Land use charge: Outcry over new “crazy” charges

Land use charge: Outcry over new “crazy” charges

…Landlords regret building houses in Lagos

Henry Okonkwo

There has been disquiet among property owners in Lagos State in the past two weeks after details of the newly enacted law on land use charge emerged.

The law raised the charges payable by up to 400 per cent in some instances, though the government said it tried to provide reliefs for relevant groups of property owners.

Notwithstanding the palliatives offered by the government in the land use charge law, property owners took to the airwaves, print media and social media to criticize the new law and urged the government to withdraw it, describing it as anti-people. For several of them it seems that their assets which should have given them peace, have rather caused them worry and despair.

“It is an unjust increase,” lamented Alhaji Rasheed Awofeso, a landlord at Oworo axis in Kosofe Local Government Area of Lagos metropolis. “I paid N27000 as LUC last time, but this Tuesday I got a notice informing me that I should pay N50,000.”

Awofeso who is a community leader said that the economy is still harsh on the common man, arguing that imposing the new tax would only make the situation worse.

“Transferring the increase to my tenants is the easy option, but in these hard times where many of my tenants struggle to pay their rents, I am not convinced that rent increment would make any sense. The government should please reconsider this law for the sake of ordinary people like me,” he pleaded.

On her part, Mrs Doris Akinlami, a widow who owns a property Ogudu area told Sunday Sun that she was shocked when she got the notice from the government informing her that the Land Use Charge on her property had been jacked up to over one N1 million from the previous amount of N250,000, which she paid last year.

“I thought it was a joke. How much do I get as rent from tenants? Many of my tenants have not been paying their rents. In fact, I have one tenant that hasn’t paid his rent for more than two years. And business has been tough these past three years. So where and how am I going to raise N1 million for the government? Is it a crime to own a house in Lagos State?” she queried in anger.

The state government has repeatedly explained that the rationale behind the LUC was to generate additional revenue needed to develop the state, which has a population that is growing at an alarming rate.

Whatever the rationale may be for the steep increase in LUC, many property owners in the state were left in shock by the increase. This drew the ire of many   and the barrage of criticism and protest against the government came in torrents.

Commenting on the law, another house owner, George Ugonna said: “There is nothing to justify the 400 per cent increment. I used to pay N180,000 but the new LUC implies that I would be paying about N525,000.

He spoke further: “They keep saying they want to make Lagos a mega city, honestly sometimes I wish I can just carry my house and relocate to another state. The government is making it so hard for the common man to survive in this state.”

Alhaji Segun Ogunlami, another landlord, is infuriated that the government raised his Land Use Charge, which jumped from N177,000 to N401,000. His property is located in the Oregun area of Lagos.

“We keep talking about megacity, but what exactly are we benefitting as property owners in Lagos State? Nothing!” he fumed. “I buy fuel to power my generators so I can have electricity at home and at my office. I dug a borehole to get my water supply, we contribute money to build our roads when they go bad, I pay heavily for my children’s school fees in private schools because its an open secret that we don’t have enough teachers in the public schools and we pay to provide our own security. So what infrastructure exactly are they using the money for? We just came out from recession for Christ sake! How can the government be so blind to the hunger in the land? Even if they want to increase LUC they should have come up with charges that are reasonable and acceptable to the people. The increment is indeed very provocative.”

Real estate investors were predictably not left out of the firestorm of protests against the law. Even the Nigeria Bar Association, Lagos State Chapter threatened to call out its members and mobilise other residents on a street protest if the ultimatum it gave to the government is allowed to expire without the government demonstrating true leadership by reviewing the law and holding wider consultations.

Real estate professionals claimed that the new LUC would adversely affect them. “The ridiculous increment would have adverse effect on property business in Lagos,” said Daniel Anijeke, of DanBridge Estates, Lagos.

Anijeke disclosed that the major reason Lagos landlords are crying out is because they are empathetic to the bad effect the charge would have on the tenants. “Aside that, they have no business arguing with the government because they would just pass the burden to the tenants, which is the simplest thing to do, but in an economy where the people are still struggling to feed and pay school fees, then a government comes from nowhere to trigger arbitrary increment in house rents because they aim to make Lagos a megacity, that is just crazy.”

However, the Lagos Government in its reaction to the concerns expressed by residents, the Commissioner for Information and Strategy, Mr. Kehinde Bamigbetan, assured that government has avenues to cushion the effect of the increment on tenants, property owners and real estate investors.

His words: “The state government has laws and instructions to protect tenants from shylock landlords. These include the Consumer Protection Law, the Tenancy law and the Office of the Public Defender. We have also published the rate guide in the newspapers to empower the tenants with the information so that no landlord will misinform them.

“Also to let Lagosians realise that the money comes back to them in form of infrastructure. So, they have not lost anything. The aim of the law was not to punish anybody.”

Beyond the assurances by the government, there had equally been questions as to how the values of properties were arrived at. Mr Ibukun Jolayemi, chief executive of Jolayemi Associates, while decrying the situation queried the basis for the LUC.

“The basis of the tax assessment is the open market value of the property. That means that the government is charging based on the worth of the property if you want to sell it. That is not proper and we are opposed to it because there is nowhere it is done in the world. The government should base the tax on the annual rent the property generates.”

Jolayemi, a fellow of the Nigerian Institute of Estate Surveyors and Valuers (NIESV) also wondered at how the state government arrived at the charges property owners are to pay, considering that valuation officers did not visit the places to assess the buildings to determine their value.

He said: “How can the government just jack up LUC by 400 per cent? And if they are not careful this could lead to them losing at the polls come 2019. This is just a very bad move. Since the law was first promulgated in 2001 there has not been any substantial increase in the value of properties; even, many tenants can’t afford the rent and that has forced many landlords to reduce their rents.

“Again, there was no assessment done before they started slamming charges. They didn’t involve registered estate valuers to assess these properties, rather they brought riff-raffs and put figures on different properties in the state.

“We are not opposed to the tax, but we are opposed to the basis and the way the government is going about it.”