The Lagos State Government recently repealed its Land Use Charge Law (LUCL) 2001, replacing it with a new Land Use Charge Law, 2018.
The amendment is for the purpose of increasing the state government’s internally generated revenue and expanding its tax base.
The state government also extended the period for the payment of all annual Land Use Charge Demand Notices for 2018 to Saturday, April 14, 2018. This is to enable property owners and affected occupiers take the option of enjoying the discounts available for the prompt and early payment of LUCL invoices.
The interesting take away from the reenactment is the exemption of senior citizens (70 years and above) who live in their own houses from paying Land Use Charge.
The same applies to properties owned by religious and not-for-profit organisations where such properties are not profit-yielding.
The state Commissioner for Finance, Mr. Akinyemi Ashade, said prior to the review, only a small fraction of taxable properties were actually remitting Land Use Charge to the government.
Ashade said property enumerators were being deployed across the state to verify not only the dimensions and reasonable market value of properties to enhance the accuracy of Land Use Charge determination.
According to the new law, a property solely occupied by the owner for residential purpose will be charged at a rate of 0.076 per cent per annum
A property occupied by the property owner and tenant(s) or third parties will be charged 0.256 per cent per annum
An investment property fully occupied by tenants or third party(ies)for revenue generation will be charged at 0.76 per cent per annum.
However, barely 24 hours after the announcement, property owners in the state have come out to criticise the new law, describing the timing as insensitive.
A resident who declined to give his name said, “I have just received the land use charge notification for this year; it has gone up 450 per cent. The justification is that the Lagos State House of Assembly on January 28, re-enacted the land use law which has necessitated an adjustment in the tariff. This adjustment became effective on February 8. I have looked at the basis for calculation and not only has the percentage rate increased from 0.394 to 0.761000, they have valued the house far in excess of its market value to maximise revenue,” the resident said.
“Who hikes taxes by 450 per cent with 11 days’ notice? To compound matters there’s a threat of penalty payments ranging from 125 per cent to 200 per cent of this bill if payment isn’t made between April and August. How on earth can we continue like this?” the resident asked.
The complaint of this property owner resonates with most of the complainants who spoke with Daily Trust on the new law.
The organised private sector also seems to think in the same direction.
The President of the Nigeria Employer Consultative Forum (NECA), Mr. Larry E. Ettah, at a press conference, said, “The recent amendment of the land use charge law is a classic case of insensitivity, alienation and gross disregard of the current state of wellbeing of both corporate entities and residents.”
Ettah said in reality the new law expected property owners in Lagos State to pay at the very minimum a monstrous, appalling and callous increase of over 200 per cent, and in some instances over 500 per cent in Land Use Charge.
“It is not as if the income of a property owner has gone up significantly to justify this outrageous law. More so, the real estate sector continues to wallow in deep recession with high vacancy rates,” he added.
To compound matters, he said, “There is a repugnant and odious penalty payment ranging between 125-200 per cent if payment is not made between April and August.”
NECA hinted that the organised private sector (OPS) would do everything legal and legitimate; including social resistance, to challenge this “unfair and unjustifiable law.”
But a top management personnel of the Lagos State Government told Daily Trust that the new law had succeeded in harmonising tenement rate, the land use charge and the neighbourhood development levy.
He said there were misconceptions and lack of understanding around the new law and the numerous inherent incentives that came with it.
He noted that whatever was the valuation of the property involved, 40 per cent was immediately discounted.
For instance, the official said if a property was valued at N10m, a discount of 40 per cent would bring the value to N6m. The ground rent would be 0.7m, which translated to N7.60k for every N1,000 worth of that property.
Therefore, for the N10m property, it will come to N7,600 for an owner occupier.
If the property is a commercial property, the amount translates to N76,000, not more than 10 per cent of the value of the rent. Where the property owner stays in the same property with tenants, the rate is 0.25 per cent, which in the case of a N10m valuation, will translate to N25,000.