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Bill proposes higher land rates for Nairobi

HOME & AWAY
By Harold Ayodo | June 18th 2015

Property owners in Nairobi will start paying more in land rates if a bill seeking fresh valuations is passed. The Nairobi City County Valuation and Rating Bill proposes that the rates be based on new valuations.

Currently, land rates are based on valuations done 33 years ago, despite property prices having hit the roof over the past three decades.

Land rates are the principal revenue source for Nairobi City County and in the fiscal year ending June 2015, the county expects to have collected Sh3 billion from property owners. If passed, the Bill will be set out in the Annual County Finance Act and general valuation of land will be done every ten years and supplementary valuations every year.

The Bill may also see rent of commercial and residential buildings shoot up as landlords may seek to recoup the increased rates.

It may also rope in property owners with no title deeds, mostly in Eastlands where many investors have share certificates as proof of land ownership.

Majority of the property owners with share certificates, mainly, bought their land from land selling companies.

Presently, many land dealings are not registered, making the county miss out on property rates revenue.

Last year, Land and Housing Executive Tom Odongo said Nairobi is estimated to have more than 300,000 properties, but as at July 2013, the number of rateable properties was 124,000.

Back to the Bill, it also outlines several new measures to recover unpaid rates, including auction. Those who refuse to pay rates for three years might have their properties auctioned to recover the amounts owed.

The county will also withhold all business licences for commercial activities carried out on the property whose land rates are outstanding.

Auction

Before instituting auction proceedings, property owners should be given at least one-month notice.

Upon sale, the proceeds from the auction will be divided between the county, valuers and the balance given to the owner.

The Rating Act empowers county governments to seek court orders to auction properties at forced sale values. Before county governments took over, City Hall wrote demand letters to land rate defaulters to pay up and published gazette notices before going to court.

City Hall also repeatedly published names of the defaulters in the mainstream media, but never got full payments.

Traditionally, affected defaulters include senior government officials, prominent business personalities, land buying companies and the State.

Others are banks, mortgage firms and financiers that extended loans to property owners without confirming whether rates were paid on property given as security. About two years ago, parastatals alone owed City Hall a whopping Sh47 billion.

Over the past decade, City Hall has been on a warpath with property owners owing it over Sh60 billion in unpaid land rates.

Recently, it pulled the trigger on some defaulting property owners by taking over rent collection until recovery of outstanding dues.

County chairman of the operation John Njoit was quoted in a section of the media saying that the action involves getting tenants of buildings, whose owners have defaulted on land rates, to pay rent to the county.

Once the debt is settled, the tenants will go back to paying rent to building owners.

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