Estate Management

Property Rating As A Source Of Local Government Revenue In Nigeria

Property Rating As A Source Of Local Government Revenue In Imo State, Nigeria (A Case Study of Oru-West local Government Imo state)


This project attempts on the discussion of property rate as a source of local government reenue. It is centered on Oru-West Local Government in Imo state. Property rating or tenement rating is the tax levied on the owners of properties that are rateable. This work traces the history of property rating in Nigeria Local Government. It states the definition of some basic terms. The aims of property rating in Nigeria local government cannot be over emphasized. Owning to the obligations and works laid on the hand of the local government authority, they engage in tenement rating with the aim of getting the following: To increase the local government revenue, to provide the poor with the need facilities, to encourage the owners of building to develop them and development of the council unit and the purchase of big machines. Rating has been used to discourage urban decay by answering the big question of how to put cities in order. It is now noted according to the fact from Oru-West Local Government that many houses has been pulled down and new ones has been created because of effect of heavy taxation on such properties. Although rating has been noted to be the best way of getting money, there are some problems like lack of personality, skills, equipments needed etc. which are discussed in detail in chapter four of this project have been disturbing the free flow of ration of our economy.

Title page
Approval page
Table of Content

1.0 introduction
1.1 Background of the study
1.2 The historical development of property rating in Nigeria
1.3 Research methodology
1.4 Some basic terms associated with Tenament rating.

2.0 Literature Review
2.1 Property rating in Oru-West local government
2.2 Need for revenue and rational for property rating

3.0 Method/Process of property rating in Nigeria local government

4.0 Case study/Presentation and Analysis of Data
4.1 Property rating as a source of local government revenue
4.2 Why rating is the best means of local government revenue
4.3 Problems of property rating in Nigeria local government

Conclusions and Recommendations



Property rating which is also known as tenement rating is the rate or tax levied upon the owners or occupiers of properties or tenements which are rateable. It is the kind of tax or rate which is levied on the properties which are not government or publics own. Rates from the main source of revenue to the local government. The term tenement rating was not known until 1601 when the United Kingdom introduced the poor relief fund gradually, the property rating began to gain ground in the nations and especially Nigeria local government authorities which I now a great source of the local government’s finance not only for the development of their areas of jurisdiction but to maintain these places e.g Oru – West local government is one.

Before the introduction or rating, the local government based their realization of fund on the grants from the state and federal, borrowing from banks, Agriculture etc. and some other way of fund realiation. The fact is that the money the government got those days were not enough to pilot the affairs of their areas. They were looking for ways on which they can embark on so to get adequate money owing to the introduction of property rating, the government now have another means of getting money.

The aim for the introduction of property rating is to enable local government realize adequate revenue that should be used in providing all the needed facilities like pipe-borne water, electricity, access roads, good streets etc. for the consumption of both poor and rich people.

Howeer, with taxation by rate the amount of revenue required is fast decided and ths total liability is then distributed amount the tax payers or rate payers. The maount of the tax is fixed by dividing the sum to be raised by the aggregate rateable value. The basis of assessment of the property rate is the rateable value of land and buildings.

In Oru-West local government Imo stae, the record has it that a handful of money was realized from tenement rating. This helped them more than the agricultural sector and other sectors in the area therefore, rating is of paramount help to the world and Nigeria local governments in particular.

  • Historical Background of Oru-West Local Government Area

Oru-West local government was created in the year 1996 from the old Oru local government. It is made up of ten towns namely: Ohakpu, Eleh, Aji, Nempi, Ozara, Otulu, Ubulu, Amaofu, Ibiasoegbe and Mgbidi which is the headquarter of Oru-West local government area.

It covers an area of twenty-five kilometer with estimate population of 1.4 million inhabitants. The people are mainly villagers and predominatly farmers. For instance, Eleh people and known for cassava production, Otulu are known for palm tree and plantain plantation, Mgbidi are known for poultry keeping, Aji are known for yam production, Ibiasoegbe are known for livestock keeping and management, Ozara people are known for fishing because of the large lake in their town.

The local government council headquater at Mgbidi was built and furnished by revenue generated from property rating in the area.


