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National Treasury Planning New Property Rating Legislation

By Estate Cloud - over 2 years ago - Kenya

National Treasury Planning New Property Rating Legislation

Kenya's National Treasury is seeking a consultant for the purpose of developing new national property rating legislation to replace the outdated Valuation for Rating Act of 1956 and the Rating Act of 1963.

National Treasury recently published the tender documents, saying the initiative will increase the tax bracket by drawing more property owners across the counties into the tax bracket.

“Outdated property legislations imply low coverage by valuation rolls and tax base of properties that are ratable which further undermines the property rates,” told Business Daily.

According to the National Treasury, replacing the old property valuation laws dating back to 1956 will improve county governments’ own-source revenues which hit a four-year low of KSh 32.49 billion in 2017/2018 financial year before recovering slightly to KSh 35.48 billion in 2019/2020.

Treasury holds that a new valuation law will expose the rise in property values over time, providing the government with a basis to collect higher rate payments to reflect the rise in value over time.

The National Treasury said that the old valuation roll has never been updated even though best practice requires the valuation roll to be updated over ten years.

This means the government has not been able to realize revenues accruing from accumulated property values across the country. Furthermore, most counties currently use outdated valuation rolls valuation laws with non-existent rating authorities.

Treasury said the valuations can be legally challenged hence the need to have a new legal framework that would correct these anomalies as soon as possible.

Data from the counties have shown that rates are their single largest source of revenue yet efficient collection has been amiss. In 2018 data from the Nairobi County Budget Office revealed that land rates were the single largest contributor to local revenue.

In October 2020, Nairobi Metropolitan Services (NMS) said it is set to unveil a new property valuation system that will reset land rates in Nairobi County to prevailing market conditions.

Another recent bid to improve the country’s valuation regime is by the Ministry of Lands which recently announced that it is already working on a new Land Valuation Index to guide land valuations for investment and other purposes across the country.

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