Challenges Associated With Property Rating In Nigeria (A Case Study Of Abeokuta North Local Government In Ogun State)

Project and Seminar Material for Estate Management

Challenges Associated With Property Rating In Nigeria (A Case Study Of Abeokuta North Local Government In Ogun State)


Property rating is not a new phenomenon in history it is as old as a man himself. The payment of tax was originated as man learned to live together in an organized community. In Africa society, for instance, grown-up males are often participating in communal labor to maintain the pathway leading to the village, farm kinds, construction of roads, public square. In view of the above historical facts, Abeokuta North Local Government Area is been involved in the course of rating exercise. This was backed up by the tenement rate edict of 1995, an edict that makes provision for the levying and collection of tenement rate on properties in Ogun State. The effective year that the local government understudy started the exercise was 1996, while they did re-assessment in 1995, up till date. The local government is responsible for the collection of the tenement rate but they are proposing to give it to a quality estate surveyor and valuers who are capable to collect the rates. This study is meant to confirm the challenges of property rating within the period of 1996 till date as well as to evaluate some of the benefits and problems confronting the success of rating exercise and the importance of property rating which make it serves as a durable source of revenue to the local government.

Table of Content

Preliminary Page(s)

  • Title page
  • Certification
  • Dedication
  • Acknowledgement
  • Synopsis
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 Statement of problem
  • 1.2 Aims and objectives
  • 1.3 Significant of the study
  • 1.4 Scope of the study
  • 1.5 Limitation of the study
  • 1.6 The study area
  • 1.7 Definitions of terms

Chapter Two

2.0 Literature Review

  • 2.1 Historical background of property rating in Nigeria
  • 2.2 Method of rating assessment
  • 2.3 Property rating authority
  • 2.4 Rating authority
  • 2.5 Types of property tax
  • 2.6 Major types of property
  • 2.7 Property rating process
  • 2.8 Tenement rate as a source of revenue generation

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Population o the study
  • 3.4 Sample of the study
  • 3.5 Sample size
  • 3.6 Sampling technique
  • 3.7 Data for the study
  • 3.8 Instrument for data collection
  • 3.9 Design of questionnaire
  • 3.10 Procedure for the administration of the questionnaire
  • 3.11 Procedure for the collection of data
  • 3.12 Tools for data analysis
  • 3.13 Problems encountered

Chapter Four

4.0 Data Interpretation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Analysis of data
  • 4.3 Analysis of questionnaire
  • 4.4 Interpretation of data

Chapter Five;

5.0 Summary, Conclusion and Recommendation

  • 5.1 Summary of findings
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • Appendix

Chapter One

1.0 Introduction

Property rating is a form of tax levied on real property and it is normally charged at local level for raising the revenue to carry out specific developmental projects. These rates are levied annually on owners or occupiers of landed property. It is charged on the annual value of occupation of the tenement and should reflect the income earning capacity of the built up landed property.

Historically, rating system has its origin in the Poor Relief Act, 1601 generally referred to in Britain as “the statute of Elizabeth”. This system inherited from Britain in 19th century has been recognized as a potentially rich source of raising fund within a Local Government Area for the purpose of providing and maintaining essential services and amenities in the rating area – such as roads, market squares, motor parks, communal halls are maintained through communal efforts. Individual in the community contribute their income and services for the up keep in their leaders’ household.

It is the present day made of living and modernization that brought about the present sophistication and form of its application and collection. The local government now takes some of the roles formerly played by the Obas, Obis or Emirs which are presently more complicated like provision of electricity, schools, roads, clinics, refuse proposal services etc.

The first real attempt to property rating was through the federal government guideline for local government reform of August, 1976. This document was designed to give guidelines on the structure, finance and administration of local government in the federation. The document introduced a pattern of rating law for the entire country and since then, all estate government have based their Rating Edict or Laws on it with very little modification. If is important to know that the major principles of the rating system in Nigeria is to defray the Local Government expenses. For example, that of Ogun state was called Tenement Rate Edict of 1995, where property types were zoned and appropriate unit was adopted. Thus the x – ray of the system in Nigeria was that of Tenement Rating, where value of the property for rating purpose is ascertained by a qualified estate surveyors and valuers and a percentage of the property is multiplied by a rate Nairrage to be adopted by the Rating Authority.

