The Truth about the Land Use Charge

by Otunba Gbenga Teejay Abass
LAGOS LAND USE CHARGE: SIFTING TRUTH FROM FALSEHOOD
It is always the case that any time a well-meaning administration, is out with a progressive policy to advance the course of governance and enhance the well-being of the people, that one or two selfishly motivated individuals and parties, would attempt to scuttle it.  Such is not new but the irony is that in that attempt to advance a selfish agenda, a sincere and committed administration, could be distracted.
A case in point is the Lagos Land Use Charge, which in its reenactment is intended to serve the state well, but which has now become a generator of intense controversy, some misplaced and some outrightly mischievous.
Reviewed by the Lagos State House of Assembly and signed into Law by the Lagos State Governor, Mr. Akinwunmi Ambode on February 8, 2018, one clear attribute of the new law is it is standardized and offers clarity in the area of self-assessment for and by property owners.
Yet, an ill-informed person may be deceived into taking the law and everything that it represents as oppressive and anti-people.
How then are people able to draw the line? Only if they are able to understand all the dynamics concerning the new law.
The first thing to note is that the law as it pertains to land use in the state is supposed to be reviewed every five years, to make it dynamic and in line with reality, but the LUC had not been reviewed in the last 15 years.
The second has to do with the need for harmonization of taxes and rates payable in a state as cosmopolitan and industrial as Lagos. To do otherwise, is to create room for a multiplicity of payments that end up not only exerting pressure on payers, but also not effectively accounted for. In fact, with the current administration harping on the Ease of Doing Business, in line with the broad policies of the Federal Government, you cannot but need a harmonized system of taxation.
The third point is that until now, some people, including commercial property owners, were making more money from property, and paying less in tenement fees.
These and more had informed the need for the new law but have not been properly understood by many in the state. The result is the cacophony that we are hearing out there. Well, this is not totally unexpected given the diversity in the elements and people that make up Lagos. Truth however, is that no well-meaning citizen, no matter what political ideology or philosophy he professes would not join issues when there is need to join one. And this issue of LUC is one. Ones interest is not to allow misinterpretation that may force the baby being thrown out with the bath water. Those who have axes to grind, should not hinge it on an otherwise well-intentioned policy like the one under reference.
At least, some of the key officials in the government have been able to throw one or two lights on this issue that should assuage any ill-feelings. For example, Mr Kehinde Bamighetan, the Commissioner for Information and Strategy, has taken time to provide education as far as the new law is. For example, The main targets are those making money from property because they make more money they need to pay more, that is the principles of progressive taxation. Those who pay more take care of those who pay less. If you are not using your property for commercial purses or rent it out, you are not likely to be affected by the law this is our narrative”.
Critics do not want to mention the fact that the law is a consolidation of Ground Rent, Tenement Rate, and Neighborhood Improvement Levy. Thus, the Tenement Rates Law, the Land Based Rates Law, the Neighborhood Improvement Charge and all other similar Property Rates or Charges, Laws or amendments to any such property Laws shall cease to apply to any property in the State as from February 2018.
That the law under the previous dispensation, made calculation of the LUC totally inaccurate, meant it created burden for payers. Much more, it was a kind of drain pipe in terms of revenue losses to the state government.
“Kudos to the apex body for real estate operators in the state, the Coalition of Real Estate Investors and Surveyors, which promptly took up the gauntlet in shedding light on grey areas of the new law, addressing critical areas of misconceptions and misrepresentations by politically motivated mischief makers.
The Coalition educates the public on the workings of the new policy,for example, that the charge which owner occupiers are expected to pay in the new law came to a token percentage of 0.076% of the value of the assessed property.
The coalition which spoke through its convener, Mr. Ayokunle Gregory, in fact, went ahead to issue a press statement after a closed-door meeting in Lagos on Friday, March 2, 2018. In its press release the coalition expressed dismay at the level of misinformation circulating about the law among the unsuspecting public, who unconsciously are at the mercy of detractors that wants to score cheap political points with a well-intended policy that guarantees deliverables of democracy dividends”
It said it must have been motivated by a desire to negatively exploit the new law and confuse the entre populace, thereby creating problem for the administration in the state.
“And as such, we feel obliged to address the falsehood from a professional perspective before the unsuspecting public is misguided to bewilderment and violation of the law”.
Also, that the state government also extended the period for the payment of all annual Land Use Charge, LUC, Demand Notices for 2018, to Saturday, April 14th, 2018 deserves acknowledgment. This gesture is to avoid stampede on anybody, as it enables Property Owners and affected occupiers take the option of enjoying the discounts available for the prompt and early payment of LUC invoices.
According to Bamigbetan, not only are pensioners and retirees exempt from the payments, those using their properties for charitable and religious purposes are equally exempted. This he says is in order to protect the poor and the vulnerable sections of the society from the burden of over-levying affirming that the gains from the increase outweigh the pains as the state government is committing more than 20 percent of the 2018 budget to revamping the educational sector to build a better future for our youth.
While not holding brief for Governor Ambode and his administration, one would nonetheless observe that the new law is not the demon that some critics have painted it to be. For example, we understand that all pending invoices, orders, rules, regulations, etc. under the 2001 repealed Law shall continue to be in effect until such obligations are discharged.
Also, using the applicable formula provided by the reviewed law, owners and occupiers can now calculate their rate by multiplying the Market Value (MV) of a property by the Applicable Relief Rate (RR) and Annual Charge Rate (CR).
These to us, show transparency and consideration and should be commended. For Gregory:  “For Owner-occupied residential property, the LUC per annum is at 0.076%. For instance, if the Market Value of an owner-occupied property is at N15, 000,000.00 it means that that the amount payable is N6,840 per annum only which amounts to N570.00 per month. For a property occupied by tenants, used for commercial purposes, at the same Market Value of N15, 000,000.00, the LUC rate of that property will be N68, 400 per annum”.
In fact, in terms of relief there are quite a number: These include a 10% relief for owners and occupiers with persons with disabilities, a 10% relief for owners and occupiers of 70 years and above, a 10% relief for properties above 25 years, a 5% relief for properties occupied by their owners for over 12 years, a 20 % relief for non-revenue generating federal and state government property, and 20% partial relief for non-profit making organizations.
According to the press statement, the state has provided professional services of registered Estate Surveyors and Values to get accurate data which will help in assessment and valuation of properties in the state.
“In order to clear the air of any misinformation, we implore all owners and occupiers of properties in Lagos to do a self-assessment using the formula provided, and also provide officials with valid documents to ensure a smooth run of the exercise for the benefits of all”, the coalition concluded.
At this juncture, one may have to advise the governor of the state to remain focused while ensuring a sincerity of purpose, not only in policies and programmes formulated in the state, but also in their implementation. That way, the promised dividends of democracy would be delivered while the camp of critics would be dramatically reduced