Executive Orders

 

LAGOS STATE GOVERNMENT

June 6, 2008

EXECUTIVE ORDER (NO. EO/005/2008)

TO:        All Ministries, Departments and Agencies

RE: REPORT OF THE LAND CHARGES REVIEW COMMITTEE

1.1 PREAMBLE

1.1 The Land Charges Review Committee was established under the Chairmanship of the Special Adviser (Taxation & Revenue) to review land rates, fees and other charges applicable in Lagos State and make appropriate recommendations to government. The Committee presented its report to the Lagos State Executive Council on Monday March 31, 2008.

1.2 After extensive deliberations on the subject, Council unanimously accepted the following observations, resolutions and recommendations:

2.0 NEIGHBOURHOOD IMPROVEMENT CHARGE

2.1 Council observed that the Neighbourhood Improvement Charge (NIC) Law was now subsumed under the Land Use Charge Law. According to section 22 of the latter, once Land Use Charge is levied, the provisions of the Neighbourhood Improvement Charge Law would no longer apply to the same property.

2.2 However, Council noted that Government was still entitled to all arrears of NIC due on affected properties up to the time they are assessed to Land Use Charge.

2.3 Council therefore directed the LAND SERVICES DIRECTORATE to immediately identify all private estates to which the NIC Law is applicable with a view to charging and collecting all arrears of NIC up to the year in which the property owners actually get a Land Use Charge assessment.

3.0 CAPITAL DEVELOPMENT LEVY (CDL)

3.1 Council observed that Capital Development Levy is a necessary condition imposed on holders of government allocated land pursuant to the powers of the Governor under section 46(2) of the Land Use Act, 1978.

3.2 Council also observed that CDL is to enable Government to finance some of the cost of providing and renewing essential infrastructural facilities in government estates.

3.3 Council noted that CDL rates were last reviewed in 2003 and that, considering the current cost of procuring necessary infrastructure, another upward review is long overdue. However, Council resolved as follows:

1. To maintain for now the current rates of CDL, so as to encourage speedy development of government estates;

2. that CDL collections for each of the Government Schemes should be placed in a dedicated account and used only for that scheme with appropriate level of government subsidy;

3. The HONOURABLE ATTORNEY GENERAL AND COMMISSIONER FOR JUSTICE shall work with the NEW TOWN DEVELOPMENT AUTHORITY to ensure the amendment of the Land Use Regulations to reflect current rates of CDL.

4. Due to the inflationary trends in the economy, unpaid levies should henceforth bear interest at the CBN MR Rate + 5%.

Consequently, the amount payable on already allocated plots will henceforth depend on the year in which the allottee actually makes full payment.

4.0 DISPOSAL OF PLOTS IN GOVERNMENT SCHEMES

4.1 After reviewing past experiences on the subject matter, Council resolved that the disposal of plots in government schemes shall now be as follows:

Stage 1 - Government divides a proposed estate into convenient phases for infrastructure development.

Stage 2 - In each phase to be offered for sale, Government ensures the completion of adequate infrastructure, either by itself or with private sector participation. Where necessary and appropriate, Government may procure a bank facility for this purpose.

Stage 3 - Upon completion of essential infrastructure works, Government determines the commercial rate (having regard to cost of land + facilities provided in the relevant location) and places media advertisements of plots in the completed phase for sale to the general public.

4.2 On the same subject, Council resolved that:

1. All allocations to be made on preferential and non-commercial basis will be limited to a predetermined portion (%) of the Estate. Excluding allocation for government purposes, this should not normally exceed 15% of available space in any Estate.

2. Other phases in an Estate will be offered for sale only after available plots in the previously completed phase have been fully taken up and paid for.

3. Deadline for payments in the Letter of Allocation shall be enforced strictly. An allocation will therefore be deemed incomplete and property will not pass unless the allottee has paid all applicable costs, taxes and levies in full.

5.0 GROUND RENT

5.1 Council noted that payment of ground rent is provided for by section 1(b) of the Land Rates Law (Cap. L.59) and is a contractual term in each Certificate of Occupancy. Council also observed that by virtue of the contract incorporated in every Certificate of Occupancy, the rates of ground rent are to be reviewed every five years and, since the last review was done in January 2005, none is due until 2010. Furthermore, Council acknowledged the fact that payment of Ground rent is now being subsumed by the Land Use Act.

5.2 Council however accepted the following recommendations:

1. ALL THE RELEVANT DEPARTMENTS are to ensure that arrears of ground rent are paid up to the year in which the property is eventually assessed to Land Use Charge.

