In the year 2001, the Lagos State Government consolidated all land-based rates and charges previously applicable under Land Rates, Tenement Rates and Neighbourhood Improvement Charge into a single rate. Therefore on June 22, 2001, the Land Use Charge became applicable to landed properties within the state as prescribed by the Land Use Charge Law, No 11 of 2001.This was done with the dual purpose of simplifying the payment of property tax and generating additional revenue for the state through effective enforcement. Although, the Land Use Charge of 2001 was not effective in Lagos State as only a few residents were aware of it and even fewer complied with the provisions.
Gbolahan Yishawu, a member of the Lagos State House of Assembly, was reported to have lamented in December 2017 that only about 300,000 out of an estimated two million eligible properties paid their land use charge in the State. The Lagos State House of Assembly passed the Land Use Charge Bill 2017 on Monday, January 29, 2018, and was signed into law by Governor Akinwunmi Ambode on Monday, February 5, 2018. This law has effectively consolidated all land-based rates and also incorporated several improvements to enable it to correct the inadequacies of the previous land use charge law and reflect current economic realities.
The land use charge is now based on the commercial value of a property and valuation will be assessed by professional estate valuers appointed by the state. Valuation will also now be updated every five years. Fairness is also evident in the new law with the establishment of an assessment appeal tribunal where people may appeal the decision of perceived overvaluation of their assets.
However, the law provides a delineation of properties exempted from payment like registered educational institutions and public or private libraries are now only exempted once they are certified by the commissioner to be non-profit making, properties owned and occupied by a religious body will be exempted if used exclusively as a place of worship or religious education. If used otherwise, they become chargeable. Other exemptions include public cemeteries and burial grounds, all palaces of recognised Obas and Chiefs, and any property specifically exempted by the governor of Lagos State. Properties occupied by non-profit making organisations may get only partial relief and not complete exemptions
The law also makes provision for self-billing and electronic payment of the land use charge by owners. This is an indication that the government is employing technology to make compliance much easier.