Economy

State eyes more cash with review of property rates every five years

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Parliament buildings in Nairobi. FILE PHOTO | NMG

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Summary

  • Property rates will be reviewed every five years in changes to the law aimed at ensuring that the State does not lose out on the appreciation of plots.
  • The changes are contained in the National Rating Bill 2021 and if passed by lawmakers will compel counties to review their valuation roll every five years.
  • 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in the urban centres, have been surging in recent years on growing demand but counties use valuation rolls based on outdated ratings and laws, denying them revenue.

Property rates will be reviewed every five years in changes to the law aimed at ensuring that the State does not lose out on the appreciation of plots.

The changes are contained in the National Rating Bill 2021 and if passed by lawmakers will compel counties to review their valuation roll every five years.

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in the urban centres, have been surging in recent years on growing demand but counties use valuation rolls based on outdated ratings and laws, denying them revenue.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 Treasury in the draft Bill.

The proposed law will replace the outdated Valuation for Rating Act of 1956 and the Rating Act of 1963 that have denied counties billions of shillings due to the use of rates that do not match the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.

A valuation roll is a list of ratable properties showing owners, their addresses, locations of land, tenure, acreage and assigned value.

The Treasury says best practice requires valuation rolls to be updated every 10 years this has never been achieved.

Counties will, however, be allowed to extend the validity of a valuation roll by up to two years.

The push is part of efforts by the National Treasury to increase internal revenues for county governments which hit a four-year low of Sh32.49 billion in the year to June 2018 but recovered slightly to Sh35.48 billion in the year to June 2020.

Property rate is a tax on the value of a property, including land usually assessed by a rating authority with help of a valuer.