On Monday April 09, 2018, Cabinet sitting at State House Entebbe approved the Landlord -Tenant Bill, 2018. The Cabinet was chaired by President Yoweri Museveni.
If passed by Parliament and assented to by the President, the Act will put a ban on rent charges in foreign currency especially the US dollar-unless the landlord and tenant expressly agree to do so without any duress.
The law will apply to commercial and residential buildings countrywide.
The Bill also proposes that landlords can’t increase rental fees beyond 10% in a year.
However, property mogul Hamis Kiggundu popularly known as Ham says the Bill is unrealistic because rent has determinant factors that are being ignored by proponents of the Bill, a thing he blames on bad politics.
In an interview with a local radio, the proprietor of Ham Enterprises (U) Ltd cited the cost of a plot, construction costs and cost of funds as key factors in determining rent charges.
“If one borrows from the bank and builds four houses and say is paying Shs4m [to the bank per month], it is automatic he has to collect over Shs1m from each house; If you collect Shs500,000, the bank will eventually take the houses,” he said, adding that rent is determined basing on prevailing economic circumstances.
He explained that once one agrees to become a tenant, they are automatically subjected to the terms and conditions under which the building was constructed.
“For example, if I borrowed money in dollars, definitely you also have to pay me in dollars,” Ham said, adding that many business people don’t want to borrow in dollars, but they are literally forced because local banks have a single borrower’s limit where they can’t lend an individual beyond US$10m.
“This means if you want more capital, you have to look beyond borders making it further expensive,” he says.
Ham reveals that bad politics is killing the economy.
“Ugandans should stop frustrating business by mixing it with politics otherwise the economy will collapse,” he said, giving an example of how politicians fought him on the Nakivubo Stadium redevelopment project.
He says the project stalled for four years in wars, but quickly adds that business people are now happily working after developing the place with state-of-the art arcades.
He calls for an end to the politicization of almost everything related to development in Uganda.
“[Bad] politics should be completely out of business and development matters otherwise Uganda cannot develop,” he said, adding that many politicians claim to be fighting for the ordinary people yet they are their worst enemies because they don’t want them to develop.
He says that the Bill aims to make happy tenants yet landlords also come from tenants.
“The Bill will be passed but implementation will be hard because demand and supply determine prices. The Bill is all about politics,” he says, challenging proponents of the Bill to also control prices of goods/services sold by the tenants.
Boosting The Economy
Ham also talked about why many Ugandans are feeling the pinch of the hard economy.
“The economy has weakened because we don’t have a source of income; we export less and import much,” he said, adding: “The only solution to Uganda’s economic problem is to go back to the roots by establishing a source of income for the country. Controlling rent isn’t the solution; we need agro-processing and value addition with government taking the lead.”
He added that it’s ordinary people who are supposed to support the economy by providing market and these must be empowered.
He urged government to look for suitable funding for agro-processing which will uplift ordinary Ugandans out of poverty.
Ham, who revealed that he hasn’t reached where he wants to be urged Ugandans to start business with what they have just like he started small.
“…Many Ugandans don’t believe in themselves. Even Shs1m or Shs2m can be capital; it’s about the nature of business you want to start. You can’t have Shs2m and think of a business idea requiring billions,” he said, adding that Nakivubo Stadium construction works are ongoing and that Ugandans will be happy with it upon completion.
About Landlord-Tenant Wars
Several city property owners charge rent in dollars, a move traders have described as manipulative and disastrous for both formal and informal sector players. For many years, traders under Kampala City Traders Association (KACITA) have been at loggerheads with landlords over charging them rent in dollars which keeps fluctuating.