Property Rating As A Source Of Local Government Revenue In Imo State (A Case Study Of Oru-West Local Government Imo State)

Project and Seminar Material for Estate Management

Property Rating As A Source Of Local Government Revenue In Imo State (A Case Study Of Oru-West Local Government Imo State)


This project attempts on the discussion of property rate as a source of local government reenue. It is centered on Oru-West Local Government in Imo state. Property rating or tenement rating is the tax levied on the owners of properties that are rateable. This work traces the history of property rating in Nigeria Local Government. It states the definition of some basic terms. The aims of property rating in Nigeria local government cannot be over emphasized.

Owning to the obligations and works laid on the hand of the local government authority, they engage in tenement rating with the aim of getting the following: To increase the local government revenue, to provide the poor with the need facilities, to encourage the owners of building to develop them and development of the council unit and the purchase of big machines. Rating has been used to discourage urban decay by answering the big question of how to put cities in order.

It is now noted according to the fact from Oru-West Local Government that many houses has been pulled down and new ones has been created because of effect of heavy taxation on such properties. Although rating has been noted to be the best way of getting money, there are some problems like lack of personality, skills, equipments needed etc. which are discussed in detail in chapter four of this project have been disturbing the free flow of ration of our economy.

Chapter One

1.0 Introduction

Property rating which is also known as tenement rating is the rate or tax levied upon the owners or occupiers of properties or tenements which are rateable. It is the kind of tax or rate which is levied on the properties which are not government or publics own. Rates from the main source of revenue to the local government. The term tenement rating was not known until 1601 when the United Kingdom introduced the poor relief fund gradually, the property rating began to gain ground in the nations and especially Nigeria local government authorities which I now a great source of the local government’s finanace not only for the development of their areas of jurisdiction but to maintain these places e.g Oru – West local government is one.

Before the introduction or rating, the local government based their realization of fund on the grants from the state and federal, borrowing from banks, Agriculture etc. and some other way of fund realiation. The fact is that the money the government got those days were not enough to pilot the affairs of their areas. They were looking for ways on which they can embark on so to get adequate money owing to the introduction of property rating, the government now have another means of getting money.

The aim for the introduction of property rating is to enable local government realize adequate revenue that should be used in providing all the needed facilities like pipe-borne water, electricity, access roads, good streets etc. for the consumption of both poor and rich people.

Howeer, with taxation by rate the amount of revenue required is fast decided and ths total liability is then distributed amount the tax payers or rate payers. The maount of the tax is fixed by dividing the sum to be raised by the aggregate rateable value. The basis of assessment of the property rate is the rateable value of land and buildings.

In Oru-West local government Imo stae, the record has it that a handful of money was realized from tenement rating. This helped them more than the agricultural sector and other sectors in the area therefore, rating is of paramount help to the world and Nigeria local governments in particular.

1.2 Historical Background of Oru-West Local Government Area

Oru-West local government was created in the year 1996 from the old Oru local government. It is made up of ten towns namely: Ohakpu, Eleh, Aji, Nempi, Ozara, Otulu, Ubulu, Amaofu, Ibiasoegbe and Mgbidi which is the headquarter of Oru-West local government area.

It covers an area of twenty-five kilometer with estimate population of 1.4 million inhabitants. The people are mainly villagers and predominatly farmers. For instance, Eleh people and known for cassava production, Otulu are known for palm tree and plantain plantation, Mgbidi are known for poultry keeping, Aji are known for yam production, Ibiasoegbe are known for livestock keeping and management, Ozara people are known for fishing because of the large lake in their town.

The local government council headquater at Mgbidi was built and furnished by revenue generated from property rating in the area.

1.3 The Historical Background of Property Rating in Nigeria

Property rating in Nigeria is not entirely new. In the public services were very few. Nevertheless roads, market places, chiefs palace, meeting squares were built and maintained with communal efforts that is, individuals in the community contributed their quota of crops and services for the up-keep and maintenance of all these facilities. These contributions were nothing more than rates.

Our rating system in Nigeria was derived from Britain laws. The rating law in Britain originated with the poor relief Act 1601 which provided for the levying of taxation on every occupier of land houses etc towards the relief of the poor. This law is often called the statute of Elizabeth of England.

Property rating was first placed on the Nigeria statute book in 1915, this law was the organized place of property rating as a source of local government finance. By 1958, the 1915 ordinance was modified and amended to form the assessment oridncance caps 15 and 16 laws of Nigeria and Lagos. In 1975, when the head of state, General Mohammed came into power, there was a local government reform that is, the various local government Edicts were enacted and this changed the property rating system. The various states were empowered to enact local government Edict that presently gae rating the legal backing with which it operates in Oru-West local government Area, Imo state.

1.4 Research Methodology

Information was collected from records pertaining to property rating in local government secretariat, Journals, Oral interviews, lectures delivered on property rating in the department of Estate management and discussions/interviews text-books and project work.

1.5 Some Basic Terms Associated with Tenement Rating

In the discussion of property rating as source of local government revenue one must expect to come across some of the words that are associated with ratin. In the first place let us take rating.


This is defiend as the levying of landed properties in the form of taxes on their uses, occupation and ownership which is used for the provision of facilities by the local government that is, the third tier of government in their areas of jurisdiction.

Property Rating:

This is a form of taxation, it can be tax on ownership or occupation or use of a landed property i.e tenement rating it can be levy or tax on the head of any taxable adult who resides or works within a local government area that is, capitation rate. Howereer, property rating is the rate or tax levied upon the owners or occupiers of properties or tenement which are retable. Rates form the main source of internal revenue to the local government.