Property rating in Nigeria is not entirely new. In the public services were very few. Nevertheless roads, market places, chiefs palace, meeting squares were built and maintained with communal efforts that is, individuals in the community contributed their quota of crops and services for the up-keep and maintenance of all these facilities. These contributions were nothing more than rates.

Our rating system in Nigeria was derived from Britain laws. The rating law in Britain originated with the poor relief Act 1601 which provided for the levying of taxation on every occupier of land houses etc towards the relief of the poor. This law is often called the statute of Elizabeth of England.

Property rating was first placed on the Nigeria statute book in 1915, this law was the organized place of property rating as a source of local government finance. By 1958, the 1915 ordinance was modified and amended to form the assessment oridncance caps 15 and 16 laws of Nigeria and Lagos. In 1975, when the head of state, General Mohammed came into power, there was a local government reform that is, the various local government Edicts were enacted and this changed the property rating system. The various states were empowered to enact local government Edict that presently gae rating the legal backing with which it operates in Oru-West local government Area, Imo state.


Information was collected from records pertaining to property rating in local government secretariat, Journals, Oral interviews, lectures delivered on property rating in the department of Estate management and discussions/interviews text-books and project work.


In the discussion of property rating as source of local government revenue one must expect to come across some of the words that are associated with ratin. In the first place let us take rating.

RATING: This is defined as the levying of landed properties in the form of taxes on their uses, occupation and ownership which is used for the provision of facilities by the local government that is, the third tier of government in their areas of jurisdiction.

PROPERTY RATING: This is a form of taxation, it can be tax on ownership or occupation or use of a landed property i.e tenement rating it can be levy or tax on the head of any taxable adult who resides or works within a local government area that is, capitation rate. Howereer, property rating is the rate or tax levied upon the owners or occupiers of properties or tenement which are retable. Rates form the main source of internal revenue to the local government.

RATEABLE VALUE: This is the amount of money which the rate nairage is applied on after the deduction of outgoings and decapitalization amount which had been taken out from the money. For instance, if a lessor gets say N1000 as the rent. He will then remove the outgoings and the rate officers will decapitalize the amount with capitalization amount say, 5% the remaining money is the rateable value.

RATE NAIRAGE: This is the amount per naira payable as the rate on the net annual value or rateable value of a property or hereditament in a particular year by the appropriate operating authority. This is determined by calculating the total expenditure expected to be done and then divide by the figure of the total rateable value of rateable properties or hereditaments in the rate nairage.

TENEMENT: This means land with building which is held or occupied as a distinct or separate tenancy or any pier but does not include land without building.

HEREDITAMENT: The term hereditament is the property which is liable to rate, it is shown in the production as a separate item. It include all physical land and building. It is also the right or interest over a unit of a rateable property. Hereditament can be physical or nonphysical from the rating point of view.

DECAPITALIZATION: This is the act of applying the decapitalize value say, 5% according to the one chosen by the government so that the rateable value can be derived. In Nigeria local government 5% is used for the decapitalized amount. The aim of decapitalization is to arrive at the amount which the rate to be paid. The value gotten is known as the decapitalized value.

GROSS VALUE: This is the rent at which a hereditament might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenants rates and taxes and the landlord undertook to bear the cost of the repairs and insurance, and the other expenses if any, necessary to maintain the hereditament in a state to command that rent on the property.

NET ANNUAL VALUE: This is an amount equal to the rent at which it is estimated that the hereditament might reasonably be expected to let from year to year, if the tenant undertook to pay all, usually tenant’s rates and taxes, and to bear the cost of repairs and insurance and other expenses if any, maintain the hereditament in a state to command that rent.

ASSESSED VALUE: The assessed value refers to the value at which the tenement is for the time being assessed in accordance with the order made under section 106.

SCHEDULED TENEMENT: This means a tenement in any local government area in the state.

RENTAL VALUE: This is described as the open market rent paid or payable from year to year in respect of the tenement in question or as established by analysis and comparison of the general level of rent actually paid for that class of tenement in that are of locality in case of controlled properties.

