The Lagos State Land Use Charge Law of 2018: What You Need to Know as a Property Owner, Tenant, Buyer or Seller

Consequent to the re-enactment of the Land Use Charge Law, 2018 of Lagos State, and the drastic increases in the Charge payable by ‘Property[2]’ owners and tenants/ occupiers[1]  in Lagos State, here are the major things to be aware of:

Enactment, Thrust and Administration of the Law

  • The Land Use Charge (LUC) Law, 2018, was passed by the Lagos State House of Assembly, on 29 January 2018 and became effective on 8 February 2018.
  • With the re-enactment of the LUC Law, 2018, the LUC liabilities (as noted in most of the distributed demand notices for 2018) have now increased by over 200% to 300%.
  • The LUC Law 2018, in similarity with the Land Use Charge Law 2001 which it seeks to repeal and replace, aims to consolidate all Property and land-based rates and charges that were payable under the Land rates Law, the Neighbourhood Improvement Charge Law and Tenement Rates.
  • The LUC Law is being administered by the office of the Lagos State Commissioner for Finance (the ‘Commissioner’).
  • Land Use Charge is a land-based charge which is payable on all real and chargeable (not exempted by the Law) Properties situate in the State, on an annual basis, derivable from the market value of such Properties as determined by professional valuers appointed by the Commissioner. Such valuation is required to be reviewed at least, once every five years.

Exempted Properties

Certain categories of Properties are exempted from the payment of the LUC. These include:

  • Properties owned or occupied by a religious body and used exclusively as a place of worship or religious education;
  • public cemeteries and burial grounds;
  • Property used by a registered educational institution certified by the Commissioner to be non-profit making;
  • any Property specifically exempted via an Official Gazette by the Executive Governor;
  • all palaces of recognized Obas and Chief in Lagos State

There is a proviso that eliminates the exemption status of any of these Properties once they are leased out to private entities for revenue generation.

Partial relief may be granted by the Commissioner via an official gazette for:

  • Property that is occupied by a non-profit making organization;
  • Property used solely for community games, sports, athletics or recreation for the benefit of the general public;
  • and Property used for a charitable or benevolent purpose for the benefit of the general public and owned by non-profit making organization.

The onus lies on the owner or the person liable to pay the Land Use Charge to notify the Commissioner for Finance in writing of the loss of exemption status. Failure to do so may attract a fine of up to 3 times the value of exemption in issue. Provision is also made in the law to determine the payable Land Use Charge on a pro rata basis where a Property loses its exemption status for less than a year.

Liability for Payment of the LUC

  • The LUC demand notice may be delivered to and requested from either the owner or tenant/occupier or authorized ‘agent’[3] of the Property.
  • Where a Property is on lease to a tenant/ occupier for less than 10 years, the ultimate liability for payment of the LUC lies with either the owner or the tenant/ occupier. In practice, such liability is usually passed to the tenant via a tenancy agreement.
  • Where the Property is on lease for 10 years and above to a tenant/ occupier, the ultimate liability for payment of the LUC lies with such tenant/ occupier.
  • Where an ‘agent’ is appointed by the collecting authority, and the LUC is demanded of such an agent, the ultimate liability for payment or refund of the LUC lies with the owner of the Property whom the agent represents.
  • The LUC demanded is expected to be paid within 30 days from the date of delivery of the demand notice.
  • Any person aggrieved by either the chargeability status of his/her Property or the amount of assessment demanded of him/her can appeal within 30 days of delivery of such demand notice to the Appeal Tribunal and certain conditions or processes are expected to be fulfilled/ followed by the appellant for the appeal to take effect.
  • All pending obligations and liabilities under the repealed laws shall continue to be in effect, as though they originated under the 2018 LUC Law, until all such obligations and liabilities are settled.

Computation of LUC

The LUC payable under the law is derived as follows:

(Land value + Building Development Value) x Relief Rate x Charge Rate

Interpreted as;

LUC = [(LA x LR) + (BA x BR x DR) x -RR x CR]


LUC = Annual amount of Land Use Charge

LA = The amount of land parcel in square meters

LR = The average market value of a land parcel in the neighborhood on a per square meter basis in Naira as determined by the professional valuers appointed by the commissioner.

BA = The total developed floor area of the building on the plot of land in square meters.

BR = The average construction value of a medium quality buildings and improvement in the neighborhood on a per square meter basis in Naira.

DR = The depreciation rate for the building and improvements of land which accounts for the building being of higher or lower value than the average buildings in the neighborhood and which also accounts for the degree of completion of construction of the building.

RR = The rate of relief from tax (if any) applicable to the owner occupier – to be determined by the Commissioner under the circumstance. May vary from area to area and from person to person.

CR = The annual charge rate expressed as a percentage of the assessed Market Value of the Property and which may at the State Governors discretion vary between owner occupied Property, residential & commercial Property, physically challenged persons and persons who have been resident in the same location for at least 12 years.

