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Nigerian Institution of Estate Surveyors and Valuers releases Statement on Lagos State Land Use Charge

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Nigerian Institution of Estate Surveyors and Valuers releases Statement on Lagos State Land Use Charge - BellaNaijaThe Lagos chapter of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) has released a statement concerning the highly debated Land Use Charge.

The umbrella body for estate surveyors in the country said it has received several calls asking that it weigh in on the issue.

Listing the observations made from going through the charge, the body said while the method of valuation of landed properties in the state suffice, it is worrying that actual physical valuation has not taken place.

Property values have been adjusted upwards, the body said, and the government should conclude a valuation exercise before assessing values.

The body also asked that the relief rates be higher, and that the charge rate be taken from the property rental income, not from the property value.

See the statement below:

STATEMENT BY THE NIGERIAN INSTITUTION OF ESTATE SURVEYORS AND VALUERS ON THE LAGOS STATE LAND USE CHARGE LAW 2018

Ladies and Gentlemen,

Since the Lagos State House of Assembly passed the Land Use Charge bill on the 29th January 2018 and the Governor of Lagos State, Akinwunmi Ambode signed the bill into law on the 8th February, 2018, the law has received varied opinions from the populace.

We have received several calls from stakeholders as custodians of physical assets and managers of properties and facilities in the state. In some quarters, there is even a claim that the bill has risen to over 300 percent compared to the previous bill of 2017.

The Nigerian Institution of Estate Surveyors and Valuers is concerned about this law and has since studied the law, the methods, basis applied and the likely impact to the citizenry.

By the provisions of the law establishing our profession and our professional calling, The Institution has a responsibility to offer professional advice to both Government and the General Public on issues of development and management of land resources. It is in line with this responsibility, we hereby make the following observations after going through the Land Use Charge law:

  1. It is our opinion that the Land Use Charge Law 2018 should be anchored on the basic principles of taxation. This will ensure fairness particularly from the tax payers’ point of view.
  2. The method proposed to arrive at the assessed value is clearly defined in this law and it is the Depreciated Replacement Cost approach to valuation. While this is not the only method applicable, we appreciate that this will suffice.
  3. We are however worried that property values for 2018 have now been adjusted upwards without the valuation. We will appeal to the government to conclude the valuation exercise before adjusting assessment figures based on valuation.
  4. Other areas of concern include Relief Rate (RR), Land Use Charge (LUC) Rate and the Depreciation Rate (DR) to arrive at the Amount Payable for the Land Use Charge.

The Institution would therefore be recommending the following to enhance the engagement with the Lagos State Government on issues concerning the law:

I. Relief Rate:
We recommend an upward review of the Relief Rates to accommodate provision for maintenance cost and other outgoings;

II. Land Use Charge Rate
It must be noted that most of the payers can only pay from the property income, therefore the Charge rate should take cognisance of rental trend which in most locations is either stagnant or going southwards. We will suggest a holistic review of the Charge Rate to take account of the above which speaks to affordability.

III. Depreciation Rate
The rates adopted for depreciation is most inappropriate as this rate could be as high as 40% depending on the age and the repairs state of the property. Depreciation consists of elements of obsolescence and dilapidation.

5.   It was also observed that the rise in the rates has significant cut into the annual rental income which could be generated from some properties. This makes payment of this annual charge (LUC) difficult. This could also lead to increase in rents by landlords to meet up with the tax weight while being a disincentive for new real estate developments. Government should therefore have a mechanism to limit the amount payable within highly reduced percentage of the net annual rental income on assessed property as a benchmark.

6. Finally, for the sake of transparency and best practices, when the valuation is concluded, a Valuation List should be produced and displayed in each LGA for all stakeholders to see. This will reduce perception of arbitrariness and increase compliance. It makes it easier for stakeholders to compare their assessment with that of neighbouring properties.

We have articulated key suggestions and grey areas with contradictory provisions, which we would be recommending to the government when we meet for dialogue.

Ladies and Gentlemen, we are aware of government’s efforts to commence the enumeration exercise in the state. This is a welcome development. Through this process, it would help government obtain the real values of the properties whilst 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 reduces charges.

Thank you.

ESV Olurogba Orimalade FNIVS, FRICS

Chairman, Lagos State Branch,

The Nigerian Institution of Estate Surveyors and Valuers

3 Comments

  1. tunmi

    March 14, 2018 at 7:00 pm

    1. Does any organization that hopes to remain relevant have to “receive calls to weigh in on an issue” before stating their opinion? Sufh Nigerian arrogance… “Well since they called me, I must now deign to speak”

    Having said that, they wrote some seriously good stuff. Which begs the question, were they not consulted before this legislation?

    • olanna+odenigbo

      March 14, 2018 at 9:11 pm

      my question exactly…. how does a whole state take this kind of step without involving stakeholders from NIESV….like…how?!!!

    • tunmi

      March 16, 2018 at 7:23 pm

      eh…kinda goes both ways. Why didn’t the organization have their finger on the pulse to know of issues affecting them?

      Everyone likes to feel important.

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