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Rent law: Good intentions, bad incentives for property market

Rental houses on Kafumbe-Mukasa Road in Kampala. Traders have in the past years protested sudden rent increments. INDEPENDENT/ Jimmy Siya

The proposed law will make rent expensive

Kampala, Uganda | ISAAC KHISA | John Kityo has been experiencing some tough times in renting a room for his small business in downtown Kampala. The 30-year old has rented seven different places as a result of sudden rent increments.

So when Dr. Chris Baryomunsi, the Minister of State for Housing announced on April 10 that the government is soon tabling a Bill titled ‘Landlords and Tenants Bill 2018’ in Parliament seeking to reform the property market through rent controls, Kityo, was one of the tenants who were excited.
“I feel happy that a law is coming into place to curb sudden sharp rent increases,” he said. “At least, we will have time to plan our rent in the coming month or so.”

The Bill, among others, imposes a cap of 10% on rent increments per annum, provides payment of rent only in shillings except only with mutual agreement between the parties, and provides for lawful eviction of the tenant only through a court order.

The Bill also proposes imposition of jail terms on landlords for breach of certain provisions of the law and limits the landlord’s recourse to magistrate’s courts in case of errant tenants.
Also, landlords shall carry out all repairs of the premises unless the damage caused to the premises were caused by the tenants’ negligence or failure to take reasonable care.

This proposed law is in response to the Kampala City Traders Association (KACITA)’s previous protests citing sharp surges in rent.

But not everyone is impressed with the government’s proposed law. Arthur Mukembo, the regional director for REMAX in East Africa that manages properties in Kampala told The Independent in an interview that they welcome the government’s move to regulate the landlord and tenant relationship but the proposed law in its current form will be destructive to the growth of the property market.

“The net effect of the Bill in its current form is that it will render several existing investments unviable, deter new local and Foreign Direct Investment into sector, lead to significant job losses and ultimately disadvantage tenants given reduced variety and quality of supply, which collectively, defeat Cabinet’s objectives for the Bill,” he said.

He said this has even been made worse with the imposition of jail terms on landlords for breach of certain provisions of the law and limiting landlord’s recourse to Magistrate’s Courts in cases of errant tenants.

Mukembo, though remained cagey on investors and the related projects, said a number of local and international real estate projects are already being reviewed following Cabinet’s approval of the draft Landlord and Tenant Bill.

Judy Rugasira, the managing director of Knight Frank Uganda, which currently manages 1,731,000 square feet of commercial and 350,000 square feet of residential assets in Uganda said the government’s new step shows that it is yet to understand the causes of rent increases in the country especially Kampala , and is not in any way near to resolving the problem.

One comment

  1. Do these cabinet ministers own any properties in this country? Why would they seem to only favour the tenants as if landlords are not supposed to benefit from their sweat. There is really nothing much one can do if they cannot build their own houses. Once not happy with one landlord move on to the next with hope of forging relationship. Otherwise as the bill is it will deter people from construction residential and commercial properties for fear of marginalisation hence keep the housing deficit as high as 8m as it stands now.

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