Land Use Charge: Real Estate Experts Demand Review

Following criticisms that have followed the introduction of the Land Use Charge Law, 2018 by the Lagos State Government, real estate experts in the  industry have called for a review of the entire legislation.

The Nigerian Institution of Estate Surveyors and Valuers, Lagos Branch, suggested that the LUC 2018 should be anchored on the basic principles of taxation, as this would ensure fairness, particularly from the taxpayers’ point of view.

The Chairman, NIESV Lagos branch, Mr. Rogba Orimalade, said that the institution, out of concern for the citizens, had studied the law, the methods, basis applied and the likely impact, and was troubled that property values had been adjusted upwards without valuation.

He stated, “We will appeal to the government to conclude the valuation exercise before adjusting assessment figures based on valuation. For the sake of transparency and best practices, when the valuation is concluded, a list should be produced and displayed in each local government area for all stakeholders to see.

“This will reduce the perception of arbitrariness and increase compliance. It makes it easier for stakeholders to compare their assessments with those of neighbouring properties.”

He said estate surveyors, as custodians of physical assets and managers of properties and facilities in the state, had articulated key suggestions and grey areas with contradictory provisions in the law, which it would be recommending to the government when they meet.

“We are aware of government’s efforts to commence the enumeration exercise in the state. Through this process, the government will obtain the real values of the properties, while also providing the necessary data on the housing stock in the state. It is our opinion that after that exercise, more people would have been brought into the tax net, thereby reducing the tax burden on the few who presently are bearing the major brunt of the taxes, through reduced charges,” he explained.

The Land Use Charge is a consolidation of the ground rent, tenement rate and neighbourhood improvement levy by the Land Use Charge Law of 2018, which was first enacted in 2001, and payable on properties in the state.

Since the bill was signed into law on February 8, 2018 by Governor Akinwunmi Ambode and launched on the 19th, it has received varied opinions and criticisms from property owners and other stakeholders in the state.

Residents of the Lekki peninsula had last week threatened to go to the Lagos State Land Use Appeal Tribunal over the new demand notices served on them under the re-enacted LUC.

The Lekki Estates Residents and Stakeholders Association, a coalition of all residents associations along the Lekki-Epe Axis from 1004 Estates to Epe, met and unanimously resolved that the members would not pay the new charges, which they said were four times higher than what they paid in 2017.

The Chairman, VGC Property Owners and Residents Association, Mr. Olusegun Ladega, said residents find the new charges extremely exorbitant and out of tune with their economic realities.

Ladega, who is also the Vice Chairman of LERSA, told our correspondent that the charges were based on unrealistic and arbitrary valuation of residents’ properties and that they had commenced the process of documentation and had set up a committee to take their case to the Lagos State Land Use Appeal Tribunal.

At a stakeholders’ dialogue forum organised by the Lagos Chamber of Commerce and Industry to discuss the LUC on Friday, representatives of the state government, property owners, estate developers and members of the Organised Private Sector were divided on the provisions of the law.

While the Commissioner for Finance, Mr. Akinyemi Ashade, tried to explain that the new law by implication would have about 75 per cent of property owners in Lagos paying about N5,000 annually as the LUC, the President of the LCCI, Mr. Babatunde Ruwase, said the country’s economic situation would not accommodate additional taxes for taxpayers.

Ruwase requested that the implementation of the new LUC law be put on hold because of the stakeholders’ complaints, while the grey areas were sorted out, adding that some key provisions in the law should be normalised in the interest of fairness, equity and natural justice.

The 1st Vice President, Nigerian Institute of Building, Mr. Kunle Awobodu, told our correspondent that on the surface, the law appeared simple but a careful assessment showed some financial implications on property owners and tenants.

According to him, if the economy is favourable, the law will not have been so criticised by residents.

He said, “The present situation is not favourable for everyone. Many tenants are finding it difficult to meet their daily needs and many others have vacated their accommodation secretly, while still owing their landlords. So, people see the LUC as a punishment rather than a way of generating revenue for development.

“Tenement rate and other land use charges have been there but were not being paid regularly so the state is trying to regularise it and generate revenue but at a wrong time. It could have been better received if there was general improvement in the income of people; more people would have been willing to pay because it is not a bad idea, but the timing is very wrong.”