EFFECT OF LAND USE CHARGE ON

PROPERTY MARKET TRANSACTIONS IN

OSUN STATE

BY

B A N K O L E , O M O L A R A R U K AYAT

HE 20 1 9 0 10 0 83 0
 BACKGROUND TO STUDY
 STATEMENT OF THE PROBLEM
 AIM & OBJECTIVES
 JUSTIFICATION
 LITERATURE REVIEW
 CHARGEABLE AND NON-CHARGEABLE PROPERTY
 PERSONS LIABLE TO PAY LAND USE CHARGE
 AN OVER VIEW
 EFFECTS OF LAND USE CHARGE
BACKGROUND TO STUDY

WHAT IS LAND USE CHARGE? LAND USE CHARGE IS AN UNAVOIDABLE

TOOL OF POVERTY REDUCTION, PHYSICAL DEVELOPMENT, INCOME

GENERATION AND ENVIRONMENTAL REPAIR WHEN IT COMES TO LAND

USES. IT IS BELIEVED THAT IT IS T HE RESPONSIBILITY OF

GOVERNMENTS AT ALL LEVELS TO PROVIDE INFRASTRUCTURES WHICH

MAY BE RURAL AND URBAN IN TERMS OF GOOD ROADS, SEWERS, OR

UTILITY LINES, HOSPITALS, SCHOOLS, FIRE FIGHTERS AND POLICE.

ALL THESE FACILITIES MAKE A TOWN OR CITY FUNCTION AND ARE

NECESSARY FOR NATIONAL DEVELOPMENT. THE LUC, ACCORDING TO

OSUN STATE GOVERNMENT (2001), IS A TAX ON PROPERTY INTRODUCED

TO CONSOLIDATE THE GROUND RENT ON LEASES OF STATE GOVERNMENT

LAND AND DEVELOPMENT CHARGES ORIGINALLY COLLECTED BY THE

STATE GOVERNMENT AND IT IS TO HELP THE GOVERNMENT OF THE STATE

TO GENERATE ADDITIONAL REVENUE NEEDED TO DEVELOP THE STATE

THROUGH THE PROVISION OF INFRASTRUCTURE AND BASIC AMENITIES

STATEMENT OF THE PROBLEM

AS IMPORTANT AS THE LAND USE CHARGE IS, LITTLE OR NO

EMPIRICAL STUDY HAS BEEN CONDUCTED TO DATE ON THE

NIGERIAN PROPERTY MARKET TO REVEAL ITS STATE OF MATURITY

AS IT HAS BEEN DONE FOR SIMILAR PROPERTY MARKETS

ELSEWHERE BECAUSE VIEWS EXPRESSED ON THE MARKET ARE NOT

BASED ON RESEARCH THEREFORE INVESTOR PERCEPTION ABOUT

THE MARKET WILL REMAIN HINGED ON MYTHS RATHER THAN

EMPIRICAL EVIDENCE
AIM & OBJECTIVES

THE AIM OF THIS STUDY IS TO ASSESS THE EFFECT OF LAND USE

CHARGE ON THE PROPERTY MARKET TRANSACTION IN OSUN STATE

BY CONSIDERING THE FOLLOWING OBJECTIVES :

IDENTIFY THE VARIOUS CHARGES OF GOVERNMENT  THAT IMPINGES ON
THE PROPERTY MARKET OTHER THAN LAND USE CHARGE

ASSESS THE IMPACT OF LAND USE CHARGE ON THE PROPERTY MARKET.

EXAMINE THE ISSUE AND CHANGES OF THESE LAND USE CHARGES AS

THEY APPLY TO THE TRANSACTION OF THE PROPERTY MARKET.
J U STI F I C ATI O N

1. THIS WOULD ENABLE A BETTER APPRECIATION OF ITS STRENGTH

AND CHALLENGES BY THE INVESTING COMMUNITY AND ALSO
MAKE FOR A BETTER AND MORE INFORMED BASIS FOR
INVESTMENT ADVICE AND COMPARISON.