2. Graduated penalty rates as stipulated in the Certificate of Occupancy should be applied strictly.

6.0 LAND USE CHARGE

6.1 On the Land Use Charge (LUC), Council noted that
1. Implementation of Law had been adversely affected by initial widespread protests against the LUC concept and the inability of the first set of consultants to complete the property identification exercise on schedule.

2. The previous administration agreed with taxpayers’ representatives to lower the rates and apply the new rates without upward review for a period of seven years, commencing from 1st January 2002.

3. The State Government has recently given a grant to the Consultants and the tempo of enumeration and collection is rising considerably. However, the assessed property values currently being used across the zones is only about half of the commercial rate.

6.2 Council therefore resolved -
1. that in view of the agreed moratorium on rate increases, LAND RECORDS COMPANY shall take gradual steps to align the assessed value of properties with their current commercial rates. This is to be achieved by an annual increase of the assessed value by 10% across all the zones beginning from 2009.

2. The SPECIAL ADVISER (TAXATION & REVENUE) shall work with the HON. ATTORNEY GENERAL & COMMISIONER FOR JUSTICE in revisiting the amendments to the Land Use Charge Law which were first proposed in 2003. The new proposals should include an intensive review of the provisions and aim for a world class property tax law for Lagos State.

7.0 OTHER TAXES AND PAYMENTS REQUIRED FOR GOVERNOR’S CONSENT

7.1 Council noted that apart from the fee payable for Governor’s Consent, the Stamp Duties Act and the Capital Gains Act (both Federal Legislations) provide for the payment of Stamp Duty and Capital Gains Tax on property transactions. Similarly, Registration fees are payable in the course of perfecting such transactions.

7.2 It was also noted that the current practice in Lagos State does not take cognisance of the relevant statutes. Rather, it was established as a policy of Government that 15% of the property value would be charged for Governor’s Consent and apportioned as follows:
(i) Consent fee - 8%
(ii) Capital Gains Tax - 2%
(iii) Stamp Duty - 2%
(iv) Registration fee - 3%

7.3 Council noted however that the level of response expected from the general public is yet to be achieved because people involved in property transactions still have misgivings about the efficiency and cost of the perfection process. For this reason, most land documents are not perfected and registered and Government loses billions of naira which ought to accrue from such subsequent transactions in land.

7.4 Perceived complexity and delays of the perfection process has also negatively affected property development as Town Planning Offices now insist on the production of proper title documents before applications for building plan approval can be accepted for processing.

7.5 In view of the foregoing, Council accepted the following recommendations:

1. That perfection of subsequent transactions on land, houses, flats, etc must be encouraged for two major reasons:
(a) Proceeds from Governor’s Consent and perfection of title documents are the most sustainable source of government revenue as land resources are severely limited in Lagos State.
(b) Perfection/registration of title documents encourage the use of land for commercial and credit purposes which in turn boost the economy and encourage subsequent transactions.

2. For now, charges for Governor’s consent shall be kept at their current levels to further encourage compliance.

3. ALL THE RELEVANT DEPARTMENTS shall process Certificates of Occupancy, Governor’s consent and property registration as a matter of priority, with the overriding purpose of getting all property holders in Lagos State to perfect and register their title documents thereby bringing their interests into public record.

4. All due taxes are to be assessed and all necessary documents collected from applicants at the commencement of the process and before the formal acceptance of the application. Thereafter no new demands shall be made on the applicant so as to avoid unnecessary delays.

5. THE SPECIAL ADVISER (T & R) shall work with S.S.A. (Lands) and all RELEVANT DEPARTMENTS to review the 30-day consent programme with a view to clearing up the remaining bottlenecks, simplifying the process and ensuring better compliance with the time limits.

6. THE MINISTRY OF LANDS shall sensitize the general public more actively about the 30 day consent programme and educate them concerning the pitfalls that usually delay the process.

7. To this end, the Ministry shall publish in the media simplified information detailing the step by step requirements for perfection of land transactions. Among other things, this should alert the public to the fact that the current rates are lower than normal and Government reserves the right to return to the full statutory charges whenever it deems fit to do so.

8. Government shall take necessary steps to increase coordination and cooperation among the various departments handling land matters towards the achievement of common goals and in order to avoid policy inconsistencies and attendant legal problems.

All affected Ministries, agencies and officials of Government are hereby directed to ensure the immediate implementation of these Council conclusions and decisions.

 

Issued this 6th day of June 2008.

SIGNED

BABATUNDE RAJI FASHOLA, SAN
EXECUTIVE GOVERNOR, LAGOS STATE