The federal government’s planned implementation of six percent stamp duty charge on tenancy agreements nationwide effective from August 10, 2020, has elicited bitter reactions from the organised labour, estate agents and tenants, with all describing the fiscal measure as insensitive.
According to Daily trust investigations, the charge which was announced by the Federal Inland Revenue Service (FIRS) a few days ago reveal that all the stakeholders rued the move in view of its additional burden on their dwindling incomes and negative implications for the housing sector.
Under the stamp duty charge regime, landlords and property agents are to charge six percent stamp duty on all tenancy and lease agreements they enter into with all renters and remit the same to the service in line with the provisions of the Stamp Duty Act.
The Chairman of FIRS, Mr. Muhammad Nami, made the disclosure following the recent release and wide circulation of a stamp duty clarification guide. According to him, property-related transactions like tenancy or lease agreement fell under the Ad Valorem category of the stamp duty, which attracted six percent duty payable in percentage of the total value or sum of the tenancy or lease.
The stamp duty types and their rates are Appraisement or Valuation of Property, 1.5 percent; Certificate of Occupancy, Partnership N1,000 flat rate; Gift of Land, 1.5 percent; Legal Mortgage, 0.375 percent; Legal Mortgage (Upstamping), 0.375 percent; Deed of Conveyance or Transfer on Sale of Property, 1.5 percent; Gift of Land, 1.5 percent; Memorandum of Understanding (Related to Land, Sales, Joint Venture, Surrender, Subdivision Agreements, 1.5 percent; Power of Attorney (Irrevocable/Land Related), 1.5 percent; Sales Agreement, 1.5 percent, among others. Estate developers/surveyors Some investors in the real estate sector have described the fiscal stance as not reflective of the socio-economic situation in the country and therefore should be suspended for now.
An estate developer and Chief Executive Officer of DealMorr Real Estate Limited, Abuja, Prince Moruff Adedapo, in a telephone interview with Daily Trust, said, “Ordinarily, Nigerians struggle to meet up with their annual rent. “But in this case, the government that is supposed to provide accommodation is still the one saying they should pay more for rent. “The effects will be huge on both the tenant and the landlord, not on the real estate developers. “Unfortunately, it is not possible for tenants not to patronise our business because shelter is compulsory for everybody. For the sales of properties, those who have to do so will do so. As hard as this time is, some still buy houses of N100m and above.”
Another estate developer in Abuja, Mr. Nasiru Ibrahim, said the six percent stamp duty on tenancy was not reasonable. Mr. Ibrahim said, “Although stamp duty has been in existence prior to now, if the government wants to re-emphasise it, it should be made reasonable so that it will encourage people to comply’’. He added that the duty would be transferred to the buyer or tenant, and that since six percent was a significant increase, the transactions might be done informally and hence deprive the government of the revenue. An estate surveyor in Minna, Niger State, Dr Oluwole Kajola, said the measure would affect his job negatively because getting rent from tenants is a big problem and adding another amount to it would create serious issues. He explained that “There is a downward review for tenants who are paying for the first year to 0.078, which won’t pay subsequently while the 6 percent is for those taking a lease for 21years.
“As an estate surveyor, it affects us in the sense that tenants will want to deal with landlords directly thereby boycotting the stamp duty rate because landlords won’t bother them about the money once he or she gets the rent. For us, that we usually have our banners on all our properties, the Federal Inland Revenue Service will follow up with us for such money. “The implication of such is that some of the state surveyors may decide not to put their banners on the property any longer but market it privately. Our people are not also confident about the government because they believe the money will be embezzled as usual”, he added.
Source: Daily Trust