RATEABLE OCCUPIER: It is not easy to give accurate and exhaustive definition of the word “occupier”, occupation include possession as it’s primary element but it also include something more, legal possession does not of itself constitute an occupation.

However, the owners of a vacant house is in possession and may maintain trespass against any one who invades it, but as long as he leaves it vacant, he is not rateable for it as an occupier. If however, he furnishes it, and keeps it ready for habitation whenever he pleases to go to it, he is an occupier though he may not reside in it one day in a year.

One other hand, a person who without having any title takes actual possession of a house or piece of land, whether by lease of the owner or against has will, is the occupier of it.

Another element that is necessary to constitute occupation is permanence. An itinerant show man who erects a temporary structure for his performance may be an occupier of the structure.



The poor relief act of 1601, often known as the statue of Elizabeth can be regarded as the origin of ratin valuation in the world. This statute first made provision for the levy of local regular tax over the whole of England by the parish council. This being the local unit of the local administration which cover the country at that time. The act provided that each parish should appoint overseers of the poor with powers to provide

  1. Work for the unemployed of the parish
  2. To give relief to those not capable of working
  3. To assess and levy a rate to finance the above foregoing activities and recover unpaid tax by distress.

The above foregoing activities and recover unpaid tax by distress.

The first two activities as shown above where poor function – while the latter activity was rating authority function. Under the same act, the overseers could tax every inhabitant and every occupier of land in the parish. The ability to pay rate by each inhabitant depend on his occupation of land and buildings it was decided that a parish poor rate could be believed on real and personal property actually within the boundaries of the particular parish and that rates if levied on an occupier, could not in addition be levied on the landlord of the same property. In practice, the overseers found it difficult to establish the ownership and even of personal unit in 1804 when the poor law exemption act was enacted. The act exempted inhabitants of properties from paying rates in respect of their business stock in trade etc, and rates became levied only on the occupiers of land and building.

The basis of assessment was not specifically stated in the 1601 act and the overseers fixed this on the basis of the annual value of the property. But the parochial assessment act (1836) tried to ameliorate this problem by providing the definition of value for rating purpose when it provided that every rate must be based on the net annual value of the occupation. The annual rent on the basis that the tenant paid all outgoings. The union assessment committee act (1862) further provided that net annual value, it could also be determined on the basis of gross estimated value, or gross value, the annual rent on the basis that the landlord paid all outgoings.

However, both the rating and valuation act (1925) and the general rate act (1967) repeated the above definition and provided definition which are still in force today for gross value, net annual value or rateable value. These acts also transfer the functions of the overseers to that government authorities.


There has been a method of collecting local taxes inform of rating in Oru-West right from the beginning. Although, there was no statutory provision for its practice until very recently when the 1976 local government reforms was enacted.

In the recent times, people of different age group usually contribute money together in other to carry out some beneficial projects and services of roads and common paths, construction of local bridges, maintenance of public places like markets etc and also maintenances of the Igwe’s house. There are other ways money used to finance facilities and services are derived. These could be inform of fines collected during general meetings, annual tributes paid by the citizens and rendering of the services by some subjects especially for the maintenance of the Igwe properties at this time, rating was termed Great tax because it involves manual works.

The crude system continued until the enactment of the 1976 local government reforms, property rating in Oru-West is being controlled by the local government law of 1980 which provides the method, basis of assessment for property rating in Imo state. 


The need for revenue to any local government authority cannot be over emphasized. Property rates are “compulsory levies imposed on owners of property for the purpose of meeting up the cost of specific public improvements likely to enhance the value of the fact that money is required to defray the expenses incurred by the local authorities in the development provision, and maintenance of essential amenities in a locality. Opponents of rating as a source of local government activities often argue that rates collection should be on the basis of services and productive ventures already established in a locality. They feel that unless industries which would provide gainful employment in a locality abound, people cannot be expected to have sufficient income with which to pay rates. On the other hand, opponents of the rating idea insist that there already some infrastructure amenities, goods and services enjoyed by the community and these together are indicative of the preparedness of government to develop the society.

However, the fact remains that all localities need some form economic base, they need the basic infrastructure and recreational facilities. These facilities need adequate maintenance and repairs, the cost of which have to be defrayed.

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