However, all these are subject to a minimum land use charge of N 5,000. No Property liable to charge shall pay a sum less than N5,000 irrespective of any relief.

Land Use Charge Annual Relief Rate

1 General Relief 40% Applicable to all Properties liable to pay Land Use Charge
2 Specific Reliefs: (Applicable to Property Owners and Lessees of 10 years and above)
I. Pensioner 100% Owner Occupied – 60 years & above
II. Persons with disability 10% Owner occupied
III. Aged Persons 10% Owner Occupied – 70 years & above
IV. Age of Property 10% 25 years and above
V. Long occupation by Owners 5% 12 years and above
VI. Federal and other State Government Properties 20% None Revenue Generating
VII. Partial Relief under the Land Use Charge Law 20% None Profit Making
2b The onus is on the person seeking a Specific Relief to provide relevant documents in proof thereof.
3 Payment within 15 days of receipt of Demand Notice 15% Timely payment Discount
4 Mode of Application for relief All applications for relief must be made to the Commissioner for Finance for approval supported with relevant documents.
5 Minimum Land Use Charge N5,000.00 No Property liable to Charge shall pay a sum less than N5,000.00 (Five Thousand Naira) irrespective of any relief granted.

Land Use Charge Annual Rates

The Annual Land Use Charge Rates to be applied to eligible Properties in Lagos State shall be as follows:

  • Owner-Occupied Residential Property – 0.076% per annum of the Assessed Property Value.
  • Owner-Occupied Pensioner’s Property – Exempted from Land Use Charge
  • Lagos State Government Properties – Exempted from Land Use Charge
  • Industrial Premises of Manufacturing Concerns – 0.256% per annum of the Assessed Property Value;
  • Residential Property (Owner and 3rd Party) – 0.256% per annum of the Assessed Property Value;
  • Residential Property (without owner in residence) – 0.76% per annum of the Assessed Value;
  • Commercial Property (Used by Occupier for Business Purposes) – 0.76% of the Assessed Value;
  • Vacant Properties and Open empty Land – 0.076% per annum of the Assessed Value.

Land Use Charge (Depreciation Rate)

  • The Depreciation Rate shall be determined by the age or depreciation rate of a building and considered in the computation of Land Use Charge for the Property.
  • The Depreciation Rate for a building shall be calculated as follows:


Year of Building Depreciation Rate
0 – 5 1%
6 – 10 0.9%
11 – 15 0.8%
16 – 20 0.7%
21 – 25 0.6%
26 – 30 0.5%
31 – 35 0.4%
36 – 40 0.3%
41 – 45 0.2%
46 – 50 0.1%


Offences and Penalties

  • The penalty for non-compliance with the provisions of the LUC Law has been increased from N100,000 to a maximum fine of N250,000 only, or a maximum imprisonment term of 3 years, or both. This penalty also applies to any person who incites another to refuse to pay the Land Use Charge or assists to misrepresent a person’s chargeable Property.
  • Default in the payment of Land Use Charge within specific periods attracts a penalty, and default of over 135 days renders the Property liable to enforcement by the State until all outstanding taxes, penalties, and administrative charges are paid.
  • The LUC Law 2018 extends the enforcement right of the State to include right to file and maintain a civil action against the owner, occupier, or authorized agent to recover the accrued LUC or to obtain an order of court for distrain of the Property.


The changes in the LUC Law 2018 are aimed to clarify and simplify the regulatory and operational framework of the Land Use Charge Law in the State. While the increases in the LUC payable, probably as a result of the increased market valuations of Properties (as currently being experienced by several Property owners and occupiers in the State) may help shore up the tax revenues of Lagos State, it places yet an additional burden on the already strained incomes of households and businesses (who are occupiers and owners of the Properties) in an economy which is currently struggling to fully exit recession.

In recent times, Government at all levels have been aggressively seeking to raise more revenues from taxation and so are closing in on taxpayers from all practicable angles. While the tax drive is getting steeper, family and business incomes are getting leaner due to the tough economy. Considering the economic difficulties currently being experienced by citizens in the country, this move by Lagos State to increase the LUC in order to generate more revenue could be considered insensitive and untimely, and if due care is not taken, may be met with very stiff resistance.

Earlier this week, the Organised Private Sector (OPS) rejected the newly passed Land Use Charge Law of Lagos State, 2018, vowing to fight the law with every legal means at its disposal.


[1] A person who is in occupation of the Property, whether lawfully or unlawfully and any person with a right to actual or beneficial occupation or mandate to occupy the land given by a person with such right, whether solely or concurrently with other persons, whether for monetary benefits or not.

[2] ‘Property’, according to the Law includes: a building; any improvement on land; a parcel of land, whether or not reclaimed, waterlogged or otherwise; a parcel of land and any building or improvement; a wharf or pier; and a leasehold of up to (10) years. This means that ‘Land not in use’ in the practical sense of it is also subject to the LUC.

[3] Appointed in writing by the Collecting Authority.


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