Economy

Nairobi land rates to increase

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Nairobi City skyline. FILE PHOTO | NMG

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Summary

  • Land owners in Nairobi will soon start paying higher rates after City Hall tabled a proposal that fixes the charge to current asset valuation.
  • City Hall said new rates will be based on between 0.1 and 0.115 percent of the current value of undeveloped land, setting stage for costly levies.
  • Currently, property owners pay land rates at 25 percent of the unimproved site value based on the 1980 valuation roll, which City Hall reckons has seen it lose on the appreciation of plots.

Land owners in Nairobi will soon start paying higher rates after City Hall tabled a proposal that fixes the charge to current asset valuation.

City Hall said new rates will be based on between 0.1 and 0.115 percent of the current value of undeveloped land, setting stage for costly levies.

Currently, property owners pay land rates at 25 percent of the unimproved site value based on the 1980 valuation roll, which City Hall reckons has seen it lose on the appreciation of plots.

Nairobi County Lands and Urban Planning CEC Charles Kerich said property owners will start paying higher rates compared to the current once once the new valuation roll, which is awaiting public participation, comes into effect.

He said the new valuation roll has been submitted to the county assembly, which will arrange for public participation

“The new valuation roll is currently before the county assembly which, after public participation, will come up with a figure of the percentage to be charged as rates on all ratable properties in the capital,” said Mr Kerich.

“Definitely the rates will have to go up but it cannot go too high. It can only go high up to a point where Nairobi residents will be comfortable to pay,” he added.

City Hall is seeking to cash in on the sharp appreciation of land in Nairobi over the past two decades on increased appetite for real estate deals.

INVESTMENT CLIMATE

Land prices started rising in 2003 after a new government came to power promising change following a 24-year rule of Moi era characterised by a poor investment climate.

The price of an acre of land in Nairobi’s Upper Hill business district ballooned to Sh552 million from Sh120 million in 2010 and Sh50 million in 2002, property dealers say.

City Hall raised Sh1.97 billion from land rates in the year to June 2019 against a target Sh4.84 billion, reflecting the defaults facing the income stream.

Different jurisdictions use different methods to levy property rates.

In Tanzania, for example, the tax is based on the value of a building.

In other countries like India and the United Kingdom, the tax is based on the income (rent) generated or an assigned rent estimated to be generated from the property.

In the US, property taxes are based on the land and value of the developments on the property.