Nigeria: Lagos Reviews Regularisation of Property, Documentation Over 100%

3 August 2021

Lagos State government has surreptitiously increased fees charged for property/land regularisation and other documentation from 25 per cent of the fair market value of such property to over 100 per cent in some cases.

The National President of the Nigerian Institute of Building, Bldr. Kunle Awobodu has appealed to the Lagos State Governor, Mr. Babajide Sanwo-Olu to be more considerate in the imposition of these charges/fees/rates so as not to stifle the real estate market.

"The Lagos State government is trying to increase their internally generated revenue (IGR). They should understand that the post-COVID economy is in quagmire, not buoyant. So, this is not the time to double taxes or charges, I mean not the time to increase those fees astronomically.

This, he said was because people were just trying to recover from losses created by COVID-19 and #EndSars protests. There is property glut right now, because of weak purchasing power of most people."

He said not many people are developing buildings right now and that the few that are doing so should be encouraged. "The astronomical increase of these charges will affect the real estate market adversely.

"So, we appeal to the governor to allow the economy to stabilise and the charges should be minimal. We understand that the government needs a strong IGR to provide social amenities, but they should be guided by the poor economy," he said.

There is demand for the buildings being constructed but people cannot purchase them for lack of funds and developers would be unable to pay back loans to lenders if they are unable to sell, he said.

Meanwhile, there is no uproar yet unlike when it increased the Land Use Charge, because it targets a small group of people who must do the mandatory property regularisation/documentation, according to investors, who said they purchased land in Ikoyi, Victoria Island, Lekki and elsewhere that they needed to document.

Those who said they have documents, released by the government about two months ago, showing rates/fees/charges, say they believe the government is "desperate for cash" and is doing all that was necessary to recoup the revenue they lost to the COVID-19 lockdown and amass money to rebuild infrastructure destroyed during the #EndSars protest.

So, in all sectors of the Lagos economy, all rates/fees/charges have been increased over 100%, and these payments are made in every step of the way on all projects, discouraging potential investors and even those with ongoing developments.

"I'm beginning to suspect that the Lagos State government is deliberately making it difficult for people to build their homes or set up work stations in the state. Most people are moving to neighbouring states, particularly Ogun, because it is not easy to do business in Lagos State," said an investor.

Another investor in Lekki said, "The Lagos State government is budgeting on the projected earnings of residents, just as jobless landlords do with their tenants."

According to a professional in the built environment (name withheld, who said his clients' projects have been badly hit by this new regime of fees/charges/rates, "What is going on now and from what I also gathered, is revenue drive across board by the Lagos State government."

They said, "The Governor Babajide Sanwo-Olu has a crack no-holds-barred revenue committee that targets property and other sectors of the economy."

For instance, they stated that "if you want to build a house, you will go through the physical planning department for them to assess your house and all the while, this has not being a problem because moderate fees are charged. However, not up to two months ago, the rates have become bizarre, something everyone is running from.

"In Ikoyi, for instance, a single family unit of five bedrooms or less that with ground, first to tenth floor that is built on a little over 10,000sqms will have attracted between N600,000 and N700,000, in that physical planning department. It will not be more than N800,000 just to get it assessed, but in the last one and a half months, the government is suddenly asking people to pay over N14 million for the assessment of that same type of single family building that should ordinarily cost between N600,000 and N800,000. This is preposterous, in the extreme."

The government's new payment structure attracted a "blowback as nobody was coming forward for assessment or documentation, and projects have been abandoned, and this has reduced their revenue drive."

They compared this to the Land Use Charge regime of about three years ago, saying "If you were paying N30,000, you are now asked to pay N200,000, not talking about people in Ikoyi that theirs ran into millions of Naira per unit. There was massive uproar because it affected the whole spectrum of Lagos, top to bottom, nobody could pay, but this new astronomical charges is affecting only a small segment of the Lagos society.

"If you buy land in Ikoyi, you'll need to go through the process of regularisation, pay millions of Naira and when you want to build, you pay millions again and this is aside money you'll use to build. Also, people are compelled to pay taxes or produce their tax certificates. It is as if they're deliberately strangling that sector. You're required to pay millions of Naira as consent fee, another millions of Naira for regularization and more millions of Naira for Certificate of Occupancy (CofO)."

There is also an astronomical increase in the fees charged for Governor's Consent, which is documented in pamphlet titled "The 30-Day Governor's Consent to Consequent Transaction of Land", published by Lagos State Government Directorate of Land Services, Alausa, Ikeja.

This document contains 'New Procedure for Obtaining Governor's Consent for property located in every part of the state, including the "Calculation of Fees."

It has consent fees for mortgages fixed at 2% of the loan, which, for instance, is equivalent to N20,000 per N1 million of the loan. Also, assignments, subleases (40 years and over) and power of attorney in respect of land is arrived at by "multiplying size of land by applicable rate". For buildings, it is to "multiply spot assessment rate by number of units of accommodation. "Thereafter, determine the fees payable as follows: Consent fees - 8% of assessment (16% in cases of cases of state land allocation where statutory right of occupancy has run for less than 10 years)."

It lists "Capital Gains Tax 2% of assessment; Stamp Duty, 2% of assessment, and Registration Fees, 3% of assessment. A total of 107 communities are captured in the document with the applicable consent fees per square metre charged.

The least amount payable for consent fees ranges from N150 per square metre in Agbowa/Imota; N1,000 per square metre in Ajangbadi, Egbe& Isheri, Lekki Tourism, Eti Osa, Makoko, Ojo/Iba/Tedi/Ijanikin/Ajagbandi.

The highest consent fees charged are in Old Ikoyi, N60,000 per square metre; Victoria Island is N50,000; South West Ikoyi, Park View/Osborne 1, and Victoria Island Annex (Ajose Adeogun, N40,000.

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