, alarms, and secure locks. Consider liability/property insurance to cover accidents.
• Keep good records: retain receipts, guest registers, and contracts. This helps if any authority (or tax office) asks questions.
• Stay informed: Laws evolve. Follow updates from CAC, FIRS, your state tourism, or local government council. Reach out to associations (e.g, a business owners’ group) for tips.

Also, always stay tuned to our website for hot tips and updates.

Following these steps will keep your shortlet on firm legal ground. Nigeria’s short-rental market is booming, just make sure the law stays on your side.