UNIVERSITY OF NIGERIA, ENUGU CAMPUS

FACULTY OF ENVIRONMENTAL STUDIES

DEPARTMENT OF ESTATE MANAGEMENT

AN ASSIGNMENT WRITTEN IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE COURSE: APPLIED TOWN PLANNING 1

(ESM 521)

TOPIC: AN EXAMINATION OF THE EFFECT OF VARIOUS PLANNING CHARGES

ON REAL PROPERTY INVESTMENT IN AKWA IBOM STATE WITH UYO AS A

CASE STUDY.

BY

SAMUEL UWEM ANIEKAN

REG. NO: 2015/199591

LECTURER I/C: DR. P. C. OGBUEFI

JANUARY, 2021
 CHAPTER ONE

1.0 INTRODUCTION

Over the years, the brain behind the imposition of various planning charges at various level of
government has raised noticeable eyebrows and concerns among the general public especially
within the circle of those who’s the actual charges are levied upon. Their agitations many a time
lies on the questioning of the very rationale of development charges and to what benefit do they
derived from such a compulsory levy. This on the other hand could not be seen as completely out
of place as the very doctrines of levying such charges or taxes on property calls for social equity
and the benefit principle. Having noticed the gap in knowledge and understanding among the
populace as regards development charges, this work is designed to discuss briefly yet
comprehensively about the issue in consideration and also to highlight the concept of real property
and real property in investment, the planning system and charges associated with it as well as the
implications of this charges on real property investment with adequate reference to the case study
area which is Uyo Local Government Area of Akwa Ibom State, Nigeria.

1.2 BRIEF DESCRIPTION OF THE CASE STUDY AREA (UYO, AKWA IBOM STATE)

Created on September 23rd, 1987 out of Cross River State; Akwa Ibom State is situated between
latitudes 40001N and 50451N and longitudes 70251E and 80251E. The state is bounded on the
North by Abia State, the South by the Bight of Bonny, on the East by Cross River State and on the
West by Rivers State (Figure 1). It covers a total land area of 8, 412.2 square kilometer (NPC
2002). With the total population of the 31 Local Government Areas being 3.9 million people (FGN,
2009), the state has an average population density of 466.02 persons per km2.

Uyo is the state capital of Akwa Ibom, a major oil producing state of Nigeria. The town became
the capital of the state on September 23, 1987 following the creation of Akwa Ibom State from
erstwhile Cross River State. Uyo is situated between latitudes 5° 1' 60N and longitude 7° 55' 36E.
Uyo Local Government is a creation of statute of the Federal Government of Nigeria and it has a
population of 436,873 according to 2006 census. It is by creation one of the 31 Local Government
Councils that make up Akwa Ibom State, which is one of the 36 State of the Federation of Nigeria.
Its creation was a condensed account of political struggle of people desperately yearning to assert
their identity in the political map of Nigeria. Many people see the political existence of Uyo Local
Government Area, the Akwa Ibom State capital as providing the Nucleus for the development of
the people once neglected. An area in the South Eastern part of Nigeria that is endowed with great
economic potentials.

1.3 THE DEVELOPMENT CHARACTERISTICS OF THE STUDY AREA (UYO)

Akwa Ibom State, with a population of four million on an area of less than 8,000 sq.km, is one of
the most densely populated states in Nigeria. Due to the presence of oil, Akwa Ibom has an above
average development potential. The current transportation infrastructure consists of 9,000
kilometers of paved, unpaved and not-passable roads, a natural waterway network, an
inter-national airport currently operational, a sea port with restricted operability and a crude oil
loading facility located just off the coast.

Uyo being the focus centre of the state has witness rapid development over the years from what it
used to be known as. The development could be seen in the area of infrastructures, good road
networks, power lines, good drainage system, standard telecommunication facilities, and
outstanding specialized buildings amongst others. Also, the economy of the state has grown above
hedges and this draws many forms of investment into the state. The area is actually known for its
orderliness, aesthetics, cleanness amidst other social norms and all this join in making the state
conducive enough for investment and investors to come in thus explaining the very reason for the
rapid development in the area of real property within the study area.
 CHAPTER TWO

2.1 AN OVERVIEW OF REAL PROPERTY

Real property is land and any property attached directly to it, including any subset of land that has
been improved through legal human actions. Examples of real properties can include buildings,
ponds, canals, roads, and machinery, among other things. In land law, where the term is most
commonly used, real property also entails the right of use, control, and disposition of the land and
its attached objects.

