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Land rates in Nairobi set to rise in new valuation system

HOME & AWAY
By Josphat Thiongó | February 25th 2021
An aerial view of Muindi Mbingu Street in Nairobi (PHOTO: Wilberforce Okwiri)

Property owners in Nairobi will start paying higher rates once a new valuation roll is implemented by the county government.

City Hall is replacing the current valuation roll, which was last updated in 1982.

A valuation roll is a public legal document that contains information on all ratable property within the boundaries of a county or urban centre.

According to Urban Planning and Lands Executive Charles Kerich, property owners will see the rates they have been paying go up with the implementation of the new valuation roll.

Under the current roll, rates are levied as a percentage of the property value. Property owners currently pay 25 per cent of the 1982 property value.

City Hall has however proposed a working figure of between 0.1 and 0.115 of the current property value to be paid by the property owners in rates in the new valuation roll. This will translate to higher taxes than they are currently paying.

“The county assembly will come up with an exact figure of the percentage to be charged as rates after the valuation roll undergoes public participation. Definitely the rates have to go up but it won't be too high. It can only go high up to a point where Nairobi residents will be comfortable to pay,” said Kerich.

He revealed that his department had already tabled the new valuation roll before the county assembly and it was now awaiting public participation.

Currently, Nairobi County has 170,000 ratable properties – as captured in the new roll – which the county targets to raise its revenue and fund its Sh37.5 billion budget. City Hall is seeking to cash in on the sharp appreciation of land in Nairobi over the past two decades following increased appetite for real estate deals.

Kerich said the law requires that the valuation roll is reviewed after every 10 years. However, the last review was done in 1980 and implemented in 1982. He said this has had a negative impact on revenue collection as the county has been losing billions of shillings due to outdated records.

This is evidenced by the dwindling revenue collections from rates from Sh3.1 billion in the 2015/16 financial year, Sh2.2 billion in 2016/17, Sh2.1 billion in  2017/18, Sh2 billion in 2018/19  and Sh1.9 billion in 2019/2020.

In 1990, an acre in Karen was valued at Sh800,000 but the value has shot up to Sh60 million. In the same year, an acre in Upper Hill was valued at Sh435,000, which has now increased to approximately Sh500 million.

The updating of the valuation roll will not only capture this reality, but also translate into more revenues for City Hall.

Kerich said a new valuation roll should be part of the Finance Bill as the county cannot charge anything if it is not part of the Bill.

And to guard against neighbouring areas with different economic value paying the same rates – as is the case with Kawangware and Lavington – Kerich said a document that will say what percentage will be charged in the new valuation roll for each zone will be developed.

The process of developing a new valuation roll started during former Governor Evans Kidero's administration in 2016. It was an undertaking with support of the World Bank through the State department of Housing under NAMSIP.

The World Bank brought in a consultant – Geomaps Africa – which is a valuation firm, to undertake the process alongside 11 City Hall valuers.

The process of coming up with a new valuation roll begins with preparation by the chief valuer who signs it then transmits it to the county secretary. It is then tabled before the County Assembly, which in turn is supposed to commit it to the relevant sectorial committee that opens it for public participation. This has already been done in this case.

After the public participation, there will be amendments taking into consideration views gathered from the public before it is again tabled before the assembly for approval.

The entire list has to be published in two newspapers of national circulation and in the Kenya Gazette for the purpose of inviting property owners to interrogate it.

This, Kerich says, is to prevent property owners from claiming that their properties have been valued higher than others.

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