Proposed law to harmonise property taxes in devolved unitsThursday March 09 2023
Persons who hold freehold or leasehold land where the right of occupancy is more than 21 years will be treated as the rateable owners if a Bill that will inform how counties tax property sails through Parliament.
Majority Leader Kimani Ichung’wah has tabled a Bill that seeks to provide for enhancement, certainty, uniformity and fairness in the levying of property rates by the 47 county governments.
It will ensure that the government does not lose out on the appreciation of plots.
Property rate is a tax on the value of a property, including land usually assessed by a rating authority with help of a valuer.
“The Bill seeks to provide a buoyant source of revenue for county governments. The revenue is necessary to enable each county government to perform the functions assigned to county governments as set in the Fourth Schedule to the Constitution and enable county governments to realise development agenda,” Mr Ichung’wah said in a memorandum to the Bill.
Property rates will be reviewed every five years in changes contained in the National Rating Bill 2022.
If passed by lawmakers, the law will compel counties to review their valuation roll every five years.
The proposed law will replace the outdated Valuation for Rating Act of 1956 and the Rating Act of 1963 that have denied counties billions of shillings due to the use of rates that do not match the appreciation in market prices for property.
The Bill defines a rateable land owner as a person who holds whether freehold or leasehold where the unexpired residue of the term is not less than 21 years and there is an intention to confer ownership.
“For purposes of this Act, a rateable owner means-in relation to an interest in the ratable property registered in favour of another means the name of the person registered against the interest,” the Bill states.
In case of successions, the executor, executrix or appointed administrator will be taken as a rateable owner under the Succession Act.
The proposed Bill also defines the appointed and registered trustees including the public trustee as ratable owners in the case of trust property.
“In case of bankruptcy or insolvency, the person appointed as administrator or liquidator in accordance with the Insolvency Act, 2015,” the Bill states.
A holder of a sectional property under the Sectional Properties Act, 2020 will also be taken as a rateable owner.
“For the purposes of this Act, a ratable owner means an occupier of the retable property; or a beneficial owner who is receiving profits and rent from the rateable property.”
The Bill requires a rateable owner to provide accurate, reliable and sufficient information on the rateable property for purposes of valuation upon request by the County Executive Committee member or a designate of the County Executive Member appointed in writing.
“A rateable own shall promptly pay land rates as they fall due and where the rateable property is jointly owned, jointly and severally with other registered proprietors, be liable to pay rates when they fall due,” the Bill states.
The Bill mandates every county to levy rates either in the form of an annual rental value rating, area rating, unimproved site value rating or a site value rating in combination with an improved rating.
Prices of land and houses, especially in the urban centres, have been surging in recent years on growing demand but counties use valuation rolls based on outdated ratings and laws, denying them revenue.
“Every valuation roll prepared, adopted and implemented shall be in the time being in force for a period of five years subject to be extended on or before the lapse of five years,” says the Bill tabled by Mr Ichung’wah.
A valuation roll is a list of rateable properties showing owners, their addresses, locations of land, tenure, acreage and assigned value.