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Discordant Tunes Over Property Taxation On Unoccupied Houses

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CHIKA OKEKE writes that the rising number of completed and unoccupied houses across major commercial cities in Nigeria have posed pertinent questions on the source of wealth of the home owners.

It’s estimated that over 5, 000 properties in Lagos are unoccupied due to over-pricing and high agency fee. In Abuja, the number of completed and vacant houses are over 30, 000 notwithstanding the high number of slum settlements dotting the city.

This is also linked to high rental fees irrespective of the battle by successive and current administration to provide affordable homes for low income earners.

Despite efforts to salvage Nigeria from the over 17 million housing deficit, the bottlenecks associated with home ownership like difficulty in acquiring lands and high cost of building materials remained unresolved.

Also, double digit interest rate offered to loan seekers by Primary Mortgage Banks (PMBs) and commercial banks have worsened the already dicey issue, thereby partly contributing to increased number of unoccupied houses.

Given the spate of unoccupied houses, Nigerians are advocating for the enforcement of property taxation in order to compel home owners to rent the houses at moderate fees.

However, cross section of experts that spoke with LEADERSHIP Newspaper kicked against property taxation on unoccupied houses, describing it as double jeopardy for house owners.

A former president of Nigerian Institute of Town Planners (NITP), Tpl. Steve Onu described property taxation as a veritable tool for financing infrastructure in urban areas.

He challenged property owners to be ready to pay their taxes on demand whether such property is vacant or occupied.

In his view, a developer, Arc Adewunmi Towolawi Okupe kicked against taxation of vacant properties.

This, he noted, was because the landlord is already contending from loss of income from the vacant houses, adding that the landlord would suffer double jeopardy through the enforcement of property taxation.

He was optimistic that property taxation could reduce the effect of vacant housing as well as compelling landlords to reduce the asking rent to mitigate losses.

Okupe added, “Hence more accommodation will be occupied and for uncompleted buildings, the landlord will be forced to look for money to complete to avoid same scenario”.

The architect lamented that property taxation may act as a disincentive for people willing to build houses.

However, managing director of Justin Okpu & Co limited, a facility management company, Prince Justin Okpu assured that the enforcement of property taxation would correct the found- in-wealth distribution in Nigeria.

He noted that if government could exercise the political will to enforce the policy thay it would address the anomaly.

The president of Mortgage Bankers Association of Nigeria, Mr Adeniyi Akinlusi said that property tax should be paid by owners whether its occupied or not.

He noted that if there is any law that empowers people to own a house that it remained the choice of any house owner to either rent it, occupy it or leave it vacant.

Akinlusi however added that the enactment of property taxation law could serve as an incentive that would mandate homeowners to put the property in use.

He said that whether the properties are rented or not does not mean that government should not engage with property owners. 

The president advocated that property taxation should be affordable to enable homeowners meet up with the payment.

Given the state of Nigeria’s economy, he urged government’s to parley with the stakeholders and owners before enacting such law adding that property owners pay property tax in other countries whether the houses are occupied or unoccupied.

According to him, “Government should also do its own bit because people wants to see that the taxation will be utilised in building amenities within the environment because they believe that other taxes collected are not utilised”.

Akinlusi stated that home owners might be encouraged to pay the tax if there are projects that would be constructed using the tax.

Lending his voice, the immediate past president of Nigerian Institution of Estate Surveyors & Valuers (NIESV), Dr Bolarinde Joshua Patunola-Ajayi noted that property taxation had been enforced since the beginning of human existence.

He said, “ When our parents were given land to cultivate in the community, at the end of the year, they will take yams and rice to the community head including goats, which is tax; it’s an obligation that you must fulfil and when you don’t do it, the chief’s messenger will remind you about it”. 

Patunola-Ajayi referenced a law in  England known as Poor Relief tax 160, meant for the collection of taxes to assist the poor.

He asserted that Nigeria’s constitution stated clearly that each local government could collect tenement rate on each building but with some exemption that were not highlighted.

The expert disclosed that property taxation is not a new law adding that payment of tenement rate is another form of property taxation.

On tenement rate, he revealed that upon the valuation of each house, that the rate would be paid to the local government according to the constitution.

He lamented that states have taken over the collection of tenemant tax reserved for local government thereby changing the professional principle from what has been in practice in many parts of the world.

This he said is one of the reasons why the success stories are limited even as he wondered why state governments collect tenement rate without engaging the services of Valuers.

He appealed to state governments to  engage estate surveyors and valuers that are empowered by law to determine the tax payable on each buildings and structures.

Contributing, the principal consultant of AA Abdulfatai & Co, ESV Abdulfatai Abdulrauf rejected the taxation of unoccupied properties since such category of houses failed to generate income for the owner.

This he said was because of the existence of laws of taxation like ground rent and tenement rate paid by house owners and some occupants.

He noted that it’s almost impossible for federal government to checkmate unoccupied houses since Abuja property market is driven by law of demand and supply.

The expert said that when there is no demand that the value of the property would depreciate but would appreciate when in high demand.

“Some people who cannot continue with their artifical lifestyle are moving to suburbs where there are cheaper lands to build or rent at a cheaper rate”, he added.

He pleaded with real estate experts to intimate their clients on the actual value of any property saying that some properties were over-valued when the actual value is less the amount.

Abdulrauf asserted that the entire properties in Abuja were built on artificial value both for the landlord and tenant.

He said, “It is now that we are facing the reality of what the actual rate should be either for the landlord or tenant but the issue is that landlords should accept the economic hardship and review the rent downward”.



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