Oredola Adeola, Lagos
The Land Use Charge(LUC) law which was recently assented by Governor Akinwunmi Ambode, is expected to serve as a source of increasing the state's internally generated revenue (IGR) and to expand its tax base, being part of the N897bllion projected receipts to cover N1,046,121,181,680.00 , Y2018 budget.
Recall that the state government through the Assembly repealed its 2001 Land Use Charge Law, and replaced it with the new Land Use Charge Law 2018, attributing it to inadequacies and lack of coordination.
Based on the new amendment, all Property and Land Based Rates and charges including; the Tenement rates law, Land rates Law, neighbourhood Improvement charge and all other similar property charges, would be harmonised and paid as a bill.
Having conducted a critical perusal of the whole LUC law, and as laudable as it is, there are issues that needed clarification before every Lagosians will begin to feel the heat of the law, which takes effect from Wednesday March 1, 2018.
What is obvious with the new law, is the introduction of a land use charge formula, that ensures that assessments are based on ‘market’ or commercial value of land and improvements verified by professional evidence of the Estate valuers appointed by the States.
But in a recent review conducted by Proshare, it was discovered that an annual Land Use Charge on the market value of a property, is an inequitable form of taxation, as the owner of the property will not be receiving the market value of the property on an annual basis.
So, if you don’t know what is about to hit you, as tenant and landlord in Lagos. I have helped you with the simple analysis below:-
*The Land Use Charge payable on any property is calculated by multiplying the market value of the property by the applicable relief rate and annual charge rate using the prescribed formula.
For instance if property is solely occupied by the owner for residential purpose, the owner will be charged at a rate:-
LUC = 0.076% per annum x market value of the building
e.g if the property is valued at N9,000,000
N9,000,000 x 0.076% = N 6,840
If a property is occupied by the property owner and tenant(s) or third parties, the property will be charged at a rate:-
LUC = 0.256% per annum x market value of the property
e.g for a property valued at N20,000,000,
N20,000,000 x 0.256%= N51,200
For an investment property fully occupied by tenants or third party/parties for revenue generation, such a property will be charged at a rate :
LUC = 0.76% per annum x market value of the property
e.g If the property is worth N500,000,000
N500,000,000 x 0.76% = N3,800,000
For every vacant properties and open empty land in the state, such will be charged at :
LUC = 0.076% per annum x market value of the vacant property/open land.
For instance, a private homeowner in the suburb of Lagos ( e.g Abule Egba) who paid N3000 in 2015, during former Governor Babatunde Fashola's administration, must be prepared to pay N7,000 per year ( if not more)
PENALTY
This is what the State Government will serve you as a form of penalty for not paying :-
*The sanction for non-compliance or defaulters based on the law has been increased to a maximum fine of Two Hundred and Fifty Thousand Naira (N250,000), from One Hundred Thousand Naira (=N=100,000) as provided in the 2001 Legislation.
*The new legislation has extended the enforcement rights of the State to include a civil action against the defaulters to recover the accrued LUC.
*This right include the power to jail defaulters for a period up to three (3) months, or to both the fine and the term of imprisonment.
Collecting agents and Enforcers:-
Meanwhile, the State Government has given power under the new law to each Local Government Area(LGA) / Local Council Development Area(LCDA) in the state, to function in capacity as collecting authority for land use charge.
The LGA/ LCDA will under the LUC law, be the only body empowered to levy and collect the land use charge within its specified jurisdiction.
Note that the LUC is only payable on ALL properties except those exempted under Section 12 of the new Land Use Charge Law, 2018.
*ADR / Tribunal / Court for settlement of dispute on LUC law
Also worthy of note is the fact that every dispute on payment and other related matters would be addressed through Alternative Dispute Resolution (ADR).
Meanwhile, if the ADR does not resolve the dispute within 45 working days of the first session or when the mediator declares a deadlock, the mediation shall be deemed inconclusive and all the parties involved shall be at liberty to resolve their dispute formally at the Special Tribunal established by the LUC law.
The Special Tribunals that have been reduced from 15 to 9, have also been given the power to adopt decisions obtained from the ADR. Issues of dispute can also be heard in the Courts.
However If we all permit this law to fly, then we should be ready to face the consequences, one of which is astronomical increment in rents.
This may not affect Landlords or property owners much, as they have little to lose, but the impact would be daunting on tenants and average workers, who have not had pay increase, but must prepare for rent increment no matter how they wish.
Recall that under the forces of demand and supply, Lagos landlords and property owners may be forced to pass the LUC rate on the amount payable by their tenants and occupants, this is under a recessed-economy.
Also worrying is the fact that owners of unoccupied properties and pieces of land would also be forced to pay LUC thereby further creating more challenges for buyers.
Therefore , we all must join every right-thinking groups to demand the downward review of this new policy.
If care is not taken, Land Use Charge, passed on poor tenants, will render many homeless and may be forced to sleep under the beautiful bridges being built by Governor Ambode.
If you feel that we should allow the law to fly under the misconception that the Governor has done more than expected with the infrastructural development in the state, then you must be prepared for rent increase or be ready to go back to your village.
Oredola Adeola is a writer, journalist, public affairs commentator, and a revolutionist based in Lagos State. He writes for The Editorials and can be reached via theeditorialsngr@gmail.com or 08098262437
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