On the 29th January 2018, the Lagos State House of Assembly passed a law to provide for the consolidation of property and land based charges and to make provisions for the levying and collection of the land use charge in the State.
This law is otherwise known as the Land Use Charge Law of Lagos State, 2018 (the “LUC Law”) and it replaced the Land Use Charge Law, 2001. Both laws are quite similar however; there are some differences.
In this post, you’ll get to find out all you need to know about this new land use charge.
One of the similarities between the LUC Law 2001 and LUC Law 2018 is the fact that both laws provides for a unified ‘Land Use Charge’ which consolidates all property and land based rates and charges payable under the land rates law, neighbourhood improvement charge and all tenement rates; and provides that such other rates shall cease to apply to any property on which land use charge has been levied.
However, the 2018 Law repeals the Land Rates Law and Neighbourhood Improvement Charge Law, as well as the Land Use Charge Law, 2001 thereby creating a clearer regulatory framework for land based rates and charges within the state.
A lot of people have been asking how this land use charge is calculated and we’ll explain that in a bit.
The land use charge is calculated as an annual charge rate expressed as a percentage of the assessed market value of the property. However, the law allows the state government to vary between owner-occupied property and other property, as well as residential property and commercial or revenue generating property.
This variation includes property for physically-challenged persons and those who have been resident at the same location for at least 12 years, minors; retiree owners of property and occupiers on the one hand, and active owners and occupiers on the other.
Based on the law, the annual charge rate to be applied to eligible property in Lagos State shall be as follows: owner-occupied residential property – 0.076 per cent per annum of the assessed property value, and owner-occupied pensioner’s property.
Generally, there are properties that are exempted from paying the Land Use Charge. These include:
- All palaces of recognised Obas and Chiefs of Lagos State; unlike the 2001 law, such property will lose its exempt status if it is leased to private entities for revenue generation.
- Property owned, occupied and registered in the name of the religious body and used exclusively as a place of worship or religious education;
- Public cemeteries and burial grounds; unlike the 2001 law which applied to both public and private cemeteries.
However, ‘family compounds’, once exempted under the 2001 law, are no longer exempted.
According to the 2018 LUC Law, ‘owners or occupiers of a lease’ are liable to pay Land Use Charge. Also, the law identifies both occupiers of leases of less than 10 years and occupiers of leases of 10 years or more as liable to pay Land Use Charge.
This differs from the 2001 Land Use Charge Law which made this an owner liability. ‘Occupier’ is defined to include both lawful and unlawful occupiers of the whole or part of property, and only excludes lodgers (being licensees).
A lot of land owners have been wondering how to calculate their Land Use Charge based on the new law. Here’s an easy way to go about it.
The calculation is no different from the 2001 Law. As stated earlier, the LUC Law calculates Land Use Charge by multiplying the market value of the property (i.e. the sum of land value and building development value) by the Annual Charge Rate. Unlike the 2001 Law, market value under the LUC Law is to be determined by professional valuers appointed by the Commissioner of Finance.
In this new law, there is also a new ‘Relief Rate’ which is applied to the market value and charge rate. Basically, a general Relief Rate of 40% is applied in calculation of Land Use Charge. Specific Relief Rates are also available at various rates ranging from 5% (for long occupiers of property) to 100% (for pensioners).
Also, Specific Relief may be applied for by disabled persons, aged persons, owners/occupiers of old properties (25 years and above), Federal and State owned property, non-profit making entities and for timely payment of Land Use Charge (within 15 days).
Below is a summary of these reliefs:
- A general relief of 40 per cent (applicable to all property liable to pay LUC)
- A specific reliefs applicable to property owners and leases of 10 years and above for pensioners (60 years and above) which is 100 per cent for owner-occupied property, persons with disability 10 per cent for owner-occupied property and aged persons (70 years and above)
- 10 per cent for owner-occupied property, age of property 10 per cent for property aged 25 years and above, long occupation by owners five per cent for 12 years and above, federal and other state government property 20 per cent for non-revenue generating property, partial relief under the LUC Law – 20 per cent for non-profit-making organizations.
If you would like to enjoy the available reliefs, you will need to provide the relevant documentary evidence to support their relief claims with is accompanied by a supporting letter to the Commissioner of Finance.
Also, all LUC paid within 15 days of receipt of Demand Notice will enjoy a timely payment discount of 15 per cent.
Overall, the minimum LUC payable on any given property shall not be less than N5,000 irrespective of any LUC relief granted on the property.
Failure to pay the LUC fee as at when due is also subject to specific liabilities and penalties. Based on the new law, the penalty for non-compliance with the provisions of the LUC Law has been increased from ₦100,000.00 to ₦250,000.00 or imprisonment for a period of 3 months.
On the other hand, failure to pay the stipulated fee after 135 calendar days gives the Lagos State Government the right to file and maintain a civil action against the owner or occupier of property, or their agent.