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Stakeholders reject proposed 10% tax on commercial rent in Lagos

Stakeholders in housing and real estate sectors in Lagos State on Tuesday appealed to the Lagos State House of Assembly to scrap its proposed 10 per cent tax on commercial properties.

The stakeholders made the appeal at a one-day public hearing on “A Bill for a Law to Regulate the Relationship of the Parties Under Tenancy Agreements and Specify the Procedure for the Recovery of Premises in Lagos State and for Connected Purposes.’’

The News Agency of Nigeria (NAN) reports the public hearing was organised by the House Committee on Housing headed by Mr Olanrewaju Layode (APC-Badagry I).

According to them, the 10 per cent being proposed as deductable tax from the gross rent payable to the Lagos State Tax Authority will discourage investment in real estate.

Section 9 of the proposed bill says “Where a payment for rent becomes due or payable to the landlord, a commercial tenant shall deduct 10 per cent of the gross amount of the rent as tax on the date the rent is paid and immediately pay the amount deducted to the Lagos State tax authority.

“The commercial tenant shall in addition to the remittance to the Lagos State Tax Authority, render a written account of deducted tax.’’

The stakeholders also advocated that the Lagos State Real Estate Transaction Department (LASRETRAD) should be made a full agency of government for effective monitoring.

Speaking, Mr Bolarinde Patunola-Ajayi, the immediate past President of Nigerian Institution of Estate Surveyors and Valuers, urged the House to look into the 10 per cent tax on commercial rent.

According to him, such has become necessary to avoid double taxation, saying that landlords are already paying withholding tax on all rent.

Patunola-Ajayi, however, noted that the bill had simplified handling of tenancy related-matters and removed a lot of complicated issues, calling on the lawmakers to make LASRETRAD a full-fledged agency.

He also urged the lawmakers to ensure the proposed law addresses the control of service providers, which he said were the estate agents.

“Estate agency is a purely professional service and should be handled by professionals.

“Let the law restrict the professionals that would handle estate agency to be registered estate surveyors and valuers and estate agents registered with LASRETRAD,’’ he added.

Also, Mr Dele Oloke, the Chairman, Nigerian Bar Association (NBA), Ikeja Branch, described the bill as a good development but should be subjected to innovations and amendments.

Oloke said: “The issue of saying commercial rent should pay 10 per cent, I don’t think it will be allowed by joint tax board because that will become issue of double taxation. It will only discourage investment in real estate.

“It is the duty of government to provide shelter, where that duty is abdicated for investors who take bank loans at commercial rates, you cannot now gag what they do with it or that they should give you part of that money.

“That will be added to their liability to the banks, when they default in paying that loan, the banks pound on their property.

“A lot of foreign funds are in real estate, we should not discourage investors. It is not the best,’’ Oloke said.

In his comment, Mr Osagie Odiase, a Real Estate Consultant, who noted that the bill was good, said “We want a situation where all agents are properly documented and registered in the state.

“We are saying upgrade LASRETRAD to an agency and enforce it that all property owners engage only registered agents so that everybody can be held accountable.

“By saying commercial properties should pay 10 per cent rates, we are saying that is just increasing rents. Rents will go high, businesses will be relocated from the state,’’ Odiase said.

He said that there were already existing taxes on property like Withholding tax and Land Use Charge.

Chief Adeolu Ogunbanjo, the Chairman, Association of Estate Agents in Nigeria (AEAN), Lagos State Chapter, said “Honestly, it is a very good bill that has corrected and addressed some of those seeming lapses of the old law.’’

Ogunbanjo urged the House to further expand and empower Citizens Mediation Centre for alternative disputes resolution for tenants and landlords.

Mr Nelson Ekujumi, a landlord, who also commended the bill, advocated a time frame for tenancy-related suits in law courts, adding that landlords suffered a lot from tenants who made away with rents and other bills.

Ekujumi, who also advocated ADR, said: “I am not emboldened to go to court whenever I have issues with my tenants. I am always looking for short cut.’’

While overviewing the bill, Mr Sanai Agunbiade, the Majority Leader, said that the proposed law was very rich and made provision for property recovery, saying the bill sought to repeal 2015 tenancy law.

He said that the bill had 34 sections and 15 schedules.

Earlier, Layode said that the bill sought to rectify lapses observed in the implementation of the extant tenancy law, with a view to regulating relationship between landlords and tenants.

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