Emedo Charles Ebuka

Presented To

Department of Estate Management


This project attempts on the discussion of property rate as a source of local government revenue. 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 ratable. 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 ratable. 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 realization. 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.

However, with taxation by rate the amount of revenue required is fast decided and this total liability is then distributed amount the tax payers or rate payers. The amount of the tax is fixed by dividing the sum to be raised by the aggregate ratable value. The basis of assessment of the property rate is the ratable 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.

1.2 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 predominantly 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 headquarter 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 ordinance 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 rating. 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. However, 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.

RATABLE VALUE: This is the amount of money which the rate nairage is applied on after the deduction of outgoings and recapitalization 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 recapitalize the amount with capitalization amount say, 5% the remaining money is the ratable value.

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

TENEMENT: This means land with building which is help 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 relatable property. Hereditament can be physical or non-physical from the rating point of view.

DECAPITALIZATION: This is the act of applying the recapitalize value say, 5% according to the one chosen by the government so that the ratable value can be derived. In Nigeria local government 5% is used for the decapilized amount. The aim of recapitalization 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 under took to pay all usual tenants rates and taxes and the landlord under took 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 under took 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 VVALUE: The assessed value refers to the value at which the tenement is for the time being assessed in accordance with thte 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.

RATABLE 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 it self 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 ratable for it as an occupier. If howeer, 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 huse or piece of land, whether by leae 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.

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