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The short answer
A shortlet caution deposit is a refundable sum a host holds against damage, missing items or rule breaches during a stay. Set it in proportion to the apartment, state the rules and the refund timeline before the guest pays, keep it separate from rent, inspect the apartment at check-out with the guest, and refund promptly with an itemised note of any deduction.
What a caution deposit is for
Shortlet apartments in Nigeria often contain expensive fittings, appliances and furniture, and guests stay for days rather than months. A caution deposit, sometimes called a security deposit or caution fee, gives the host a fund to cover damage, missing items, excessive cleaning or breaches such as unauthorised parties. It is not part of the price of the stay and should come back to the guest when nothing is wrong.
The market is large and attracting regulatory attention. A Lagos short-let market report estimated revenue at ₦264 billion in 2024, and the state government has said it intends to tighten oversight of short-lets. Hosts who run deposits fairly are better placed as rules develop.
Setting the amount
Base the deposit on what could realistically go wrong, not on the most you can ask for. A deposit that is too high discourages bookings; one that is too low covers nothing.
| Factor | Pushes deposit up | Pushes deposit down |
|---|---|---|
| Apartment value | Luxury fittings, artwork, large TVs | Simple furnishing |
| Length of stay | Long stays | One or two nights |
| Guest type | New guest, event booking | Returning guest, corporate booking |
| Rules | Parties or extra guests allowed | Strict occupancy |
Write the policy before the guest pays
The FCCPC's guidance says terms that limit a business's liability must be brought to the consumer's attention before the transaction, that information must be in plain language, and that prices must be fully disclosed. A caution deposit policy that appears only at check-in, or only in small print, invites disputes.
- The deposit amount and how it is paid.
- What it covers: damage, missing items, extra cleaning, smoking, unauthorised guests.
- What it does not cover: normal wear and tear.
- How and when the check-out inspection happens.
- The refund timeline, for example within 48 to 72 hours of check-out.
- How deductions are calculated and evidenced.
Include the policy in your listing, the booking confirmation and the house manual, and ask the guest to confirm they have read it.
Hold it separately
Mixing caution deposits with rent and running costs is the commonest reason refunds are late: the money has already been spent. Keep deposits in a separate account or pot, so you can see at a glance how much belongs to guests. When you take payment, take the stay and the deposit as two separate amounts with clear references.
Inspect, deduct fairly, refund promptly
- Photograph or video the apartment before each check-in, with a date.
- Use a short inventory checklist: appliances, remotes, linen, kitchenware.
- Inspect at check-out, with the guest present if possible.
- If something is wrong, tell the guest at once, with photos.
- Deduct only the reasonable cost of repair or replacement, with a receipt or quote.
- Refund the balance by transfer within the stated time, with an itemised note.
Prompt refunds matter for reviews. Guests often judge a host as much on how the deposit was handled as on the apartment itself.
Handling a dispute
Sometimes a guest will not accept a deduction. Most disputes are settled quickly if the host can show three things: the condition of the item before the stay, its condition after, and the cost of putting it right. That is why dated photos at check-in and check-out matter more than any wording in the policy.
- Share the evidence with the guest in writing, calmly, within a day of check-out.
- Offer the receipt or quote for the repair, not a round number.
- Refund the undisputed part of the deposit straight away, rather than holding all of it.
- Keep every message, in case the guest complains to a platform or to the FCCPC.
If damage clearly exceeds the deposit, tell the guest in writing what the extra cost is and how it was worked out. Pursuing more than the deposit is rarely worth the time for small amounts, so many hosts write it off and adjust the deposit for future stays.
Other obligations hosts forget
In Lagos, the Hotel Occupancy and Restaurant Consumption Tax Law applies a 5% consumption tax to accommodation, including short-let apartments, collected from guests and remitted to LIRS by the 20th of each month. The tax applies to the stay, not to a refundable deposit, which is another reason to keep the two separate. Check the rules in the state where your apartment is.
Guest identity details are personal data. Collect only what you need for security, store it carefully and delete it when it is no longer needed; see your data rights under the NDPA.
Where Pryme fits
Hotels and shortlets are a supported Spaces sector. A host with a Pryme Business Account can take the stay and the deposit as separate payments through bank-transfer checkout, hold deposits in a separate sub-account and refund from it, and join Spaces to reach guests holding Loans on Spaces, credit from Solid Allianze MFB that can only be spent with Spaces merchants. See pay-later for hotels; for merchant terms, ask Pryme.
Questions people ask
How much is caution fee for a shortlet in Lagos?
There is no fixed figure. Hosts set it according to the apartment's value, length of stay and house rules. It should be stated clearly in the listing before you pay.
How long does it take to get shortlet caution fee back?
It depends on the host's policy, which should state a refund timeline. Many hosts refund within a few days of check-out after inspection.
Can a shortlet host keep my caution deposit?
Only for damage, missing items or breaches covered by a policy you were shown before paying, and only for the reasonable cost, ideally evidenced with photos and receipts.
Do shortlets in Lagos pay consumption tax?
Yes. The Lagos Hotel Occupancy and Restaurant Consumption Tax Law applies 5% to accommodation, including short-let apartments, remitted to LIRS.
Sources
- FCCPC: Consumer rights and responsibilities · accessed Oct 2026
- Understanding the Hotel Occupancy and Restaurant Consumption Tax Law of Lagos State (Mondaq) · accessed Oct 2026
- Lagos moves to tighten oversight of short-let rentals (Legit.ng) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.