2. IT WILL PROVIDE PROPERTY AND OTHER INVESTMENT ANALYSTS

WITH THE NEEDED BASIS FOR A MORE MEANINGFUL COMPARISON
WITH OTHER PROPERTY MARKET TRANSACTIONS.
J U ST I F I C AT I O N

1. IT WILL HELP TO REDIRECT RESEARCH INTEREST ON THE MARKET

TRANSACTIONS BY BOTH ACADEMICS AND INDUSTRY-BASED
RESEARCHERS BY PROVIDING BASIC EMPIRICAL EVIDENCE ON
FACTORS DRIVING ITS MATURITY PATH

2. FINALLY, BY REVEALING THE MARKET TRANSACTION’S STRENGTHS

AND CHALLENGES, THE STUDY WILL FEED THE LOCAL POLICY
MAKING PROCESS WITH STRONG BASIS THROUGH LAND USE CHARGE
EMPIRICAL DATA TO RE-POSITION THE MARKET FOR GLOBAL
COMPETITIVENESS.
LITERATURE REVIEW

MANY SCHOLARS HAVE ACTUALLY WORKED ON LAND USE CHARGE BUT

NONE OF THEM HAS LOOKED AT THE EFFECTS ON PROPERTY MARKET

FOR INSTANCE,

ONI (2010) ASSESSED THE PROVISIONS OF THE OSUN STATE LAND USE

CHARGE LAW AND DETERMINED THE EFFECTS ON STAKEHOLDERS AND

FOUND OUT A GREAT DISADVANTAGE OF THE LAW, AND RECOMMENDED

APPROPRIATE BASIS TO DETERMINE FAIR AND EQUITABLE CHARGE

EGWUATU AND EGWUATU (2016) EXAMINED THE IMPERATIVES OF

VALUATION AS A PREREQUISITE FOR EFFECTIVE ASSESSMENT AND

ENFORCEMENT OF PROPERTY-BASED LAND USE CHARGE IN NIGERIA

AND CONCLUDED THAT DESPITE THE GENERATED REVENUE FROM LAND

USE CHARGE, THE LAND USE CHARGE EXERCISE IS NOT EFFECTIVE

BECAUSE OF THE RAGING CONTROVERSIES OF OVER ASSESSMENT

OF PROPERTIES AS A RESULTOF HIGH CHARGE; AND THE

INCONSISTENCY IN THE ASSESSMENT PROCESS IMPINGES ON THE

INTEGRITY OF THE PROCESS

IN O TH E R S T U D IES , F E W ST U D IES H A S SH O W N TH E R ELATIO N S H IP B E TW E EN

LA N D U S E C H A R G E A N D PR O P ERTY MA R K ET TR A N SA C TIO N S A S R EC O R D ED IN

TH E W O R K O F H A S S A N (2 0 15 ) W H O EX A MIN ED L A N D U SE C H A R G E A N D R E A L

ES TATE T R A N S A C T IO N I N O S H O G B O . T H E STU D Y ID EN TIF IED A N D EX A M IN ED

LA N D U S E C H A R G E TY P ES A N D FA C TO R S IN F LU E N C IN G LA N D U S E C H A R G E A N D

IN V E STI G ATE D TH E IM P LIC ATIO N S O F LA N D U SE C H A R G E B U T D ID N O T

C O N SID E R TH E R ELAT IO N S H IP B ET W EEN R EN TA L VA LU E A N D TY P ES O F L A N D

U S E C H A R G E, W H IC H IS TH E FO C U S O F TH IS S TU D Y.
OL AORE (1998) E XAMINED VALUES OF L AND AND RE NT OF SHE LT ER IN

URBAN ARE AS OF KADUNA. THE STUDY, DID NOT E XAMINE T HE

RE LATIONSHIP BET WEEN PROPERTY MARKE T TRANSACTIONS AND TYPE OF

LAND USE .

