LUC: Developer faults govt on implementation time, 50% discount
The anger and concerns generated by the Lagos State Land Use Law 2018 are yet to simmer down as more citizens of the state continue to criticize the action of the government which many have described as punitive and insensitive.
Besides near-zero public and stakeholder-engagement before coming up with the law, some citizens are angry with the government over the timing of the law which, in the opinion of Omochiere Aisagbonhi, CEO, Omais Homes, is wrong, inappropriate and inconsiderate given the hardship that defines life in Nigeria at the moment.
“The LUC is coming at a time when Nigerians are finding it difficult to meet basic needs of life. For me as a landlord, what this law means is for me to increase my house rent. But how can you do that on a tenant who is finding it very hard to survive if you don’t want him to die?” Aisagbonhi queried.
He noted that the law was also introduced when the property market is saturated with many empty houses that cannot find buyers or tenants because of the poor state of the economy in the country.
Nigeria has just exited a 13-month economic recession following a slight growth in some sectors of the economy which did not include real estate. The wider economy has, as a matter of course, moved without real estate because the sector has been in negative growth for eight consecutive quarters and in the last quarter of 2017, the growth was -5.09 percent.
This was lower by -1.8 percent than the third quarter. That quarter was less traumatic but it was that bad. Year-on-year, it was -3. 25 percent lower. These impact negatively on pipeline projects, leading to soaring construction cost and high real estate service charges.
It is against this backdrop that Aisagbonhi insisted at a press briefing in Lagos recently that the law was not only punitive but also insensitive in both provision and implementation.
However, following the widespread agitation and condemnation that greeted the signing of the law by the state governor, Akinwunmi Ambode, on February 8, the state government reduced the charge rate for all commercial property by 50 percent.
By the provisions of the law, the charge rate for an owner-occupied property is 0.076 percent of the market value of the property while the charge rate for a commercial property used as an industrial or manufacturing concern is 0.256 percent of the property’s market value. With the 50 percent discount, the new charge rate for commercial property is 0.128 percent.
But Aisagbonhi said the 50 percent was deceptive because, according to him, “this does not mean downward review of the charge rate. What the government has done is to postpone 100 percent implementation of the charge rate because the discount is a temporary measure aimed to douse tension; who says they cannot reintroduce the 100 percent charge rate next year?”.
“What we want is downward review of the charge rate, not 50 percent discount”, he emphasized, noting that what the government needed to do in the face of the mounting concerns and spreading agitation was to “revert to the old rate and start discussion with the people towards implementing the law next year”.
He wondered why the government was in a hurry to implement the law now and not next year, pointing out that in other jurisdictions, government alone would not take decision on an issue as sensitive as property tax which, he said, affected property owners as much as it did tenants.
He pointed out that landlords would naturally transmit any increase in tax on their property to the tenants and “some of these tenants are government workers whose salaries or housing allowances have not been increased in the last 10 years”.
CHUKA UROKO