Who Pays the Tenement Rate in Nigeria — Landlord or Tenant?
Confusion often arises over who pays the tenement rate in Nigeria. It depends on the property location and the tenancy agreement. Understanding this begins with defining the tenement rate, noting how Lagos differs, and considering changes from the Land Use Charge Law 2020.
To help clarify, let’s break down how the rules differ across key locations and situations.
What is a tenement rate?
A tenement rate is a local tax charged annually by councils on the rateable value of occupied buildings, as set out in the 1999 Constitution.
In most of Nigeria, the occupier pays. If the owner lives there, they pay; if a tenant occupies, the tenant pays—unless the agreement states otherwise.
Vacant land and unoccupied properties were not charged, but Lagos changed this with the Land Use Charge.
How Lagos is different: the Land Use Charge Law 2020
Lagos State took a different path, starting with the 2001 Land Use Charge Law—significantly reformed by the current 2020 law. Lagos combined three property-based charges into one:
- Tenement Rate (formerly collected by local governments)
- Land Rates
- Neighbourhood Improvement Charge
These charges are now combined into one annual Land Use Charge (LUC), collected by local councils under the State Finance Commissioner.
In 2018, LUC rates rose, sparking resistance. The 2020 law reversed increases, waived penalties for 2017–2019, and exempted pensioners. The 2020 law is current; most articles still cite 2018.
With this context, who pays the Land Use Charge in Lagos?
Under the Land Use Charge Law 2020, the property owner is legally liable for LUC. “Owner” includes anyone holding a ten-year or longer lease or receiving rent.
However, the law allows for two important practical arrangements:
- A tenant may pay LUC, then recover it from the landlord, often by deducting the amount from rent.
- The Commissioner can appoint an agent, including a tenant, to collect LUC from the occupier as needed.
The default is owner payment. If a landlord wants a tenant to pay LUC, the agreement must clearly state this.
Key things to know about the Lagos LUC
- LUC applies to empty land and vacant properties. A 10% relief for unoccupied buildings and a 20% relief for empty land are offered, but the charge still applies.
- Pensioners are exempt. Property owned and occupied by a pensioner (any retiree or person 60+ no longer earning) is exempt.
- Religious buildings, public cemeteries, registered schools, and state-recognized palaces are exempt—unless used for private income.
- Calculation. LUC is based on the assessed market value of the land and improvements, multiplied by the applicable annual charge rate (which varies by property use — owner-occupied residential, tenant-occupied residential, commercial, industrial, etc.).
- A 15% discount applies for early payment. Penalties for late payment: 10% (45–75 days late), 20% (75–105 days late), 50% (105–135 days late).
- After two missed notices, the state can seize property or take legal action. Fines may reach ₦100,000. Imprisonment can last up to three months.
Now that we’ve explored Lagos, let’s discuss how the rules differ in other Nigerian states.
Outside Lagos, traditional regimes apply, and practices vary.
- In Abuja, Area Councils collect tenement rates from occupiers, though practices can vary.
- States like Rivers, Kano, Oyo, and Ogun usually require the occupier to pay, unless the agreement says otherwise.
- Several states are studying Lagos’s model and adopting consolidated property charges.
Outside Lagos, always check your local laws and agreements for payment responsibility.
The practical takeaway
In Lagos, the landlord is legally responsible for LUC. If the tenant pays, they should be reimbursed unless otherwise agreed.
Outside Lagos, tenants usually pay the tenement rate by default, unless the tenancy agreement says otherwise.
Agreements should clearly state who pays the tenement rate, LUC, or other charges. Assumptions never win disputes.
Lease.ng helps landlords and tenants in Nigeria create clear, state-specific tenancy agreements that specify payment responsibilities. Start your agreement easily today.