Proposed Lagos Land Use Charge Law May Face Implementation Hurdles – Experts

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There are strong indications that the implementation of the yet to be fully enacted Lagos Land Use Charge Law 2017 may spark resistance from industry operators unless lawmakers tinker with some of its provisions.

The proposed law, which repealed the Land Use Charge Law 2001, titled Land Use Charge 2017 and For Connected Purposes, seeks to increase the state’s revenue generation base by bringing more taxable properties into the tax net.

The 27-section bill harmonised Land Rates Law, Neighbourhood Improvement Charge Law and Tenement Rates Law. The bill, if passed into law, will end all other rates on land except the Land Use Charge.

Already passed by the Lagos State’s House of Assembly and awaiting the governor’s assent, the proposed law has stirred up the hornet’s nest following some provisions; stakeholders consider unfair to property owners.

Titled: “A Bill for a Law to Provide for the Consolidation of Property and Land Based Charges and Make Provisions for the Levying and Collection of Land Use Charge in Lagos State and for Connected Purposes”,

The bill, in one of its provisions, states that “the annual amount of the Land Use Charge payable for any Property shall be arrived at by multiplying the market value of the property by the applicable relief rate and annual charge rate, using the prescribed formula.

“The land value and building value rates constituting the market value of the property shall be reviewed at least once every five years on the basis of information available to professional valuers, and may vary from area to area.

The Land Use Charge bill also provides that charge will be payable in respect of property that is not exempted under Section 12 of the law.

Amongst the properties exempted from the proposed law are, property owned and occupied by a religious body and used exclusively as a place of worship or religious education; public cemeteries and burial grounds as well as property used as a registered educational institution and certified by the commissioner to be non-profit making.

The proposed law also seeks to exempt any property specifically exempted by the Executive Governor by notice published in the State Official Gazette and palaces of recognized traditional rulers and chiefs in the state.

However, the law made it clear that an exempted property shall become liable for Land Use Charge if the use of such property changes to one that does not qualify for exemption.

Under the old Land Use Charge Law, some of the criticisms against it were the formula the government used to arrive at the capital values of properties by carrying out the valuation of properties without involving professional estate surveyors in the process and usurpation of local governments’ statutory right on tenement rate collection, amongst others

Already, some professionals have been quoted as picking holes in the latest bill based on some of its provisions they claim could discourage investments in real estate in the state.

For instance, a leading estate surveyor and valuer, Chief Kola Akomolede, was quoted by a newspaper as saying that the basis of computation of charges on properties as contained in the proposed law is faulty.

Specifically, he flawed the use of annual value and not the capital value to compute tenement rate in the bill as undesirable, pointing out that the same approach was used in the old law and that is quite unreasonable.

While recalling that the approach led to many court cases before the government reduced the rates down in the old law, Akomolede suggested that what the government needed to do  is to put the annual charge on the annual value of each property such that if the rental income from the property is N2 million, the land use charge should be based on that amount and not the capital value of the property.

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