Nairobi County residents who have leased or bought apartments from developers will soon be required to pay value capture as well as sectional rates.
This was revealed by County Executive Committee Member (CECM) Charles Kerich during an interview with Spice FM.
According to Kerich, value capture is essential because developers have been paying the same rates for apartments as for undeveloped lands.
The CECM explained that introducing value capture would ensure fairness in land rates and increase the county’s revenue base.
“Let us take, for example, you have one acre in Upper Hill, on that one acre stands a tower with 50 stories paying the same as that one acre next door that has nothing,” he explained what he called unfairness in the existing land rates.
Kerich said it was imperative that every person in that building pay rates depending on the floor they occupied because they were using sewage and water systems as well as a road network.
“You are not going to subdivide this one acre, but you can capture the value of each floor so that every owner of each floor pays rates as well,” he explained.
On sectional property, Kerich revealed that the county is in the process of fully implementing the Sectional Property Act to ensure that the burden of paying land rates in subdivided properties is not shouldered by a few individuals.
He added the sectional property will ensure that everyone has their own title and pays their own rates, meaning they would not be affected by their neighbours’ defaults.
“What happens is if you are on one acre and you have 60 apartments, the rates charged on that land is undeveloped site value, meaning you are charged as if there is nothing on that property,” he explained of the now being phased out system.
“Assuming you have 60 apartments and you need to pay Sh60,000, you apportion and say everyone pays Sh1,000, but then you will find many people carrying the burden for those who refuse to pay.”
The Act will now give each apartment owner total ownership of their unit,ensuring the developer does not collect the money in a lump sum.
He argued the move is a win for Kenyans buying or leasing apartments as they could take loans with the property without engaging the developer.
Additionally, it is a win for Governor Sakaja Johnson’s administration as this will ensure revenues go up.
Land rates are the top own-source revenue earner for Nairobi county and it accounts for about 25 per cent of revenue collected by the county government.
Kerich said over 285,000 property and land owners risk losing them for defaulting on land rates.
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