We are a family that owns land, commercial and residential houses in some parts of Nairobi. We have been paying land rates promptly since the properties moved from my grandfather, late father and now to we the grandchildren. There have been unconfirmed reports that payment of land rates may soon be increased in Nairobi, how true is this?
City Hall has shifted to top gear plans to increase land rates which has been static over the past 41 years. Currently, property owners are paying land rates which are way below the value of their properties.
Nairobi has been charging rates at 25-34 percent depending on location. Land rates are levied based on the value of the unimproved site as per the Rating Act enacted on May 11, 1956.
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The new proposed rates are whispered to be between 0.1 and 0.115 percent of the current value of undeveloped land. If the proposal undergoes public participation and gets a clean bill of health, City Hall will summersault to the bank, following the skyrocketed land process in Nairobi.
For instance, in 1980, an acre in Karen was valued at between Sh300,000 and Sh900,000. The current value ranges from Sh40 million to Sh60 million depending on the location.
The comparative cost of an acre in Upper Hill was valued at Sh435,000 in 1980 and at least Sh500 million-Sh600 million currently.
The new system which is based on Geographical Information Systems (GIS) will be phased in between the current financial year and the next financial year at a cost of Sh160 million, according to the Nairobi County Annual Development Plan 2020/2021.
The new supplementary valuation roll is projected to have an additional 5,000 properties an increase in the roll whose tally stood at 156,000 in 2019, which was an increase of 24,780 since 2013.
The County Department of Valuations and Property Management completed development of the county’s GIS-based mass valuation roll in 2019/2020 financial year.
The new valuation roll draft has been submitted to the Nairobi County Assembly for approval.
The public will have a say on the proposals that are currently before the County Assembly, which will agree on a specific figure to be charged as rates for ratable property.
It will, however, not be a walk in the park as the process may face legal hurdles with some land owners arguing that City Hall rarely provides them with top notch services requiring more rates.
City Hall has also not had it easy as it has over decades choked under debts accrued over time, making it almost difficult to offer services to residents.
For instance, the county loses at least Sh188 billion in uncollected land rates every financial year, a Commission on Revenue Allocation report released last year shows.
In the financial year ended on June 30, Sh1.9 billion was collected in land rates against a target of Sh3.9 billion.
A 2018 County Fiscal Strategy Paper shows that the devolved unit collected Sh2.3 billion against a target of Sh5.5 billion from rates.
Legally, registered property owners must pay land rates between January 1 and March 31 annually.
Harold Ayodo is an Advocate of the High Court of Kenya