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The deliberate approach by the current administration in Lagos State to affirm its real estate hub in Africa and beyond, has recently witnessed several legislative actions.

The Lagos State House of Assembly, on Monday, the 29th of January 2018, passed the Land Use Charge Law, 2018 (LUCL). The new LUCL, with the Governor’s assent, will replace the extant Land Use Charge Law, No. 11 of 2001. The repealed Land Use Charge of 2011 was grossly insufficient and ineffective to address the demands of the sector and only a few were aware of it and even fewer people complied hence the introduction of the new Land Use Charge Law.

The LUCL applies to real and landed property in Lagos State and seeks to consolidate all property and land based rates/charges into a single property charge. The Law sets the modalities for levying and collection of land use charge in Lagos State.

I shall attempt to point out some of the instructive highlights of this new legislation in the under listed subheadings, to wit:


Each Local Government Area in the State will be the collecting authority for Land Use Charge. Such Local Government will be the only body empowered to levy and collect the land use charge for areas within its jurisdiction.


In this new LUCL, the scope has been expanded as the elements of property have been broadened to include a building; any improvement on land; a parcel of land – whether or not reclaimed, waterlogged or otherwise, a wharf or pier and leaseholds of up to 10 years. Thus, even that which is commonly called “a bare land” will now be charged an annual rate. This is an incentive of sorts to encourage the owners of the said bare lands to develop such properties.


The law has a provision for self- billing and electronic payment of the Land Use Charge by owners thereby making compliance easier. The introduction of electronic payment in this regard would not be far from the current administration posture in digitalizing land transactions.   This is in an apparent bid to further ease the burden of payments as well as to encourage prompt payment. Interestingly, Lagos State retirees get 100% relief (that is, no charge) while factors like the age of a property owner, physical challenges (or disability), and/or duration of residency may confer partial relief. Prompt payments will also confer some relief. This is an innovative incentive capable of driving fast returns of revenue to Government.


One poignant change evinced by the advent of this legislation is the introduction of a formula for the assessment of the Land Use Charge due and payable on the basis of the extant commercial value of the property in question and the improvements made thereon. Instructively, section 6 (2) of the LUCL provides that, “the land value and building value rates constituting the market value of the property shall be reviewed at least once every five years on the basis of information available to professional valuers, and may vary from area to area.” As a result, the Land Use Charge payable on any property is arrived at by multiplying the market value of the property by the applicable relief rate and annual charge rate using the prescribed form.


Under the new LUCL, the scope of exemptions that availed cemeteries and burial grounds, have been narrowed. Thus, only public cemeteries are exempt from paying the Land Use Charge. Consequently, owners of private cemeteries are under this limited scope, required to pay Land Use Charge.

Equally, private libraries that have been certified as “non-profit making ventures” are also exempt from the payment of the Land Use Charge.

Interestingly, the LUCL also provides that any exempt property that is leased out to a private entity for the purpose of revenue generation shall not be exempted from the payment of the Land Use Charge.

By way of emphasis, Section 12 of the LUCL provides that the following are exempt from paying Land Use Charge:

  1. Property owned and occupied by a religious body and used exclusively as a place of worship or religious education although there were suggestions that if it is used for other purposes apart from those listed therein, then the law will apply.
  2. Public cemeteries and burial grounds as well as property used as a registered educational institution certified by the Commissioner of Finance (the Commissioner) to be non-profit making;
  3. Palaces of recognized traditional rulers in the State; and
  4. Any property specifically exempted by the Executive Governor by notice published in the State Official Gazette.


The new LUCL has not been without its fair share of criticisms.  Most stakeholders in the organized private sector contend that the new LUCL would increase the burden of property owners in the state which has just witnessed increase in lekki tollgate fare.

Some real estate practitioners, especially valuers, query the Law’s equitability and the methods used for the classification of property, stressing that it was based on capital value, which is not applicable in other places. Others have opined that the Land Use Charge was not equitable at all and would only operate to discourage people from investing in property, which will further worsen the accommodation problem of the populace as a result of reduced supply.

The consensus amongst experts seem to be that, at a time when governments in other jurisdictions are putting measures in place to encourage investment in the housing sector, the Lagos State government ought not to still pile charges on developers with the new Land Use Charge which is now based on the property’s capital values rather than its rental income.


In conclusion, it is clear that reservations about the new LUCL are rife, I encourage land owners around within the Ibeju Lekki and other parts to endeavor to evaluate the applicable LUC due and payable on their property and ensure compliance.

In any event, the law appears to focus more on suasion and encouraging the organized private sector to buy into the state goals for the sector as opposed to enforcement with stiff penalties and fines. Only time would enable the fuller assessment of the law, for now, it is believed to be a step in the right direction.


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