Rateable Value:

This is the amount of money which the rate nairage is applied on after the deduction of outgoings and decapitalization amount which had been taken out from the money. For instance, if a lessor gets say N1000 as the rent. He will then remove the outgoings and the rate officers will decapitalize the amount with capitalization amount say, 5% the remaining money is the rateable value.

Rate Nairage:

This is the amount per naira payable as the rate on the net annual value or rateable value of a property or heeditament in a particular year by the appropriate erating authority. This is determined by calculating the total expenditure expected too be done and then divide by the figure of the total ratable value of rateable properties or herditaments in the rate nairage.


This means land with building which is help or occupied as a distinct or separate tenancy or any pier but does not include land without building.


The term herditament is the property which is liable to rate, it is shown in the production as a seprate item. It include all physical land and building. It is also the right or interest over a unit of a reatable property. Hereditament can be physical or non-physical from the rating point of view.


This is the act of applying the decapitalize value say, 5% according to the one chosen by the government so that the rateable value can be derived. In Nigeria local government 5% is used for the decapilized amount. The aim of decapitalization is to arrive at the amount which the rate to be paid. The value gotten is known as the decapitalized value.

Gross Value:

This is the rent at which a hereditament might reasonably be expected to let from year to year if the tenant under took to pay all usual tenants rates and taxes and the landlord under took to bear the cost of the repairs and insurance, and the other expenses if any, necessary to maintain the hereditament in a state to command that rent on the property.

Net Annual Value:

This is an amount equal to the rent at which it is estimated that the hereditament might reasonably be expected to let from year to year, if the tenant under took to pay all, usually tenant’s rates and taxes, and to bear the cost of repairs and insurance and other expenses if any, maintain the hereditament in a state to command that rent.

Assessed Value:

The assessed value refers to the value at which the tenement is for the time being assessed in accordance with thte order made under section 106.

Scheduled Tenement:

This means a tenement in any local government area in the state.

Rental Value:

This is described as the open market rent paid or payable from year to year in respect of the tenement in question or as established by analysis and comparison of the general level of rent actually paid for that class of tenement in that are of locality in case of controlled properties.

Rateable Occupier:

It is not easy to give accurate and exhaustive definition of the word “occupier”, occupation include possession as it’s primary element but it also include something more, legal possession does not of it self constitute an occupation.

However, the owners of a vacant house is in possession and may maintain trespass against any one who invades it, but as long as he leaves it vacant, he is not rateable for it as an occupier. If howeer, he furnishes it, and keeps it ready for habitation whenever he pleases to go to it, he is an occupier though he may not reside in it one day in a year.

One other hand, a person who without having any title takes actual possession of a huse or piece of land, whether by leae of the owner or against has will, is the occupier of it.

Another element that is necessary to constitute occupation is permeanence. An itinerant show man who erects a temporary structure for his performance may be an occupier of the structure.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

In the circle of the local government arm of the nation, property rating and taxation have stand to bridge the gap of lack of finance for the development of their areas. But rating as it was mentioned in the previous pages needs a very great assistance in order to meet up with the required rate. Therefore, the federal and the state government should help the local government to improve the practice of rating in the areas where the practice is lacking.

In the real sense, the only help which Oru-West local government is deriving from rating is enough to make one belive that landed properties and their contributions are of vital position in the growth of an economy.

One can understand that the major problem is not because of lack of adequate personnels but many property owners always try to avoid the payment of rate,some owners abuse and fight collectors. These problems can be solved by the enlightenment of the people.

Rating can stand firm as a source of revenue if property are adequately administered.

5.2 Recommendations

In order to solve these problems which inhibit the realization of the colossal revenue from property rating in Oru-West, a multi-dimensional approach of solving all the problems is recommended because even if one of these problems is solved and leaving others unsolved its singular solution would not bring about the necessary change, progress would undoubtedly be hindered by the other problems unsolved. Consequently, each of these problems must be solved to ensure a continuous progress. The following solutions to these problems are however strongly recommended:

a) System of Rating:

The present system of rating identifies types of property merely materials used in building construction, such as sandscrete and mud. The system takes no account of the value and income generating potential of properties, thus, value factors such as the use to which the property is put, size, location and neighbourhood of properties are never considered. It is suggested that properties should be assessed having regard to their value and these value factors should be carefully considered.

b) Up to Date Valuation List

The present system of compiling the valuation list is not appropriate, the use to which most properties are put are hardly considered and recorded. It is suggested that supplementary list should be promptly prepared to cover new developments.

c) Frequent and Regular Revaluation to Ensure Equity and Fairness

The study revealed that assessment of properties are still based on their rental values. The fact that rental value of properties are not stable called for the need for frequent and regular revaluation. The rate placed on property Act in 1980 is kdkd and the same rate is still charged today. Also the use to which this property is put may change but because there is no up to date valuation list coupled with irregular revaluation, the rental value may not be known. Also those collected should be paid into the revenue account of the local government promptly. Any employee of the council who fraudulently embezzles the local government’s money should be prosecuted and convicted accordingly. This will serve as a deterant to others.

5.2 Conclusion

Property rating as a source of local government revenue is the theme of this study.

The study considered theoretical and practical issues relating to property rating in Oru-West local government with emphasis on the need for revenue by Oru-West local government council, the administration of revenue derived from rates, its problems and means of solving them etc.

The study explained that property rating could serve as an inexhaustible “Goldmine” that grows richer in size and productivity with time.

It has therefore been established that productive and fair property rating constitute a very rich source of finance to Oru-West local government Area of Imo state. The study also reveals that a number of problems under the smooth process of property assessment and rate collection. These problems are the main obstacles preventing the realiatio of the vast potentials inherent in property rating.

However, the study revealed that unless these problems are solved, the councils dependence upon grants and external loan will be inevitable and if these problems are solved, property rating will become a ready source of revenue to Oru-West local government.

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