The Lagos State House of Assembly, by a resolution of the house, on Tuesday amended the state’s Land Use Charge (LUC) Law 2018, bringing reprieve to millions of residents of the state who were already edgy with what they described as the “punitive and insensitive” provisions of the law.
Among other things, the amendment has redefined “Pensioner” in the law to include all retirees resident in the state, from federal and state institutions and from both private and corporate organisations domiciled in the state.
This is a huge relief for pensioners other than retirees of the state civil service who were captured in the amended law. Other pensioners domiciled in the state would have been under intense pressure to pay the charge which they would find difficult, if not impossible, in their circumstance. For them, therefore, the amendment means longer life, not just the money saved.
Akinwunmi Ambode, former governor of the state, had on February 7, 2018 signed the Land Use Charge (LUC) Law 2018 into effect, citing need to raise revenue to meet increasing demand for infrastructure and other social services for the state’s over 20 million people.
The 2018 law repealed the Land Use Charge Law 2001 and consolidated all property and land-based rates, including tenement rates law, the land rates law and the neighbourhood improvement charge, but it raised much dust from all segments of the society.
The state assembly’s response to the public outcry led to the setting up a six-man ad hoc committee at its plenary session on Monday, March 19, 2018. The committee chaired by Rotimi Olowo was mandated to look into the law and report its findings.
The findings of the committee, which involved public hearing, have led to the amendment that Lagos residents have commended for its forward-looking recommendations.
The Land Use Charge Law 2018 had based its charges on the current market value of eligible property in which case owner-occupied residential property attracted increase of 0.076 percent per annum of the assessed property value and industrial premises of manufacturing concerns 0.256 percent per annum of the assessed property value.
These increases, along with other charges including vacant plot of land and unoccupied properties, which are now exempted, are generally perceived to be arbitrary and unrealistic in a recessed economy, hence the advice by the lawmakers for the state to revert to status quo of the Land Use Charge for 2017.
“In my view, what this amendment implies is that the rental market in the state would continue to be stable as against the volatility that the new law would have brought into the market,” Yemi Madamidola, an estate manager, told BusinessDay on phone.
According to him, it was expected that the new law would push rent up by 50 percent as landlords would readily pass on the increase in the Land Use Charge to the tenants and this would have causes friction in many homes.
“This amendment has taken care of that; it means less pressure on landlords and it is good for tenants too who would now have more money in their pockets,” he reasoned.
Madamidola pointed out that charges on vacant plots of land and unoccupied properties were senseless as that would discourage investment needed to grow the state’s economy and provide infrastructure for the residents.
Lagos, with over 20 million population, is burdened with a deficit of 3 million housing units. It has an active rental market. According to ‘The State of the Lagos Housing Market’ report compiled by Pison Housing Company, about 80 percent of the Lagos population are renters, spending over 50 percent of their income on house rent.
A tenant in Surulere said at the onset of the new law, he received a notice from his landlord through a lawyer notifying him of increase in his rent from N600,000 to N800,000 for a three-bedroom apartment.
The tenant, who gave his name as John, said he was already considering relocating to his uncompleted property in Egbeda area of the state to escape the rent increase.
There were so many similar instances of tenants already under pressure to relocate, but with this amendment and the lawmakers’ advice to revert to status quo ante, many families would have more money to meet other needs such as health, school fees, feeding, etc.
The amendment of the law is also good for the Lagos economy. The state would raise more revenue from property tax “if the charge is affordable, flexible and friendly,” Chudi Ubosi, principal partner at Ubosi Eleh + Co, told BusinessDay.
“Take, for instance, using the market value of a property to assess its LUC on an annual basis amounts to a subtle form of double taxation as capital gains tax is paid every time the property is sold or bought,” he noted.
Ubosi explained that when property tax was affordable, it would bring more people into the tax net because more property owners would be encouraged to pay as that is in their own interest.
“And, don’t forget, the more people pay, the more revenue for the government and the better for the economy of the state,” he said.
