Landlord-tenant law is good for investment, President should just sign it

By Dr. Chris Baryomunsi

The Parliament of Uganda recently debated and passed the Land Lord and Tenants Bill 2018 with lots of energy and animation. I had earlier tabled this Bill on behalf of the Ministry of Lands, Housing and Urban Development. It was processed through the Parliamentary Committee of Infrastructure, which invited members of the public to make input before making a report to Parliament.

Since its passing, sections of the public have attempted to pour cold water on the new law with some expressing fear that once implemented, it will hurt the economy. Surprisingly, those raising these same, old and emotional arguments do so without providing evidence and sound reason.

Firstly, this law whose preparation began in 2012 has benefitted from wide consultations from a cross-section of stakeholders. It is not a rushed law. Actually, on most occasions, Ugandans have been petitioning Parliament over the delayed tabling of the law. At one point, the Speaker of Parliament asked the petitioners, who had threatened to demonstrate over the issue, to do so at the Offices of the Prime Minister and Ministry of Lands, Housing and Urban Development.  This shows there is a silent majority that sees the Bill as a big relief to their suffering.

The major objectives of the Bill are to regulate the relationship between housing landlords and tenants; to reform and consolidate the law relating to the letting of premises; to provide for the responsibilities of landlords and tenants in relation to letting of premises and for other related matters. Many countries world over-regulate this relationship. Experience in public life has shown that many people and institutions abhor regulation, yet it is the duty of the state to bring order in society. 

As you read this article, there are tenants who have refused to pay rent for a period of months and they intend to escape in the thickness of the night and shift to another rented premise. There are also landlords who may evict innocent tenants at odd hours beyond midnight. Should the Government ignore such realities?  As the Minister responsible for housing matters in the country, I wish to clarify a few issues.

This law specifically applies to the letting of residential and commercial premises. It addresses broad principles of rights and obligations of both landlords and tenants for both residential and commercial premises. Once assented to by the President, the Ministry will issue various guidelines and statutory instruments to give effect to a number of provisions. The argument that two separate laws for residential and commercial premises ought to have been made does not therefore arise.

The law outlines the key obligations and responsibilities of tenants and landlords. For instance, it provides for a tenancy agreement to be made and further provides a sample of such an agreement detailing the key ingredients therein.

The Bill creates an obligation that rental premises must always be fit for human habitation and provides for when the tenant and or the landlord is expected to repair the premises.

The duties of a tenant include, among others; not using premises for unlawful purposes, not causing interference or being a nuisance to neighbours, to keep rented premises clean, not to damage premises, to pay a security deposit and not to install fixtures or make alterations without the consent of the landlord.

Landlords, on the other hand, have to ensure the quiet enjoyment of the premises by the tenant, keep the premises safe and free of health hazards and not to refuse to rent the premises on the basis of discriminatory grounds such as sex, race, ethnic origin, religion, political opinion or disability among others.

Concern has been raised on the need to pay rent in Uganda Shillings. World over, countries protect their national currencies. In Uganda, especially, Kampala, there are landlords who do not accept rent in Uganda shillings. They insist on settling rent in US Dollars or other foreign currencies. Some argue that they borrow in dollars and, therefore, should be allowed to charge rent in dollars.

This argument is frivolous. Many Ugandan importers also purchase their goods in foreign currencies but sell their items in shillings. Medium and large scale investors operating in Uganda like Shoprite, Game stores, Toyota, Shell, Total import their goods using foreign currency and then convert their costs and sell in Uganda shillings. In addition, all foreign contractors engaged in Government and non-government works like infrastructure, oil and gas, etc import their machinery and other inputs in foreign currency but transact in Ugandan shillings. So, what is special with housing landlords?  

The foreign exchange market is liberalised in Uganda. Why don't the landlords receive Uganda shillings and convert the money into currencies of their choice like is the practice everywhere? When constructing the buildings, which currency do they use to buy materials like sand, bricks, floor tiles, and roofing materials? How come they don't insist on paying for them in dollars? Globally, over 90% of the economies charge rent in their local currencies as a best practice. Ugandans have a collective and patriotic duty to protect the Uganda shilling as other countries do.

There has also been uproar about the increase in rent. The law allows the landlord and tenant to negotiate the amount of rent to pay. The Government does not fix rental charges. The landlord-tenant law actually repeals the Rent Restriction Act of 1949, which prescribes rent not to exceed standard rents set for different areas in Uganda.

In this new law, the Government proposes that a landlord shall not increase rent at a rate of more than 10% annually or such other percentage as may be determined by the Minister responsible for Housing. Some people have argued that Uganda runs a liberalized economy hence this provision contradicts the policy. Not at all. In liberalised economies, there is always room for regulation.

There are unscrupulous landlords who wake up one morning and increase rent by over 300%. Should the state just keep quiet as the population suffers? Again this is a global practice including in countries with well-established economies. Countries like Germany, United Arab Emirates (UAE), South Africa, USA, Canada and many Asian countries do not increase their rent rate by more than 5% in their regulations. In Germany, for example, a landlord cannot increase rent by above 4% within four years and the same in UAE in a period of three years.

The rationale is to stabilise the economy so that the housing sector does not create artificial markets hence causing inflation. We have chosen a modest 10% for our case because inflation in Uganda has remained single digit for many years.

Concern has also been raised about the issue of criminalising the action of a landlord subjecting a tenant to annoyance. Annoyance has been defined to mean the unwarranted, unreasonable, offensive or unlawful interference in the use or enjoyment of rented premises.

There is a global recognition that when some landlords want to increase rent or want tenants to vacate their premises without following a legal procedure, they resort to actions that annoy and inconvenience the tenants. This provision is meant to deter this behaviour and protect the tenant from harassment by the landlord.

Critics have also created a fear that termination of a tenancy can only be effected by a landlord after a six months' notice. On the contrary, the Bill provides a number of circumstances under which termination of a tenancy can be effected either by a landlord or tenant. These are provided in clauses 37 to 43 of the Bill.

These circumstances for termination include when there is mutual consent, vacating premises by the tenant with consent of the landlord, termination at the lapse of the tenancy, termination after notice by the landlord. For an annual tenancy, a 60 days' notice is given. This termination of tenancy does not remove the obligations of the tenant to pay rent for the period he or she has occupied the premises.

The law clearly states that disputes between land lords and tenants shall be resolved through court. This is the correct position otherwise; we would be promoting impunity and lawlessness.  The landlord and tenant need each other and must always respect their relationship.

The first court of instance has been provided as the local council (LC) court, which has proved to be very helpful in resolving such conflicts. In addition, the Distress for rent (Bailiffs) Act has been saved. Under this law, a landlord or property owner has powers to confiscate and sell assets of a tenant who refuses to pay rent. We intend to issue strong regulations that give effect to this law in order to minimise cases of abuse. Clearly, these provisions show that landlords still have many lawful avenues to have disputes resolved. Nobody should promote the notion of taking the law into our hands even when we own private property.

In conclusion, the landlord and tenant Bill is a very good law. Some commentators have just opted to carry a negative narrative in the hope that they will sway the public to move with them. Serious investors cannot be comfortable to put their money in a sector that is not well regulated.

There is a need for sanity in the housing sector. To leave the sector on the whims of landlords and tenants alone without any legal framework is recipe for disaster. The law is good for investment. It balances the interests of both landlords and tenants and is not tilted to favour any of them. I strongly urge the President to sign the Bill as passed by Parliament into law.

Chris Baryomunsi (PhD) is the Minister of State for Housing and MP, Kinkizi East, Kanungu District