NWANEKE ZIE ET AL, (2010) EXAMINE D T HE IMPACT OF LAND USE

AL LOCATION IN NIGERIA AND RECOMME NDE D THAT ADEQUAT E STANDARD

FACILITIE S AND SERVICES BE PROVIDE D TO MAKE T HE RE SIDE NTIAL

FUNCTION E FFICIE NTLY IN MODERN SOCIET Y. THE ST UDY DID NOT EXAMINE

THE EFFECT OF L AND USE CHARGE ON PROPE RT Y MARKE T T RANSACT IONS

CHARGEABLE AND NON-CHARGEABLE PROPERTY

THE DEFINITION OF CHARGEABLE PROPERTY HAS BEEN EXTENDED

TO INCLUDE (1) A BUILDING; (2) ANY IMPROVEMENT ON LAND; (3) A

PARCEL OF LAND, WHETHER OR NOT RECLAIMED, WATERLOGGED OR

OTHERWISE; (4) A PARCEL OF LAND AND ANY BUILDING OR

IMPROVEMENT, A WHARF OR PIER; AND (5) A LEASEHOLD OF UP TO

TEN YEARS.
BUT THE SAME LAW STATES THAT SOME PROPERTIES IN THE STATE CAN BE

EXEMPTED UNDER SECTION 12 OF THE LAW. THE EXEMPTION GRANTED IS

APPLICABLE TO SOME CATEGORIES OF PROPERTIES INCLUDING ANY

PROPERTY (1) OWNED AND OCCUPIED BY A RELIGIOUS BODY AND USED

EXCLUSIVELY AS A PLACE OF WORSHIP OR RELIGIOUS EDUCATION; (2)

USED AS A PUBLIC CEMETERY OR BURIAL GROUND; (3) USED AS A

REGISTERED EDUCATIONAL INSTITUTION CERTIFIED BY THE

COMMISSIONER FOR FINANCE TO BE NON-PROFIT MAKING; (4) THE PALACE

OF A RECOGNIZED OBA AND CHIEF IN OSUN STATE

P E RSONS L I ABL E TO PAY L AND USE CHARGE

UNDE R T HE L AND US E CHARGE L AW, T HE OBL I GAT I ON TO PAY L UC NO L ONGE R

RE ST S SOL E LY ON T HE OW NE R OF A CHARGE - ABL E PROP E RT Y BUT AL SO T HE

OCCUPI E R OF A PROPE RT Y ON A L E AS E ARRANGE M E NT OF L E S S T HAN T E N ( 10 )

YE ARS. BUT T HI S HAS BE E N RE VI E W E D TO I NCL UDE PE RS ONS UNL AW FUL LY I N

ACT UAL OCCUPAT I ON OF A PROPE RT Y. BE CAUS E I T I S POSS I BL E T HAT L ANDL ORDS

W I L L SHI F T T HE RE SP ONSI BI L I T Y OF PAYI NG L UC TO T E NANT S/ OCCUPI E RS OF

T HE I R PROPE RT I E S, PART I CUL ARLY I N VI E W OF T HE E XORBI TANT RAT E S OF L UC.

AN OVER VIEW

LAND USE CHARGE IN NIGERIA CAN BE TRACED TO 1904 WHEN THE

PERSONAL INCOME CHARGE WAS FIRST ADMINISTERED IN NORTH BEFORE

THE AMALGAMATION OF THE MAJOR REGIONS BY THE COLONIAL MASTER

IN THE WEST IN 1917

IT GOT TO THE EASTERN REGION - 1928 AND FROM 1930 THERE WAS AN

AMENDMENT IN WHICH LAND USE CHARGE WAS INCORPORATED INTO THE

DIRECT LAND USE CHARGE ORDINANCE NO. 4 OF 1940 AND LATER PEGGED

ON THE 1948 BRITISH CHARGE LAWS.

T HE MAJOR CHARGE L AW S IN EXISTE NCE I N T HE COUNT RY AS OF SE PTE MB ER

2010 AND VARIOUS RE L AT E D AMENDME NT S INC LUDE T HE PE RSONAL INC OME

CHARGE ACT OF 2004; COMPANY INCOME CHARGE ACT OF 2004; PE TR OL EUM

PROFIT S CHARGE ACT OF 20 04; T HE PE TR OL E UM AC T OF 2004; E DUCAT ION

CHARGE ACT OF 2004; CAPITAL GAI N ACT OF 2004 ; CUSTOMS AND E XE RC ISE

MANAGEME NT ACT OF 1998; MI NE RALS AND MINING ACT OF 1999; STAMP

DUT IE S ACT OF 1990; CHARGE S AND LE VIE S (APPR OVE D L IST FOR C OL LE C TI ON)

ACT OF 1998; AND T HE 1999 CONSTI T UTI ON OF T HE FE DE R AL RE PUBL I C OF

NIGE R IA (ANYADUBA E T AL, 2012).

