August 10, 2020

CLIENT ALERT: THE NEW LAND USE CHARGE LAW 2020

Introduction

On Wednesday, August 5, 2020, the
Commissioner for Finance, Lagos State, Dr.
Rabiu Olowo, in a press briefing announced that the Lagos State Government has
decided to review the Land Use Charge Law by reversing the rate of the Land Use
Charge (LUC) to the rate which was applicable prior to the year 2018, while maintaining
the 2018 method of valuation.

Brief Background

In 2018, the Lagos State Government had increased
the Land Use Charge as well as the method of valuation of properties. However,
the increment by the Lagos State Government was frowned upon and met with
widespread disapproval, as a result of the huge financial strain caused to its citizens.
Since the increment in 2018, the payment of LUC in Lagos State has been far
from encouraging; therefore, the current administration of leaders in Lagos
decided to review the LUC by reversing the Change made in 2018.

The New Changes to the Land Use Charge Law

Alongside the announcement of the
Land Use Charge Law, 2020 and the reversal of the rate of the Land Use Charge,
the Lagos State Government also announced its creation of new provisions in the
new Law, which include the importance of LUC, the various channels
available for payments as well as the complaint management process, amongst
others. The changes include the following:

1.
The definition of “Pensioner” has been
expanded to include “all retirees from private and public institutions in the
state or any person that has attained the age of sixty (60) years and has
ceased to be actively engaged in any activity or business for remuneration”

2.
Property owned and occupied by a
pensioner is exempted from paying LUC

3.
Also, the percentage (%) increase in penalties
for defaults in paying LUC has been reduced as follows:

Days Outstanding	Before	Now
45-75 days	25%	10%
75-105 days	50%	20%
105-135 days	100%	50%

4.
In addition to this, there is also a 48%
reduction in the Annual Charge Rates as follows:

Definition Areas Before Now
Owner-Occupied Residential Property 0.076% 0.0394%
Industrial Premises of Manufacturing Concerns 0.256%
0.132%
Residential Property/Private School (Owner & 3rd Party) 0.256% 0.132%
Residential Property (Without Owner in residence) 0.76% 0.394%
Commercial property (Used by the occupier for Business Purposes) 0.76% 0.394%

Vacant Properties and open empty Land 0.076% 0394%

5.
Another major sector that had its charge
reduced is the Agricultural sector, which annual charge rate for Agricultural
land was reduced from 0.076% to 0.01%. This is an 87% reduction from the old
rate.

6.
Penalties for Land Use Charge for the years
2017, 2018 and 2019 have also been waived. This translates to N5,752,168,411.03
potential revenue being waived by the State.

7.
In addition to the re-introduction of the
15% early payment discount, an additional COVID-19 incentive of 10% is to be
granted on the total amount payable. This makes the total discount for early
payment 25%, if payment is made before the due date.

8.
The penalty for obstruction of officials
and damage to property identification plague has been reduced from N250,000.00
to N100,000.00.

9.
The penalty for inciting a person to
refuse to pay LUC has been reduced from N250,000 to N100,000.00.

10.
The 2020 LUC Law introduced a 10% and 20%
special relief for Vacant properties and Open empty land, respectively.

11.
The right of enforcement has been reduced
from notification of three (3) default notices to (2) default notices.

12.
Profit oriented Cemeteries and Burial
Grounds are no longer exempted from payment of Land Use Charge

13.
Private Libraries are also no longer
exempted from paying Land Use Charge

14.
Section 14 of the Law makes it possible
for the Commissioner to appoint any person including an occupier of a
chargeable property to be an agent of the owner for the purpose of collecting Land
Use Charge.

It is also pertinent to note that the LUC
payment can now be made Online via https://Lagos.ebs-rcm.com, and payment can also be made using the appropriate
USSD Code, to the designated banks listed below, with their corresponding USSD
code:

a. Fidelity
Bank – *770*1*7#
or *770#

b. Ecobank – *326#

c. Unity Bank
– *7799*302#

MOBILE AND INTERNET BANKING PAYMENT OPTIONS

GTB
UBA
FIDELITY
POLARIS
ZENITH
FCMB
KEYSTONE
WEMA

Conclusion

Whilst it is hoped that more work still
needs to be done and more considerations need to be given to make the cost of
the Land Use Charge more affordable to the populace, some of these new reviews
and decisions are commendable (for example, the expansion of the scope of
definition of a pensioner and the consequential exemption from payment of LUC).

The public is also encouraged to note
that the Lagos State Ministry of Finance has now expanded its Complaints
Resolution Process and as such, members of the public have been advised to make
complaints about their bills through any of the following e-mail addresses
– luc@lagosstate.gov.ng , or citizensgate@lagosstate.gov.ng; and
telephone – 08058584486, 09086786001.

Disclaimer

This client alert has been prepared for clients and professional associates of AO2LAW. Whilst every effort has been made to ensure accuracy, this client alert is not an exhaustive analysis of the area of law discussed. AO2LAW cannot accept responsibility for any loss incurred by any person or refraining from action as a result of the material in this client alert. If you require any advice concerning the individual problems or other expert assistance, please contact:

$\"\"$