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New Law Restricts Landlords To Charging Rent In Shillings

Parliament Wednesday passed the Landlord and Tenant Bill, 2018 that restricts landlords from charging rent in dollars.

Uganda’s real estate sector has been marred with confrontations between landlords and tenants over charging rent in US dollars.

Real estate developers argue that they get huge loans in foreign currencies and to pay back, it is appropriate they charge tenants in US dollars.

The Landlord and Tenant Bill, 2018 was read for the first time on 12th February, 2019 by the Minister of Lands, Housing and Urban Development, Betty Amongi and referred to the Committee on Physical Infrastructure for scrutiny.

While tabling the Bill, Amongi said that the Bill was aimed at regulating the relationship between landlord and tenant for the orderly and sustainable development of the rental housing industry that is currently governed by the Rent Restriction Act Cap 231 and the Distress for Rent (Bailiffs) Act, Cap 76 which were enacted in 1949 and 1933 respectively.

 “Evidently, the two laws are outdated and cover only limited aspects of the landlord and tenant relationship. Accordingly, the rental housing market has been largely left to the interplay of the market forces with very minimal government regulation,” Amongi said.

She added: ”This has culminated into strenuous relationships between landlords and tenants characterized by arbitrary evictions and rental increments and the resultant effects such as strikes by tenants especially in the metropolitan areas causing disruptions in the rental housing industry and the economy as a whole.”

Clause 23(2) of the Bill provides that all rent obligations or transactions shall be expressed, recorded and settled in the shilling unless otherwise provided under any enactment, or is lawfully agree to between the parties to all agreement under any lawful obligation.

With the clause being stood over twice, Legislatures finally agreed that tenants shall pay rent in shillings and landlord insisting to have payment made in dollars, the tenants will convert the exact agreed amount in shillings into dollars and make payment.

Amelia Kyambadde, Minister of Trade was one of the MPs to advocate for payment of rent in shillings saying the move will be critical at strengthening the local currency.

 “Uganda is a sovereign state and I think we need to strengthen the currency, we are advocating for local content, then we need to be consistent. My colleague at Ministry of Finance should be protecting our currency. He knows very well that foreign currency in the market can destabilise the currency,” Kyambadde said.  

Parliament also approved Clause 27 of the Bill that provides that a landlord shall not increase rent at a rate of more than 10% annually or such other percentage as may be prescribed by the Minister by statutory instrument with the provision intended to curb the rampant arbitrary and unconscionable rental increments in the country especially in relation to business tenancies.

In its report to Parliament, the Committee of Physical Infrastructure had recommended to have the determination on the percentage at which they are to increase the rent be left on the market forces, a proposal that was rejected by MPs.

Legislators also passed the provision that orders the landlords to give tenants a 90 days’ notice if they are to increase the rent to ensure that tenants can be given ample time to adjust and the increment shouldn’t be done in a space of less than twelve months from the previous increment.

The Bill, if assented into law by the President, will see the landlord give a tenant a six months’ notice if they want to vacate their buildings. It will therefore be illegal for the landlord to forcibly evict a tenant.

The Bill further bars landlords from subjecting a tenant to any annoyance and whoever does so will be liable to a fine one hundred and fifty currency points approximately Shs3M or serve a jail term not exceeding one year or both.

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