AS WE ALL KNOW THAT LAND IS A SCARCE AND A PRECIOUS

RESOURCE, THEREFORE, TAXING LAND AND PROPERTY HAS BEEN

CENTRAL TO THE STATE GOVERNMENT’S STRATEGY. WHEN THE

LAND USE CHARGE LAW WAS PASSED, THE PUBLIC, OPPOSITION

POLITICAL PARTIES, AND CIVIC ASSOCIATIONS DESCRIBED THE

LAND USE CHARGE LAW AS ‘ WICKED, SATANIC AND OPPRESSIVE’.

THIS WAS SO BECAUSE THE TIMING OF THIS LAW WAS HIGHLY

QUESTIONABLE. IT CAME AT A MOMENT WHEN THE COUNTRY WAS

STILL RECOVERING FROM A SEVERE RECESSION. PEOPLE THOUGHT

THAT PASSING THE LAW AT THIS TIME WAS TO BUILD UP STATE

FINANCES IN THE RUN UP TO THE GOVERNORSHIP AND

PRESIDENTIAL ELECTION COMING UP SOON.

BUT IN THE REAL SENSE LUC REMAINS ONE OF THE FEW TAXES THAT CAN

BE EASILY APPLIED TO THE INFORMAL SECTOR AND UNBANKED CITIZENS,

MAKING IT A LOW HANGING FRUIT FOR THE STATE THEREFORE PEOPLE

NEED REASSURANCE THAT THEIR HARD-EARNED FUNDS ARE NOT BEING

USED TO SUBSIDIZE AN OVER BLOATED GOVERNMENT

.
EFFECTS OF LAND USE CHARGE

W E NE E D TO U N D E R S TA N D I N G O F T H E N AT U R E O F U R B AN L A N D U S E C H A R G E

E S P E C I A L LY O N T HE R E S I D E N T I A L A N D C OMM E R C I A L C E N T E RS I N T H E C I T Y W H I C H

I S VI TA L F O R P R O P E RT Y I N V E S T M E N T D E C I S I O N A N D S U S TA I N A B L E D E V E L O P ME N T.

A L S O, T H E S T U D Y I N N E E D E D S O A S TO B E A B L E TO P R E D I C T F U T U R E C HA N GE S I N

P R O P E RT Y VA L U E A N D I D E N T I F Y T H E DI F F E R E N T T Y P E S O F C H A R G E S T H AT HA V E

E X I S T E D A S T H I S W I L L H E L P I N P R E D I C T I N G T H E F U T UR E U S E S O F L A N D A N D

B UI L D I N G I N T H E C I T Y I N A S I M I L A R S E T O F C I R C U M S TA N C E S .
T H E S T U D Y O F L A N D U S E C H A R GE A ND T H E E F FE C T S O N PR O P E RT Y VA L U E A R E

E S SE N T IA L TO E STA B L I SH T H E I R I N FL U E NC E S ON T H E U R B AN A R E A S AS I T WI L L

H E L P TO P R OJ E C T R E N TAL VA L U E S I N T H E SU R R O U ND I NG S AN D D E T E R M I NE T H E

T Y PE S OF L A N D U SE C H AR G E T HAT WI L L O C C U R AS T HE B US I NE SS D I ST R I C T S

E X PAN D . FU RT H E R M O R E , T H E U N D E R S TA N D I N G O F T H E F UT U R E OF T H E C I T Y C AN

H E L P B UI L D I N G PR OF E S SI ON S TO D E T E R M IN E T H E P R O PE RT Y VAL UE O F AN A R E A I N

T H E F UT U R E A N D P L A N NI N G P R O C E S S A S W E L L AS S US TA I NA B L E D E V E L O P M E N T.
.
CITY EXPANSION IS AN INEVITABLE OUTCOME OF DEVELOPMENT. THE RESULT

OF THIS STUDY WILL INCREASE THE UNDERSTANDING OF HOW LAND-USE

CHARGES HAD REACHED THEIR CURRENT STATE AND THE CHANGES THAT ARE

LIKELY TO OCCUR OVER TIME IN THE STUDY AREA.

THE STUDY OF LAND USE CHARGE WILL ACCOUNT FOR THE CHANGES FROM

ONE TYPE OF LAND USE TO ANOTHER OVER A GIVEN PERIOD AND WITHIN A

GIVEN AREA (KABANZE, 2003).

THANKS FOR LISTENING