The Lagos State Land use Charge which was first enacted in 2001 has been recently repealed and re-enacted rendering the previous charges obsolete. Lagos State with the need to improve efficiency in the state decided to review it’s laws and reform them if necessary with the Land Use Charge (LUC) inclusive.

There’s so much awareness and uproar going on about the new LUC and the high increase margin, the ultimate question remains, who really pays these charges, the Land owners or the tenants?
According to lagos state laws, the land owners are required to pay these charges but who eventually bears the burden of these charges?

While it looks like the Land owners bear these costs, in reality the demand and supply of housing in Lagos will ultimately determine who these charges will affect. Presently Lagos State already has a high deficiency of houses running in hundreds of thousands and an ever increasing population leading to a booming industry which has kept property owners at an advantage. The population surge has made the Lagos State Real estate sector one of the best in the world because of the huge returns on investments and with promises of increased returns because of the limited nature of Land.

The fixed nature of land, the insignificant involvement of the government in the ownership of homes, the limited access to funds for property ownership and developments and continuous increase in population as a result of rural-urban migration are still part of the challenges that the Lagos State Government is yet to look into

In the light of these Challenges it is not unlikely that these charges imposed by the Government would ultimately be infused into rents payable by tenants thereby making housing expensive than it already is in Lagos State.

It would be a cycle of the government collecting the land use charge from the landowners, Land owners increasing rents and transfering the burden of the charge to the tenant, the revenue generated is split between state government and local government, local government invests in the development of the area which leads to appreciation of the economic value of the area which ultimately leads to increased returns on property investments for landowners and the cycle repeats itself all over. In the long run the land owner gradually absorbs himself from directly paying this charge.
There has been no better time than now to start considering owning real-estate investments.

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