On 29th January 2018, the Lagos State House of Assembly has passed a Law to Provide For The Consolidation Of Property And Land Based Charges And Make Provisions For The Levying And Collection Of Land Use Charge In Lagos State; otherwise referred to as the Land Use Charge Law of Lagos State, 2018 (the “LUC Law”).
The LUC Law repeals and replaces the Land Use Charge Law, 2001. Similar to the 2001 law, the LUC Law 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. Unlike the 2001 law, the LUC Law goes a step further to repeal 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.
The following properties are now exempted from payment of Land Use Charge:
- 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;
- 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.
‘Family compounds’, once exempted under the 2001 law, are not on the exempted properties list.
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).
CALCULATION OF LAND USE CHARGE
Similar to the 2001 Law, 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. The LUC Law also includes a new ‘Relief Rate’ which is applied to the market value and charge rate. 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). 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). Applications for Specific Relief are made to the Commissioner of Finance with any relevant supporting documentation.
LIABILITY AND PENALTIES
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.
Similar to the 2001 Law, failure to pay Land Use Charge within a specific period will attract a penalty.
Where Land Use Charge is not paid after 135 calendar days, the property is liable to enforcement. Unlike the 2001 law, the LUC Law also grants Lagos State the right to file and maintain a civil action against the owner or occupier of property, or their agent.
The provisions of the LUC Law provides for liability for payment of Land Use Charge on the part of “(1) the owner of a property or occupier of a lease of less than 10 years” and on an “(2) occupier holding a lease of 10 years and above”. There seems to be no apparent distinction between short and long leases. This may be an error on the part of the draftsman as the drafting is unclear.
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.
Overall, the LUC Law attempts to consolidate and simplify the calculation and collection of land charges and rates in Lagos State. The risk is that it may also have materially increased the same and this is likely to have an impact on the property market.
A copy of the LUC Law is available here.
 Cap L79 of the Laws of Lagos State of Nigeria, 2015
 The laws reference to Tenement Rates is defined to mean tax charged on rented property payable to a Local Government Area, and should not to be confused with charges payable under the Tenement Rates Law of Lagos State Cap T2 Laws of Lagos State of Nigeria 2005, which has since been repealed.