In the legal sense, owning real property involves the bundle of rights transferred from seller to
buyer upon the sale of a property. These rights typically dictate the use, transfer and/or sale of real
properties. These real estate rights include the right of possession, control, exclusion, enjoyment,
and disposition.

2.1.1 TYPES OF REAL PROPERTIES

2.1.1.1 Commercial properties

Commercial properties are properties built for commercial purpose. Commercial properties are
real properties of any kind, which accommodate those who are engaged in any trade or profession
with the expectation of profits. However, these properties are used solely for business purposes
and investor (developer) usually owns the building and collects rent from each business that
operates within the structure. Sometimes, the developer could build for outright sale and
subsequently appoint a facility manager.

Types of Commercial Properties

According to Ifediora (1993), basically the decision to lease, rent or purchase commercial
properties is generated by prospect for returns from the use of properties that suit the needs of a
firm or company. Investors might make purchases just rent out to the prospective tenants. Builders,
promoters and speculators, may develop new properties for lease of sale to business firms. The
decision to engage in such business therefore depends on present level and future prospects of
general business conditions or the relative prosperity of that particular line of business. Some of
the categories of commercial property include: Ultramodern malls and event centers, office
buildings, recreation centers, concession, hospitality, restaurant and fast food outlets etc. but this
study will consider a few commercial properties.

There are three main types of commercial properties namely: Office, Shops, Commercial and
Warehouse, etc.

2.1.1.1.1 Offices:

These are premises which are generally used for professional or trade purpose. They do not consist
of selling goods or showrooms, they are buildings where higher sectors of economic activities are
carried out such activity includes the services rendered by banks, insurance companies and
professional lawyers, valuers etc. however, offices are service industries consisting of those
experts whose role essentially advisory as opposed to being directly productive in the industrial
sense (Ifediora, 1993).

2.1.1.1.2 Shops:

According to Gareth (2012), shops are buildings or part of building where goods are displayed for
sale on either the retail or wholesale basis. They are very wide in area from small sized shops cover
floor spaces of about 20m2 or less net floor area. The medium cover floor spaces between 50m2
and 100m2 net floor area and are found in major streets or roads in some part of the town. Income
from shop property generally forms a very sound type of investment, attractive both the private
investors and to cooperate bodies such as institutions, pension funds and insurance companies.

2.1.1.1.3 Commercial Warehouse:

This is a commercial property usually for storage purpose or sale of goods at same time. However,
the warehouse has been generally understood as a building used primarily for the storage purpose
and has been define as a property or structure designed and used for storage of wares, goods and
merchandise (Ifediora, 1993).

2.1.1.2 Residential properties

Residential properties are properties that provide housing for accommodation,. Residential
properties cover the whole area of property types such as condominiums, residential house, service
apartments, townhouses and bungalow. They are characterized to providing shelter, security,
comfort, privacy and investment. They are type of properties meant for living purposes. It is ranked
second in the hierarchy of human needs; being most important after food (Lerano, 1992).

Type of residential properties

Residential properties cover a wide range of properties which are categorized into the following:

1. Bungalow (detached/semi-detached)

2. Block of flat

3. Detached houses

4. Duplex (detached/semi-detached)

5. Service apartments

2.1.1.3 Industrial properties

Pearl mutual consult (PMC, 2009), explains industrial properties are used for manufacturing and
production. Usually involves the construction of warehouse and factory floors. This sector of
industry is not so robust in, due to the current low level of manufacturing activities in the country.
Industrial properties can generally be broken down into three sizes namely: small (single or
double-storey building) zoned for industrial used, large (medium to large warehouses and
factories) design to manufacture or store goods and enormous (big-box industrial space) used as
logistics and distribution centers. Investing in industrial estate provides benefit including higher
rents, longer leases, low-maintenance building.

2.2 THE CONCEPT OF REAL PROPERTY INVESTMENT

There has been an increased appetite for real estate investment in recent years in Nigeria as in other
emerging nations of the world. Real estate investment represents a significant portion of many
institutional portfolios as a result of many potential benefits of real estate. Real estate investment
is associated with portfolio risk reduction, hedging of unexpected inflation or deflation, delivery
of cash flow to the investors and tax benefits (Fabozzi et al 2003, Izzo 2004). Chen and Mills
(2006) maintained that “real estate is an attractive investment for many reasons, including the high
share of total return derived from the income components”. These advantages of real estate over
other investment vehicles are what have enhanced its attractiveness to investors across the globe.

