Demystifying Land Use Charges in Nigeria: Meaning, Payment and Recent Trends

December 14, 2023
5 mins read
Demystifying Land Use Charge in Nigeria

As a Real Estate Investor based in Lekki, Lagos, I understand the intricacies of property ownership and management in Nigeria. One aspect that is often challenging to property owners is the Land Use Charge. In my experience, a thorough understanding of these charges is not just about financial management; it’s about navigating the local real estate landscape with acumen. 

Complying with these regulations is essential, not only to avoid legal entanglements but also to contribute to our local economy and community development. Through my insights, I aim to demystify Land Use Charges, offering property owners a clear perspective on how these charges impact their investments and the broader implications for the Nigerian real estate market.

What are Land Use Charges?

A Land Use Charge is a levy imposed by the government on property owners in Nigeria. It’s based on the value of the land and the buildings on it. This charge is like a property tax, where the amount paid depends on how much the property is worth and where it’s located.

Regulations and Legal Framework

  1. Legal Basis: The Land Use Charge is grounded in Nigerian law, with each state having its own specific legislation. For example, Lagos State has the “Land Use Charge Law.”
  2. Administration: It’s typically administered by state and local governments. They are responsible for assessing properties, determining the charge, issuing bills, and collecting payments.
  3. Assessment and Calculation: The charge is calculated based on factors like the property’s size, location, and the type of buildings on it. Government assessors value the property and determine the charge accordingly.
  4. Compliance and Penalties: Property owners are required to pay this charge annually. Failure to pay can result in penalties, including fines or legal action, and in extreme cases, the government may take possession of the property.
  5. Dispute Resolution: There are provisions for property owners to contest their assessments if they believe they are incorrect. This process is outlined in the respective state laws.

Variations Across States

Land Use Charges can vary significantly from one state to another in Nigeria, reflecting different local economic conditions and property values.

  1. Rate Differences: Some states might have higher rates due to higher property values, especially in urban and commercially developed areas.
  2. Exemptions and Discounts: States may offer different exemptions or discounts. For example, exemptions for pensioners, properties owned by religious organizations, or properties below a certain value.
  3. Calculation Methods: The method of calculating the charge might differ. Some states might use a flat rate, while others use a more complex formula considering multiple factors.
  4. Enforcement Practices: The strictness of enforcement and the severity of penalties for non-payment can also vary.

New Reforms to The Land Use Charge in Lagos

The Lagos State Government’s recent reforms to the Land Use Charge (LUC) system encompass a range of initiatives designed to enhance efficiency, transparency, and ease of doing business:

  1. Geographic Information System (GIS): Implementation of GIS for property mapping and identification, streamlining the billing and payment process.
  2. Electronic Document Management System (EDMS): This system improves the management and processing of documents, increasing efficiency and accuracy.
  3. Digital Mapping: Complements the EDMS in land management and planning.
  4. Harmonized Payment Schedule: The Demand Notice/Assessment Letter now includes all fees for the Governor’s Consent in one transaction.
  5. Reduction in Penalties for Defaults: The 2020 Law reduces penalties for late payments.
  6. Exemptions for Pensioners: Certain groups, like pensioners, are exempt from the LUC.
  7. Waiving Past Penalties: Waiver of penalties for the years 2017 to 2019.
  8. Discounts for Early Payment: A 15% discount for early payment, with an additional 10% COVID-19 incentive, totaling a 25% discount if paid before the due date.

These reforms, particularly the use of technologies like GIS, EDMS, and digital mapping, along with financial incentives, represent a comprehensive approach to modernizing the Land Use Charge system in Lagos, making it more efficient, user-friendly, and equitable.

