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Land Use Charge: Real estate professional body faults valuation approach

by CHUKA UROKO

March 13, 2018 | 7:54 pm
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As concerns continue to mount on the Lagos State Land Use Charge (LUC) signed into law by the state governor, Akinwunmi Ambode on February 8, 2018, estate surveyors and valuers have also lent their voice, faulting the law for adjusting property values for 2018 upwards without valuation.

The estate surveyors, under the aegis of Nigerian Institution of Estate Surveyors and Valuers (NIESV), Lagos State Branch, is also worried with other aspects of the law, especially the Relief Rate (RR), Land Use Charge (LUC) Rate and the Depreciation Rate (DR) used to arrive at the Amount Payable for the LUC.

The institution in a statement signed by OlurogbaOrimalade, the branch chairman, said it was of the opinion that LUC should be anchored on the basic principles of taxation to ensure fairness, particularly from the tax payers’ point of view.

While appealing to the government to conclude the valuation exercise before adjusting assessment figures based on valuation, the institution recommended an upward review of the Relief Rates to accommodate provision for maintenance cost and other outgoings.

By the provisions of the law, every property, on which LUC is to be paid, gets an ‘automatic’ 40 percent discount from the assessed market value of the property. Additionally, any property that has attained old age of 25 years and above gets additional 10 percent relief.

“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”, Orimalade advised.

“The rates adopted for depreciation is most inappropriate as this rate could be as high as 40 percent depending on the age and the repairs state of the property. Depreciation consists of elements of obsolescence and dilapidation”, he added.

The institution observed that the rise in the rates has significant cut into the annual rental income which could be generated from some properties, pointing out that this cut 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”, they noted.

 

CHUKA UROKO

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by CHUKA UROKO

March 13, 2018 | 7:54 pm
12893  |   93   |   0  |   Start Conversation

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