However, investment in real estate involves large capital outlay unlike the investment of probably
small sums in some other investment vehicles. Ajayi (1998) posited that “the decision to invest in
property rather than government stock or other fixed interest investments is a major step requiring
skills of financial and physical management as well as access to substantial funds”.

In Nigeria, real estate investment was seen in the past as a means to obtain security and regular
income, thus decisions were often made on the basis of intuition and past experience (Ajayi and
Fabiyi, 1984). Appraisal of portfolio performance was limited to financial holdings, while limited
interest was shown on the level of performance achieved by real estate investment.

2.3 CLASSIFICATION OF REAL PROPERTY INVESTMENT PREVALENT IN UYO

Uyo has one of the major and fastest growing cities in Nigeria has taken a considerable share in
the real estate investment portfolio. Below are some of the real property investment easily noticed
within Uyo City where it is easily noticeable;

2.3.1 RESIDENTIAL PROPERTIES INVESTMENT

Residential properties has earlier highlighted earlier in this work is mostly building specifically
built for dwelling purposes. This includes Family House, Tenement buildings, Bungalows,
Masons, Duplex etc.

Most of this buildings are built specifically as an investment i.e. built and sold or let to tenants for
a consideration of rent. Such building though can be seen almost all over the state, there are more
concentrated in the area mapped out for the state’s public estate and this include Ewet Housing
Estate, Oron road etc.
2.3.2 COMMERCIAL PROPERTIES INVESTMENT

Investing in commercial properties are one of the most dominating types of property investment
in Uyo Local Government of Akwa Ibom State. This can be seen through the myriads of
commercial activities spread across the city. This type of properties investment includes an
investment in hotels, bar, restaurants, offices, shops, marts, shopping complex, mini markets etc.

The regions within the city that such investment are prevalent are Uyo Plaza, Ikpa Road, Aka
Road, Ikot Ekpene Road etc.

2.3.3 RECREATIONAL PROPERTIES INVESTMENT

Recreational land uses are those uses involving recreation, relaxations and enjoyment. This usually
seen in the form of Garden Parks, Green space, leisure parks, relaxation plazas. Such development
though not so many in Uyo city but has its presence felt nevertheless, example of such places in
Uyo are Discovery Parks, Ibom Plaza, Museum gardens, Sport centres, Ibom Tropicana, various
private gardens etc.

Investors develops such places in the form of investment and let it to business or brand owners to
use as their catchment area and makes their economic returns from such.

2.3.4 INDUSTRIAL PROPERTIES INVESTMENT

Industrial properties are properties used as the premises for fabrication of products, producing of
goods and other industrial related activities. The Itam region in Uyo Local Government Area are
specifically zone as the industrial zone of the city and various industries operating within the states
are located there.

Property developers and investors key into this trend by building industrial complexes over the
region for rental purposes and letting to individual or companies who wishes to go into one kind
of production and industrial related activities or the other.
 CHAPTER THREE

3.1 THE CONCEPT OF PLANNING

Planning is the core centre of every human activities and such it’s a pre-requisite to any successful
accomplishment of any objective or goal. So therefore to achieve an efficient and functional
environment, it is assumed that planning is the one practice that should be given due attention so
as to enjoy it fruitage. Because of this, government circulate planning into the three tiers of
government i.e. national planning. State planning and regional planning. To this effect every local
government have their own planning authority so as to be close to the people and their immediate
environment in order to monitor land development and every other concept within their jurisdiction
with the sole aim of ensuring safety and convenience of its citizen. Irrespective of the indispensable
role of town planning authority in Nigeria, it appears that it has been sidelined by government and
even at times lack reorganization by the masses.

3.2 AN OVERVIEW OF PLANNING CHARGES

Planning charges as a concept did not originate today rather it goes down in history lane. It is the
charges or levies imposed by planning authority or its agency on building, virgin lands etc. so as
generate revenue for the provision of social services to the people which will in a long run benefit
even the payees. It is a fiscal instrument used by the local government to generate funds for its
activities.

Planning charges currently employed in Nigerian system includes;

3.2.1 Development Charges:

Development Fee means a fee for the packaging of a Property or Mortgage, including the
negotiation and approval of plans and any assistance in obtaining zoning and necessary variances
and financing for a specific Property, either initially or at a later date.

