Property owners in Nairobi will from January next year pay up to double the current land rates when City Hall implements new charges based on the latest asset valuation.
City Hall said new rates would be based on 0.115 per cent of the current value of undeveloped land, according to the Nairobi City Finance Bill, 2021, which sets the stage for costly levies.
The new rates will apply to residential, commercial, and agricultural plots within the capital city.
Further, for land not exceeding 0.1 hectares (ha), a flat rate charge of Sh2,560 will apply, while for land greater than 0.1ha and not exceeding 0.2ha, the owners will pay Sh3,200 annually. On the other hand, for land greater than 0.2ha and not exceeding 0.4ha, a charge of Sh4,000 will apply, and land exceeding 0.4ha will attract a rate of Sh4,800.
“Exemption will be taken. If the new rates are lower than the current rates, then the current rates will apply, but if the new rate is more than double the current rates then only double the current rates will be levied,” reads the document by the acting County Secretary Jairus Musumba.
Currently, property owners pay land rates at 25 per cent of the unimproved site value based on the 1980 valuation roll, which City Hall says has seen it lose on the appreciation of plots.
Consequently, the county targets to at least double the rates collected in the last financial year as it looks at collecting about Sh6 billion. City Hall is seeking to cash in on the sharp appreciation of land in Nairobi over the past two decades on an increased appetite for real estate deals.
Land prices started rising in 2003 after former President Mwai Kibaki took over amid improved investment after decades of a hostile business climate.
The price of an acre in Nairobi’s Upper Hill ballooned to Sh552 million from Sh120 million in 2010 and Sh50 million in 2002, property dealers say.
In the financial year that ended June 30, 2021, City Hall collected Sh2.76 billion from land rates against a target of Sh5 billion. City Hall is set to map its rateable properties through the implementation of the geographical information system-based valuation. This will see the number of rateable properties in Nairobi increase from the current 161,000 to about 300,000.
Defaulters owe the county government Sh120 billion, with the national government, the biggest defaulter with 150,000 properties, paying land rates out of more than 1.5 million properties.
Land rates are the top own-source revenue earner at City Hall, accounting for about 25 per cent of the revenue it collected.
The plan to raise taxes on landowners has been drawing opposition from Nairobi residents’ associations and property owners.
City Hall added that landowners whose land has not been valued or is missing from the Draft Valuation Roll are supposed to contact the county’s chief valuer.
“All persons/entities who had objected to the new values as per the 2019 Draft Valuation shall pay the old rates pending the hearing and determination of their respective objections by the valuation court,” said Dr Musumba.
City Hall has set up the valuation court to hear and determine the objections with effect from Monday, November 28, 2022. “The alternative dispute resolution process will offer ratepayers a flexible, cost-efficient, and timely dispute resolution forum. The team will be based at Charter Hall from November 30, 2022, to December 7, 2022, during working hours to review objections from interested payers,” it said.
Further, the Johnson Sakaja-led government said all existing exemptions of land rates had been reviewed. “All persons with exemptions letters are hereby advised to seek fresh exemptions from the governor’s office on or before January 1, 2023; failing that, the exemptions shall be revoked and land rates demanded in accordance with the law,” said Dr Musumba.