Property Rating is a viable or stable source of revenue generation, though 70 – 80% of the total revenue to the local Government. In Nigeria is from the federal statutory allocation.

This Rating is a way of broadening the financial base of Local Government to provide necessary facilities for its subject.

Other source through which the Local Government can raise funds are, insurance of death and birth certificate, approval of plans, revenue from motor parks and market, insurance of license etc.

1.1 Statement of Problems

The problem associated with rate collection cannot be underestimated. That is why many Local Governments have not being embarking on the implementation.

It is important to say that rating can only be effective when certain conditions such as street numbering, culture, qualified personnel, population etc have to be taken into consideration. Many Rating Authorities did not consider these that is why collection of rate is very tedious.

1.2 Aim and Objectives


The aim of this study is to examine the challenges associated with Property Rating in Abeokuta North Local Government of Ogun State.

  1. To identify the rateable hereditament in the case study.
  2. To examine the process of assessment of reteable properties within the case study.
  3. To evaluate level of awareness of property rating by general public especially in the study area.
  4. To identify the challenges of property in the study area.
  5. To recommended possible solution to problem, the Local Government is facing as a result of rating exercise.

1.3 Significance of the Study

The research shall be of immeasurable importance to the case study in particular and other local government area in Nigeria, because the research will provide possible solution to the local government area.

The research will also be useful to determine the effectiveness of the rate collection in Nigeria.

1.4 Scope of the Study

The study covers Abeokuta North Rating Authority. The data for this project was based on the information collected from the following.

  1. Kunle Olubode and company and Muri-Adi and associate (Estate firms)
  2. Abeokuta North Local Government (The Local Government under study). The study will covers the amount realized from property rating since 2007 – 2011 in the Local Government.
  3. Respondents to questionnaires.

1.5 Limitations of Study

  1. Non – availability of some important respondents as at the time of visits.
  2. Non availability of relevant textbook in the library.
  3. Financial constraint – Money sometimes, delay in carrying out some research.
  4. The time and stress involved in convincing respondents on the importance of the study.

1.6 Study Area

Abeokuta North Local Government has its headquarters at Akomoje in the Iberekodo Area of Abeokuta Ogun State capital. The Local Government first came into existence in 1981, as Abeokuta South Local Government the same year to make up the defunct Abeokuta Local Government it however re – emerged again on 27th September, 1991 when the federal government moved closer to the people at the grassroots.

The local government share common boundaries with the Odeda Local Government – North, Ewekoro local government – south, Abeokuta south local government – East, Yewa North local government – West.

Olumo rock is one of the most outstanding historical and socio – cultural landmarks in the Local Government Area and Abeokuta in general. The rock is situated in Abeokuta between Ikija and Ikehreku. It is 137 metres above the sea level. The rock is a massive outcrop of granite rock of primitive formation from which the state capital derives its name “Abeokuta” meaning under the rock. It served as a refuge for solders during the old Egba inter – tribal wars.

Apart from the fact it is a symbol of faith, unity and strength it remains sacred in the history of Egba land.
Abeokuta North Local Government Area has a projected population (in 1994) of about 200,000 people more than 90% of the area is rural, although more than 75% of people live in the urban area of the Local Government.

But as at 2006 census, the population of Abeokuta North Local Government was 201, 329 people with the area of 808km2. The Local Government includes the Oyan Dam, an important source of water to the cities of Lagos and Abeokuta.

The local government has 77 public primary schools and 14 secondary schools with 16 wards.

1.7 Definition of Terms

1. Property:

Is the right that one has in land or goods to the exclusion of all others rights gained from the ownership of wealth.

2. Property Rating:

This is a form of tax, levied on real property and it is normally charged at local level for raising the required revenue to carryout specific development project. This tax is aimed at promoting the total well being of inhabitants of the local community.

3. Rate Nairrage:

This is the rate in the naira force, in the rating area where the hereditament is located. Such rate is often fixed periodically after considering the financial needs of the rating authority.

4. Capital value:

This means the amount of money which may be obtained for an interest at a particular time from those individuals who are able and willing to purchase it.

