KAMPALA – Real estate agents, property managers and developers have requested President Yoweri Museveni not to sign the Land Lord Tenant 2018 Bill recent approved by parliament. According to Ms Shirley Kongai, the president, Association of Real Estate Agents of Uganda (AREA Uganda), an umbrella organization of real estate practitioners in Uganda, if the bill becomes law, investment in the housing sector is to reduce that will increase the cost for rent.
The bill was passed with several amendments which relate to duties and rights of landlords and tenants in rented commercial and residential premises.
Among the key provisions is that landlords and tenants must sign tenancy agreements for rent transactions of over Shs500,000 with clear terms and conditions. Also, tenancy disputes shall be handled in local council court and other courts of law. It also states the landlords can only evict tenants after securing court orders to do so.
The bill also state that unlawful evictions attract a penalty of Shs5 million or jail term of one year or both upon conviction. MPs also approved the provision that landlords must give tenants an eviction notice of six months.
However, the most controversial provision is that all rent shall be settled and recorded in shillings, contrary to the initial proposal that parties can agree to transact in any other currency in the agreement. It also sets not more that 10 percent rent annual increase.
“The bill is skewed in favor of tenants, with the overall effect of making onward investment in providing rentable premises unsustainable. Annually the exchange rate of the dollar against the shilling has been increasing at 7 percent, if you set rent at 10 percent, it means the land lords will go for the 10 percent. They will also charge rent to an equivalent of the dollar that makes the cost of rent more expensive,” she told journalists Friday July 12th, 2019.
She further explained, “AREA Uganda’s membership is concerned that the bill as approved by Parliament is not consistent with the principles it set out to achieve, being, prescribing fair rights and obligations for tenants and landlords, and creating an enabling environment for the development, promotion and regulation of rentable premises.”
Kongai said the bill infringes on freedom of contract by prescribing specific formats of tenancy agreements.
“Contractual relationship should have no mention of civil penalties like jail terms, instead, should provide for reasonable protections in contracts like injunctions, consequential damages, and so on,” she said. Adding, “Requires Tenancy Agreement to be in shillings yet imposes a cap of 10 percent on rent increments per annum in spite of the performance of the broader economy. This is prejudicial and discriminatory in nature considering the rest of the economy is free to denote transactions in any currency of choice, and operates on free market principles therefore market forces of demand and supply should be allowed to play. Bank loans, construction materials and equipment, agricultural products, legal services, tourism products, motor vehicles and a range of other products and services in Uganda can be procured in foreign currencies.”
She said AREA Uganda has sent a petition to President Yoweri Museveni to send back the bill to parliament.
Founded in 2008, the Association of Real Estate Agents of Uganda (AREA-U) is a professional Association of Real Estate Agents, Property Managers, developers and related real estate practitioners in Uganda. With over 300 Individual and 200 corporate members, AREA-U’s mandate is to professionalize the real estate sector in Uganda as well as to create awareness of its benefits as an engine for economic growth.