Lagos State Government announces changes to the Land Use Charge Law

The Lagos State Government (LASG) has announced revisions to provisions of the Land Use Charge Law 2018 (LUC Law); principally covering a reduction in land use charge (LUC) payable on various categories of property in Lagos State.

It would be recalled that the LUC Law was recently passed by the Lagos State House of Assembly and subsequently signed into law by the State Governor. Please see link to our alert on this here.

The passage of the LUC Law however generated a public outcry from various interest groups and stakeholders. A major criticism of the LUC Law centred on the rates which were perceived by many to be excessive.

Following deliberations with various stakeholders on the issues, LASG has granted the following discounts on the LUC for relevant property categorisations:

Category of property LUC rates  Discount on LUC
Commercial property0.760%50%
Residential property occupied by owner and third party0.256%25%
Property used for industrial and manufacturing purposes0.256%25%
Owner-occupied residential property0.076%15%
Residential property (without owner in residence)0.760%N/A
Vacant properties and open empty land0.076%N/A
Owner-occupied pensioner’s propertyExemptedN/A
Lagos State Government propertiesExemptedN/A

The above discounts will apply to LUC calculated on the value of the property using applicable LUC rates.

Further, LASG announced the following additional revisions to the LUC Law:

  • Property owners who have already paid LUC based on the LUC Law will be granted tax credits to the extent of the excess amount paid
  • Penalty will no longer be applied on late payments of LUC
  • Allowance will be made for payment of LUC on instalment basis

To ensure that the above proposed modifications have the force of the law, the LASG will submit two different regulations pursuant to the LUC Law, to the Lagos State House of Assembly, for review and passage.

While the revision of the LUC Law is a step in the right direction, LASG will have to ensure that the process of valuing the chargeable properties is fair and reasonable. This will further demonstrate the LASG’s commitment towards reducing the additional tax burden created by the law. Notwithstanding, stakeholders are advised to seek appropriate professional guidance when served with a demand notice in respect of LUC to avoid undue overpayment of the charges.

We will keep monitoring developments in this space and provide updates as soon as they become available.

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