MPs have protested the move by landlords to continue charging rent in US dollars, arguing that there is no need for Ugandans to meet their rent obligations in a foreign currency.
The Legislator’s objection followed a meeting between MPs on the Parliamentary Physical Infrastructural Committee and Landlords under their umbrella body, Property Developers Voice led by businessman Godfrey Kirumira who were presenting their views on Landlords and Tenants Bill 2018.
Through their lawyer Muzamir Kibedi, the Landlords told the Committee that the proposal to have rent paid in the local currency alone is unconstitutional because the property owners will be segregated.
“Many developers of the large-scale properties which offer more employment opportunities and make higher contributions towards the increased property tax collection by URA source their financing in foreign currency, mostly dollars. They also service their loans in dollars. Forcing them to change to Uganda shillings would be unreasonable,” Kibedi argued.
The landlords also argued that commercial banks are able to obtain borrowing in foreign currency without any restriction and it’s this foreign currency that the banks extend to real estate developers by way of loans to construct their commercial sites and wondered why landlords should be restricted in these avenues.
However, a number of MPs rejected the argument like Francis Mwijukye (Buwheju County who said; “You have property owners in Uganda, some of them are Ugandans, others have come to work in Uganda, but they want us to pay in their currency, that is unfair; are you telling us that the Ugandan shilling is so weak? Are you undermining our economy? So, I am very annoyed. When you go to China, you must behave the way Chinese behave, when you go to Italy, you must behave the way Italians behave, when you come to Uganda, you must behave the way Ugandans behave.”
Clause 27(1) of the Bill provides that Landlord shall not increase rent at a rate of more than 10% annually or any other percentage, with the landlords calling to have the clause deleted and rather have rental increment determined by the market forces.
The group defended their stand stating that Uganda is a free market economy and warned that capping of rent increases distorts the market forces and becomes a disincentive to many investors as it will result in slow recovery of return on investment.
Kibedi said: “It is unconstitutional and amounts to discrimination against the landlords for Government to control the rent they charge without controlling the prices of inputs they use to build the premises right from the cost of the land, the cost of finance used, the cost of building materials. Landlords get their inputs at open market rates, why control the rent which is simply a product of their input?”
The landlords also rejected clause 25 of the Bill that provides the limit of rental advances to a maximum of three years, stating that terms of contracting should never be a creation of the law in a free market environment.
The group also rejected the 90days notice before evicting tenants, arguing that the period is too long for effective decision making since time is critical as rent is billed against time of use.
The property owners also rejected clause 51 that stipulates that the tenant can drag the landlord to court for annoying them, with the landlords describing this particular clause as redundant for the Bill’s failure to define annoyance.
Kibedi said that fairness and natural justice demands equal treatment of parties affected by the same law stating; “As such, mood swings for tenants should not be a basis for legislation. Moreover, who says that the landlord cannot be annoyed by the tenant?”
