UGANDAN tenants may not be very amused, but most, if not all, property owners with residential houses in Kampalaâ€™s leafy suburbs want their rent paid in dollars. What is this fuss about the dollar?
A couple of months ago, Maxwell Luboobi, a friend needed to relocate from one house to another. He wanted a single unit three-bedroom house in a decent environment, preferably in one of the up-market suburbs.
After six months of searching, we managed to get Luboobi a house, somewhere in Ntinda. With unscrupulous brokers playing â€˜cheatsâ€™ finding a decent house was not only a money-squandering venture, it was also energy sucking.
Notwithstanding the opportunistic brokers, I could tell that the owners of the houses seemed to have discouraged Luboobi more! Every landlord in Ntinda, Naguru Hill and Bugolobi bungalows asked for rent in dollars!
A landlady in Bugolobi bungalows asked for $800 rent for his three-bedroom bungalow with a guest wing. A landlord on Semawatta road, Ntinda wanted $1200 per month for his four-bedroom flat plus guest wing.
Is it a trend to charge rent in dollars or are property owners merely fascinated by the dollar?
According to Robin Kironde, the marketing manager Property Consultants, three to four years ago, houses in Kololo, Nakasero, Naguru Hill, Muyenga, Ntindaâ€™s Ministerâ€™s Village and Bugolobi were rented or sold out in Uganda shillings.
But when some people in Kampalaâ€™s up-market residential suburbs started renting out their houses to expatriates who preferred to pay rent in dollars, a â€˜dollar-rentâ€™ trend emerged.
â€œIt was the only way a property owner in such locations (up-market suburbs) could value his or her property because their neighbours valued their properties in dollars,â€ explained Kironde.
These days a majority of houses on Naguru Hill, Mbuya, Bugolobi, Kololo, Muyenga and other residential areas synonymous with diplomats and high profile government officials have the dollar tag. But property owners will tell you it is no longer a trends issue.
Ahmed Kigozi, a Kampala businessman who owns properties in Kololo says he prefers dollars because he uses the money from rent to clear his international business transactions.
â€œMany times I have to buy and import merchandise from Dubai. The money from the rent normally helps me a great deal because once I have been paid, I do not have to change it to dollars to pay for the merchandise. Otherwise I would have to lose some money if I was being paid in shillings and I had to change to dollars,â€ he explains.
For some people the high inflation rate of the Uganda shillings, in the late 1990s and early 2000s, compelled them to resort to the dollar.
The trend has caught up with owners commercial premises. Their rent is also paid in dollars.
â€œIt was not a matter of joining the trend for me,â€ argues Rhoda Mirembe, owner of three bungalows, one in Kololo and two others in Muyenga.
â€œI had two children studying in universities abroad and as you may know their tuition was not paid in shillings. I had to always get the shillings, change them to dollars and then pay off the tuition. It became really hard five years ago when the shilling grew weaker by the day. I was losing a lot of money changing to dollars.
Kironde says sometimes property owners living abroad leave custody of their property to Property Agencies in which case owners prefer to be paid in dollars and sometimes money remitted to them abroad.
â€œIf you ask for local currency, you must convert it to dollars before sending it to them and in the process we lose a lot of money,â€ he explained.
â€œBut sometimes it is not the initiative of the property owners to ask for rent in dollars,â€ he added. â€œThe clients who rent the houses are expatriates whose rent is paid in dollars by foreign governments or international agencies.â€
However, property owners are not warranted to ask for dollars simply because they need to make international transactions or because they live abroad. Kironde stressed that a house does not have to only be big; it must conform to certain standards if it is to attract the kind of people willing to pay dollars.
Kironde concedes that dollars are a bit scary to Ugandans, most of whom â€˜freak outâ€™ when shown properties valued in dollars. In his opinion landlords with two bedroom or one-flat houses located in places like Bweyogerere, Kirinya, Naalya, Luzira and other such middle class suburbs should be charged in local currency and valued at their fair market price.
Property agencies can and normally advise property owners about the fair market value of their houses to avoid having a house vacant for long periods as a result of over-pricing.
Why landlords want their rent paid in dollars