Tenement Rate is a tax imposed on OCCUPIERS of DEVELOPED PROPERTIES within a locality by the Local Government Authority. In other words, it is a tax that the Local Government Authorities charge on properties that are developed and occupied within their respective domain. This means that Tenement Rate cannot be charged on undeveloped land and unoccupied properties anywhere in Nigeria.
Tenement rate is usually demanded and paid yearly and the amount payable each year is assessed based on the annual value of the subject property. States and Local Governments are empowered to make their regulations regarding the administration of tenement rate within their jurisdiction. However, for most Local Governments in Nigeria, the current Rate of assessment (also known as Rate Nairage) is 4k for every 100k. Therefore, one can actually calculate one’s rate liability thus: ANNUAL VALUE x 0.04.
So Whose Responsibility is it to pay Tenement Rate – Tenant or Landlord?
This question has generated a lot of debate and controversies between tenants and landlords, and even among lawyers. But the answer is quite straight and simple. The law establishing Tenement Rate puts the primary liability on the OCCUPIER of any developed property in Nigeria. This means that it is the responsibility of the person in OCCUPATION of the premises to pay Tenement Rate.
So, where a property owner rents out a house to a tenant; the tenant, who is LIVING or USING the property should pay Tenement Rate. Where on the other hand, a property owner is LIVING or USING his/her own building, such owner pays. The emphasis is on the person residing or occupying the house.
However, there are instances where the rating authority finds it difficult to reach a tenant in a rented apartment, what they do is to hold the Landlord or the Managing Agent secondarily liable. This means that the Local Government will demand the money from the Landlord or the Managing Agent and expect him/her to collect it from the tenant when collecting his/her rent. Even in serviced apartments or big commercial properties where the tenants pay service charge, tenement rate is usually NOT paid from the service charge account unless it was expressly provided for in the estimates/projections for service charge expenditure and therefore reflected in the Lease/Tenancy Agreement. It should be noted that religious organizations are exempted from paying tenement rate.
Section7 (4thSchedule) of the 1999 constitution of Federal Republic of Nigeria; and Taxes and Levies (Approved List of Collection) Act No. 21 of 1998 empowers the Local Government Authorities to demand and collect Tenement Rates. In the Federal Capital Territory (FCT), the enabling law is the Federal Capital Territory Act Cap 503, LFN, 2004 (Vol.3) as amended while AMAC Tenement bye-Laws makes specific guidelines on the collection of Tenement rates in Abuja Municipal Area Council.