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Red tape, high mortgages affecting real estate

By David Mugabe

Added 1st April 2016 11:59 AM

Commercial online firm Lamudi has noted in a report that the bureaucratic process of registering property and land is a big challenge costing the industry valuable transaction time.

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High mortgage rates among other challenges are costing the real estate industry. Photo/File


Bureaucracy, lack of transparency and high mortgage rates continue to hamper sustained growth of Uganda’s real estate sector.

Commercial online firm Lamudi has noted in a report that the bureaucratic process of registering property and land is a big challenge costing the industry valuable transaction time.

“This process usually takes a couple of days, tends to a couple of weeks, months and even years. Effects such as monetary losses and exorbitant costs of this challenge tend to affect plans of the buyer, seller, developer and the sector as a whole,” noted Lamudi in a report.

They also cite the general mistrust in the real estate sector with many potential buyers believing that most real estate practitioners are con men or thieves. This reputation it says tends to take its toll on the real estate sector as a whole with several agencies, brokers and developers losing out on money and projects due to potential investors not trusting their services.

The other challenge is the high mortgage rates. Despite efforts by commercial banks to promote mortgage uptake as  a way of financing real estates, their high costs remain unattractive and the general borrowing atmosphere does not favour the sector.

“Most people who are planning on buying homes tend to hold back because they believe the high interest rates are not worth it in the long run,” noted Lamudi.

Tom Odaak, the proprietor of Excel Estates a real estates firm says they also face a big problem with speculators who buy and inflate prices without any calculation of the factors around land pricing.

“Some of them do not even know what makes the price of land rise, they just slap a price which destabilizes the market,” noted Odaak.

Uganda’s real estate sector remains fragmented, unregulated and speculative with buyers and sellers relying on researched information to determine prices.

 

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