Law News
Lagos slashes land transaction rates to 3% •As FG seeks property registration cost reduction

Lagos State government has slashed various rates applicable to land transactions in the state, effectively cutting down land use charges from 13 percent to 3 percent. Meanwhile, the Federal Government is also pushing for a reduction of property registration cost in the country from 16 percent to 3 percent to boost homeownership.

Governor Babatunde Fashola who signed an executive order to that effect, said the move is to “ensure that land transactions are carried out with minimal difficulty, especially with difficulties relating to payment of taxes, rates and legitimate levies charged under the enabling law”.

Specifically, the executive order, which takes immediate effect, reduces Consent Fees from 6 percent to 1.5 percent while Capital Gains tax, which was previously 2 percent, is reduced to 0.5 percent. Also cost of Stamp Duty has been reduced from 2 percent to 0.5 percent while Registration Fees has been reduced from 3 percent to 0.5 percent. The order, (No. EO/BRF/001 of 2015), provides, among others, that “unless otherwise indicated, the valuation of landed property for the determination of tax and other charges payable shall be by reference to the statement of fair market value produced by relevant professionals, adopted by the state government and published from time to time in the official government gazette”.

Housing-pix-1aFashola said the order is intended to improve the internal management of the state government and not to create any rights or benefits, substantive or perpetual, enforceable at law or in equity by a party against Lagos State, its departments, agencies or entities, its officials, employees or experts or any other person. According to him, at the time when the state’s economy was challenged, there was need to continue to grow the information on capital, business concerns and industrialization, adding that some of the expectations in expanding business in the state’s enterprise zones and the free trade zones could only be achieved through the reduction of cost of land acquisition. “We expect also that if we as government play a role, by reducing the cost of setting up business, we have made a huge impact enabling private enterprise to thrive and in that way hopefully provide employment opportunities to businesses that will be formed as the results of this policy intervention,” the governor said.

In a related development, the Federal Government is pushing for reduction of home registration costs in the country from the existing 16 percent to 3 percent of a property’s value. This is with a view to making homeownership more affordable, as it has been noted that high cost has prevented Nigerians from buying residential properties.

Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, said this was necessary because as long as houses are not affordable to people, there will be no effective demand for houses no matter the amount of mortgage finance available. She said the Nigerian Mortgage Refinance Company is partnering state governments through a pilot state scheme to slash costs for land titling, governor’s consent and property registration processes, to enhance the enabling environment for mortgage market growth and increase home ownership.

“So far, 18 states have signed off, all accepting to review extant land titling, governor’s consent and property registration processes to make home ownership possible. It is very onerous that the present processes result in a cost that could be up to 16 percent of the value of the accessed property in question. That is not affordable for our people. And this is what we are trying to work on because if we don’t work on it, we may have all the mortgage finance, but we will not have the demand. So, the plan is to scale it down from 16 per cent to about three per cent. Without the adoption of this model, it would be difficult to proceed in the provision of affordable houses for Nigerians,” she stated.

It has been observed that although many Nigerians have shown interest in the recently launched Affordable Home Ownership Scheme by the federal government, for which 10,000 housing units are to be built in the first phase, take-up has been weak due to high costs associated with home ownership.

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