5. Annual Value:

This implies “the rent at which any tenement or hereditament might reasonably be expected to let in the open market irrespective of the letting arrangement of the landlord and tenant”.

6. Rebus Sic Stantibus:

It is most basic principle in rating it explained that all hereditaments must be valued as they exist as at the time when the rate is being made (i.e. the property to value must be assed in the condition, state and circumstance existing at the time of assessment.

7. Hypothetical Tenancy:

This refers to all potential occupiers and actual occupiers as possible yearly tenants thus; the facts that a property owner occupier is irrelevant.

8. Gross Value:

It is defined in section 19(6) of General Act of 1967, as “the rent at which a hereditament might reasonable be expected to led from year to year if the tenant undertook to pay all usual tenant rates and taxes and landlord undertook to bear the cost of repairs and insurance and other expense if any necessary to maintain the hereditament in a state to command the rent”.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary of Findings

From the research carried out, the following summary can be made;

  1. Level of awareness of the people about property rating is low as table 4.3 shows that 54% of the respondent said they are not aware.
  2. The rating authority need to send demand notice before the owner of hereditament pays as table 4.4 shows that 80% of the respondent said they received demand notice before payment.
  3. The following are the challenge of rating collection as show in table 4.8
    • 70% of the respondent believes that there rate collectors are illiterate during the rating exercise.
    • 84% of the respondent believes that there are no qualified personnel to carry out the rating exercise.
    • 66% of the respondent believes that the publication they made before the collection of rate is not enough too them.
    • 84% of the respondent believes there is no proper street numbering, that is why the collection of rate is very tedious.
    • 60% of table 4.5 and 85% of table 4.7 of the respondent shows that many hereditament owners are not ready to pay their tenement rate,

5.2 Conclusion

The effective utilization of the proceeds realized from property rate for same of the project/services will stir up people to pay up their property rate promptly. Property rating has not been very successful in Abeokuta North Local Government of Ogun State because the money collected from property rating is very low and this fluctuate for the past five years (5 years) beginning form 2007-2011. There are benefits that are to be enjoyed by the local authority and the rate payers through prompt payment and collection of property rating. We all know that problems inherit during the course of rating exercise are meant to be solved since they are part and parcel of normal life situation. Despite the problems property rating remains the best source of revenue for ant local government.

Reliance on local government authorities for the collection of property rates has been a failure and will continue to be a failure as long as they collect their won because staff performance will continue to be low for lack of sufficient equipment.

The alternative to this is to contract and collection to the professional estate surveyor and valuers who performed well under the infrastructural development fund, funded by the World Bank. The professional estate surveyors and valuers should always advice the local government to invest or use the property rates collected for the projects that will have bearing on the people of the area and could encouraged the rate payers to pay promptly when such is formerly demanded by the local government or its agents.

5.3 Recommendation

Having observed these entire shortcomings, I hereby recommend as follows:

  1. Adequate public enlistment: People (rate payers) must be informed about rating exercise. The government (both the local and state (must create a forum whereby people in the community will be enlightened about rating exercise. This will help them to now the importance of rating and the benefits the rate payer will enjoy in paying tenement rates.
  2. Judicious use of revenue collected: Embezzlement of fund destroys society and make government effective in its administration. Therefore, there should be no act of indiscipline or misconduct as property rate is concerned and revenue collected should be used for the provision of social amenities that can enhance a good standard of living. The proceeds must not be diverted to others use.
  3. Proper street naming and house numbering: The local government should employ the expert that can render proper houses numbering. Something must be done to Haphazard Street naming to facilitate successful rating exercise.
  4. Implication of tenement law: In as much there is edict that backed the rating practice in Ogun State, local government chairman are therefore advice to make use of existing tenement law in the state. Talking legal steps against rate defaulters by sealing up their premises will lead to effective rating exercise.
  5. Provision of identity card for rate collectors: The identify card must be available to the rate collectors. This will save the collectors from embarrassment always suffer from the public. Also it will curb with activities of un-authority collectors on the field.
  6. Provision to inspect the ratable hereditament: All landlords or occupies of ratable hereditament are implored top co-operative with the rating authority by allowing rating officials to have access into their premises for internal inspection. They should also supply all the information about their properties to help the appraiser in arriving at the true and correct rate able value of their properties.

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