1. The Land Use Charge, which is payable annually, is described by the LUCL to be a consolidation of all Property and Land Based Rates and Charges imposed on all non-exempted real properties located in Lagos State.

2. The LUC Law provides that ‘owners or occupiers of a lease’ are liable to pay Land Use Charge. The law also 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 is a notable change 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).

3. Furthermore, the change in the LUC Law to extend liability for Land Use Charge to occupiers of land means that Land Use Charge is no longer identified as an ‘owner’ charge. This change is unlikely to materially affect property conveyancing in Lagos, as current market practice is for Land Use Charge to be passed through to tenants through the provisions of the lease or tenancy agreement.

4. The value of a Property (“the Land Value”) plus the Building Development Value of the Property, both of which constitutes the property’s Market Value, are now to be multiplied by the applicable relief and charge rate to arrive at the annual LUC rate for each Property.

5. The Market Value of each Property is now required to be reviewed by the Lagos State Commissioner for Finance, at least once every five (5) years, based on the information provided by Professional Property Valuers.

6. Despite the repeal of the Land Use Charge Law 2001, all pending invoices, orders, rules, regulations, etc. under the 2001 repealed Law shall continue to be in effect until such obligations are discharged.

RELEVANT PROVISIONS UNDER THE NEW LAW

It is essential that attention is paid to these relevant provisions which seem to be the pivot of this legislation:

1. Each local government area in the State has been given powers under the new law to be the collecting authority for land use charge. Such local government will under the new law be the only body empowered to levy and collect the land use charge areas within its specified jurisdiction.

2. Land use charge is payable on ALL property except those exempted under Section 12 of the new Land Use Charge Law, 2018 (LUCL).

3. The formula adopted for land use charge is now based on the commercial value of the property, which valuation will now be based on assessment by professional Estate Valuers appointed by the state; and which valuation will continue to be updated on five yearly basis.

4. According to 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.

5. Exempted from the Law are the state owned properties, while chargeable properties include residential property (without owner in residence) at the rate of 0.76 per cent per annum of the assessed property value, commercial property (used by occupier for business purposes) at the rate of 0.76 per cent per annum of the assessed property value and vacant property and open empty land at the rate of 0.76 per cent per annum of the assessed property value. Industrial premises of manufacturing concerns at the rate of 0.256 per cent per annum of the assessed property value, residential property (owner and third party) at the rate of 0.256 per cent per annum of the assessed property value.

6. The Law also provides various forms of reliefs that are available to payers of LUC. The reliefs include general relief of 40 per cent (applicable to all property liable to pay LUC), and 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.

7. Others include 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.

8. To enjoy the available reliefs, payers will need to provide relevant documentary evidence to support their relief claims. All LUC paid within 15 days of receipt of Demand Notice will enjoy a timely payment discount of 15 per cent.

9. In essence, the major change in the current Law is the introduction of a land use charge formulae that ensure that assessments are based on ‘market’ or commercial value of land and improvements as supported or verified by professional evidence of the Estate Valuers appointed by the State.

10. The Land Use Charge payable on any property is calculated by multiplying the market value of the property by the applicable relief rate and annual charge rate using the prescribed formulae.