The Local planning authority is looks after development within his area of jurisdiction to ensure it
conformity to zones, state plans, building regulations etc. to ensure conformity, beauty, comfort
and safety within the community. And development charges are almost levied on these
development in return though these charges are to a large extend dependent of location, size and
nature of the development.

3.2.2 Planning Rates:

Planning rate can be defined as the rate levied upon a hereditament by the town planning authority
so as to generate revenue for the local government. It is usually collected from the owners of a
property and sometimes from the occupiers who are not exempted from the paying rate. The
amount payable is usually calculated using the rate Nairage adopted by the local government area.

3.2.3 Site Value Rate

This is the rate charge only on undeveloped land (virgin land) so as to encourage development to
the land. This charge is mostly for the encouragement of an effective and resourceful use of land
and all as a means of generating revenue for the local government council. Site value rate is mostly
and widely seen as a weapon for positive planning (Ogbuefi, 2004).

3.2.4 Environmental Management Levy

Environmental Management Levy are those levies levied by the local government through the
sanitary, health and waste management development on business owners, companies, industries
etc. for the protection and management of the environment. This may come in form of sanitations,
waste management, sewage and refuge disposal system bills etc.

This act seek to ensure cleanliness and promote the sanitary and healthy nature of the environment
by undertaking to carry out proper waste disposal system, announcing and implementation of
sanitary exercises etc. and subsequently levying charges on the dwellers accordingly.

3.2.5 Betterment Charges

These are charges imposed on values gained by landed properties as a result of specific public
development public development works and planning charges. In other words, this are charges
levied on properties as a result of the increase in the economic value of the property through the
acts of government. In a normal sense, it is just right to pay a portion of the profit ones made from
his property as a result of public’s effort and it is mostly charge during the transfer of ownership
of a property. It is worthy to note that betterment charges are hardly collected anywhere in Nigeria.

3.2.6 Business Premises Registration Charges:

These are charges imposed on business owners at the local government level as they undergo the
registration of their enterprises. This seeks to further generate revenue to the local government
authority and thus aid in the running of the local government administrative affairs and its projects.

3.4 AN EXAMINATION OF PLANNING CHARGES IN UYO

Uyo as a typical city is not exempted from the above charges, rates and levies as they generate a
huge revenue from such charges. The local Government Secretariat which is located at Idongesit
Nkanga Complex along Aka Road, Uyo houses the various departments and agencies in charge of
levying and retrieving this sum from the public. The agencies and department includes Uyo Town
Planning Authority, Uyo Local Government Department of Health, and Department of Waste
Management Etc.
 CHAPTER FOUR

4.1 THE POSITIVE IMPLICATIONS OF PLANNING CHARGES ON REAL

The following are the positive effect of planning charges on real property investment in Uyo
local Government Area of Akwa Ibom state:

1. Provision, Payment and Maintenance of Services/Facilities and subsequent

Enormous functions/responsibilities are thrust upon the shoulders of local government. Fund must
therefore be available to pay for the services like education, health, sanitation and other social
services jointly enjoyed and funded by the local government. The property owners/occupiers that
enjoy social services borne by the local authorities ought to make certain commitment to defray
such services. It is therefore, incumbent on the occupiers/owners of properties in such localities to
bear the brunt of the payment. No particular individual affords or provides such services and only
the local government can provide them for the enjoyment of the residents/property owners in its
domain. The availability of this services within Uyo city confines through the acts of the local
government authority improves accessibility, comfort and convenience which in return enhance
the property value of real properties within Uyo City.

2. Benefit Principle

The properties benefit from the social amenities provided by the government (Federal, State and
Local Governments). These benefits translate into increase in property values by way of betterment
values. The local government area in which the properties are located ought to have access to
enhanced values since rating and taxation is proportional to the properties assessed annual values.
[

3. Redistribution of Wealth and creation of effective demand for real property in Uyo City

The act of levying the aforementioned charges helps in the redistribution of wealth from the
wealthy and house owners to the poor and tenants. For instance, a wealthy property owner is
compelled to pay property rates and the rate recovered from him/her is added to other fund to
provide good roads, electricity and pipe borne water to the community in Uyo in which the very
poor and tenants would also benefit from too. This would reduce the spending level of an average
person and increase savings which would be in turn be used to pay as a rent to occupy real property
thus creation of more effective demands for real property or built a real property which would
improve the supply level of real estate in the Uyo Local Government Area.