Paying Land Use Charges

Paying Land Use Charges in Lagos is made efficient and convenient through the integration of technology. Here’s a more detailed guide to the process:

  1. Access the Official Website: Start by visiting the official Lagos State Land Use Charge website. This platform is the primary source for information and payment processing.
  2. Enter Your Bank Payment Code: On receiving your Land Use Charge notice from the government, locate the Bank Payment Code printed on it. This unique code is essential for processing your payment accurately.
  3. Utilize the Lagos Online Assistant (LOLA) Platform: This innovative platform offers a streamlined payment experience. You can access LOLA in several ways:
  4. Follow Payment Instructions: Once on the LOLA platform, follow the step-by-step prompts to complete your payment. The system is designed to guide you through each stage, ensuring a smooth and hassle-free transaction.
  5. Receive Confirmation: After payment, you’ll receive an electronic confirmation. This serves as proof of payment and should be retained for your records.

The introduction of the LOLA platform and online payment systems reflects Lagos State’s commitment to modernizing and simplifying the payment of Land Use Charges, ensuring convenience, transparency, and enhanced public service delivery.

Consequences of Not Paying Land Use Charge

Failure to pay the Land Use Charge in Lagos can result in severe consequences, which may escalate over time:

  1. Penalty Fee: Non-payment can attract a hefty penalty of up to N100,000.
  2. Imprisonment: In some cases, non-compliance can lead to imprisonment for up to three months.
  3. Additional Charges: Obstructing officials, damaging property identification plaques, or inciting others to refuse payment can incur the same penalties.

These penalties emphasize the importance of timely payment of the Land Use Charge to avoid legal and financial repercussions. The severity of these consequences underscores the government’s commitment to enforcing compliance with the Land Use Charge Law.

How Land Use Charge Is Calculated

The calculation of the Land Use Charge (LUC) in Lagos State is a detailed process involving several critical factors:

  1. Market Value of the Property: Assessed by professional valuers appointed by the Commissioner of Finance. It includes the combined value of the land and the buildings on it.
  2. Annual Charge Rate: For owner-occupied residential properties, this rate is set at 0.076% per annum of the property’s assessed value.
  3. Property Type: Different rates apply depending on whether the property is owner-occupied, rented, or used for commercial purposes. Each category has a specific charge rate.
  4. Relief Rate: Determined by the Commissioner and published in the State Government Official Gazette. This rate offers tax relief under certain conditions and is reviewed every five years.

The LUC formula: LUC=[(LAxLR)+(BAxBRxDR)]xRRxCR

  • LUC: Annual Land Use Charge amount in Naira.
  • LA: Area of the land in square meters.
  • LR: Average market value per square meter in the neighborhood.
  • BA: Total developed floor area of the building or total floor area of an apartment with a separate ownership title.
  • BR: Average construction value of medium-quality buildings in the neighborhood per square meter.
  • RR: Relief rate applicable to the owner-occupier.
  • CR: Annual charge rate as a percentage of the assessed market value.

This comprehensive formula ensures that the LUC is fairly calculated, reflecting the property’s market value and the specific conditions of ownership and use.


In my journey as a Real Estate Investor and accounting professional, I’ve seen firsthand the importance of understanding and effectively managing Land Use Charges in Nigeria. These charges, based on the market value of the property, are more than just a financial obligation; they are a reflection of our commitment to responsible property ownership and development.

The recent advancements in Lagos State, such as the implementation of GIS and EDMS, signify a move towards more transparent and efficient land management systems. However, property owners must be vigilant; failure to comply can lead to significant consequences, including legal penalties.

Understanding the calculation of these charges is key to ensuring fairness and aligning with the true value of our properties. This balance of development needs and property owners’ responsibilities is at the heart of Lagos State’s approach to land management and revenue generation, a model that other Nigerian states could learn from.


Author’s Note: Hi, I’m Joy – a seasoned finance professional based in Lekki, Lagos. I balance a fulfilling career with successful real estate investments in Nigeria. Join me as I share insights on navigating the world of real estate investments in Nigeria. Let’s find your dream home and unlock financial success together!

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