A construction expert, Mr Ayotunde Bally, has urged the Lagos State Government to increase its 2025 Land Use Charge discount above 15 per cent.
Bally, the Chief Executive Officer of Dembally Ltd., a real estate development company, made the call in an interview with our Correspondent on Wednesday in Lagos.
Freedomonline recalled that the Lagos State Government recently released the 2025 Land Use Charge bill with 15 per cent discount for early payment
He said the current 15 per cent offer might not be sufficient to incentivise early payments due to the prevailing economic conditions.
Bally said: “I don’t think it is sufficient. Considering the economic conditions in Nigeria we are facing a higher discount, above 20-25 per cent, might have an even greater effect in ensuring that property owners willingly comply and even encourage others in driving participation in the scheme”.
He acknowledged that the aim of the government’s initiative was to establish a consistent revenue stream to fund critical infrastructure projects.
He also noted that early payments would aid government budgeting.
He, however, expressed concern that the 15 per cent discount might not adequately address affordability challenges, particularly given the rising construction costs and economic uncertainties.
The construction expert who questioned the reasonableness of the base Land Use Charge rates said a high base rate could render the 15 per cent discount inconsequential for developers with large property portfolios.
Bally proposed a more flexible incentive structure such as staggered discounts based on property value or usage, to ensure equitable benefits for various property owners.
He highlighted the significant impact of the Land Use Charge on project financial planning, warning that elevated charges could deter investment in certain Lagos areas, leading to uncompleted projects.
“Higher land use charges will also force me to adjust property prices upward to absorb the costs and this sometimes make properties less affordable for buyers and even tenants.
” If it’s a rental property, I might have to pass on the extra cost to tenants, leading to higher rent prices in high-tax areas,” he said.
Additionally, the real estate developer noted that the 2025 Land Use Charge bill would necessitate financial adjustments for ongoing projects.
This, he said, might require the reallocation of funds from marketing or land acquisition.
He also expressed concerns about the long-term impact on property sales and project viability, suggesting that developers might need to explore alternative investment locations with lower tax rates or development incentives.
He urged the government to reconsider its discount policy and base tax rates to ensure a more sustainable and equitable real estate market.