4. Encouragement of Development

The positive planning concept of levying site value charges on virgin and undeveloped land would
compel the land owner who is not financially buoyant enough to carry out developmental activities
on his/her virgin land to sell it to someone who is financially buoyant to develop such virgin land.
This simple act improves the economy of Uyo as the land that was left to waste (fallow) is being
used to generate funds through the used it is been put into. Also, leads to the development of more
real property and thus a create avenue for real property investment in Uyo.

5. Enhancement of orderliness, safety, beauty of Uyo City thus attracting more investors
and migrants into the city which creates both the demand and supply for real property
in the city.

Through the acts of levying charges especially the Development charge and Environmental
management levy, the community regulates the orderliness of the development being carried out
and ensure that all development is in conformity with the required standards and laws and thus
guaranteeing safety in the community.

6. Creation of a hygienic Uyo community suitable for Real Property Investment to flourish

A hygienic and clean community would be achieved through effective and efficient administration
of sanitation exercises, waste management exercises, proper refuge and sewage disposal amongst
others. This could be seen as a result of the planning charges levied of dwellers and the benefits
goes directly to the value, comfort and convenience enjoyed in a real property within the
community.
4.2 THE NEGATIVE IMPLICATION OF PLANNING CHARGES ON REAL
PROPERTY INVESTMENT IN UYO

The following are the negative implications/effect of the various planning charges on real property
investment in Uyo;

1. Planning Charges Hinders/Discourages Real Property Investment in Uyo

Planning charges could be said to hinder real property investment in Uyo especially in the case of
development charges. For instance, when a property developer does not pay their required
development charge so as to obtain planning permits, the local government planning authority
would put a ‘stop work’ notice on the premises which in return hinder and delay the development
of that property and this discourages real property investors in Uyo.

2. Discouragement of property rights transaction

In the aspect of betterment charge, stamp duties, obtaining of right of occupancy, deed of
assignment, due to the rigorous stress and the exorbitant amount charge by the Ministry of lands
in Uyo local government area, real property investors are discourage from buying both developed
and undeveloped land thus reducing property investment in Uyo.

3. Reduces the profit based of real property investment in Uyo

A review of the various planning charges would highlight the financial burden most property
investors faced and this charges reduces the profit based of the investors and this limits expansion
and the development of more real property within Uyo city.

4. Its creates extra burden on tenants in Uyo

Due to the various charges paid by property owners in Uyo, the landlord many a time transfers the
burden to the tenants through rent and other service charges. This extra burden increases the
expenditure level of the tenants and reduces the amount being saved by the tenants which could
be used to carry out real property investment in a long run.
5. Result in loss of profit for property investors in Uyo

Profits, business and tenants are loss most times by property investors in a situation when the local
government authority shut down or hinder entrance into the real property premises as a result of
the property owner not being able to offset the charges levied on him.

RECOMMENDATIONS

Having studied the real property investment and the effects of planning charges on such, I thereby
recommend the following;

1. That real estate investors and the general public at large should be further sensitize on the
benefits of planning charges on real property investment and the need for timely
compliance.
2. That Local Government Authority should be encouraged to use the fund generated wisely
and provide needed services in Uyo community so that the property investors would see
the benefits of the charges they are paying.
3. A seminar should be conducted in various institution in Nigeria and the concept of planning
charges and its effect on the real property investment and the society at large. It is believe
that this would prepare the mind of the students on this so that they can contribute positively
in the society.

CONCLUSION

To conclude, it is pertinent to emphasize that planning charges commands more positive effects
and implications on real property investment which would diminish its negative effects if the
administration of the planning charges exercises and the benefit principle are taken into
consideration and acted upon accordingly. And at such all should be done to sensitive the public
of this notion so that the interdependent relationship existing among the two concept could wax
stronger.
 REFERENCE

Ajayi, C. A. (1998), Property Valuation and Investment Appraisal, Ibadan: De Ayo Publications,

Ifediora Godson S.A. (1993). Appraisal framework snaap press limited, Enugu,

Ifediora, G.S.A. (2001). Rating valuation assessment. A paper presented at one - Day CPD
workshop jointly organized by the N.I.E.S.V. Enugu State branch, ESVARBON and Enugu
State local government service commission at hotel presidential, Enugu 3rd August,

Ogbuefi J. (2004). Comprehensive Property Rating and Taxation. Institute for Development
Studies, University of Nigeria, Enugu Campus,

Oral Interview with Planner Mfon Udoh on 20th November 2020.