Min.Amongi Clarifies On Controversial Landlord Tenant Bill

Following the passing of this Landlord/Tenant bill by Parliament on 26th June 2019, the public have continued to be given inaccurate and misleading information on some provisions of this bill.

The Ministry wishes to make clarification on a number of provisions for clarity and better understanding by the stakeholders and the general public.

Issue No. 1:  Payment of rent in United States Dollars (Section 23(2) of the bill)

In expression of national sovereignty and in pursuit of macro economic development and stability, all countries globally developed or developing, entrench settlement of charges across all sectors in their local currencies. Internationally rent is negotiated in dollars and then exchanged in local currency. Where as we recognize the argument by landlords that they borrow in dollars to construct houses and therefore should be allowed to charge in dollars, we also need to consider the following:

a) All Ugandans who import goods from abroad (China, India, Dubai, Japan, Turkey etc) purchase using foreign currencies e.g. US Dollar, Euro, Yen,  Renminbi, etc, however they compute their price in Uganda shillings;

b) Medium and large scale investors operating in Uganda like Shoprite, Game, Toyota, shell, Total etc  import using foreign currency and also convert their costs in Uganda shillings and sell to the Ugandan market;

c) All foreign contractors engaged in government works like Infrastructure development, oil and gas import machinery and other inputs in foreign currency and transact in Ugandan currency;

d) The construction industry relies on locally available inputs e.g local building materials like cement, tiles, sand and roofing sheets purchased using local currency and labour for construction procured using local currency. This means that the construction industry or real estate industry largely anchors on transactions done in Ugandan shillings. We therefore find it defeating for the landlords to oppose charging rent in Uganda shillings when the other sectors of the economy that depend on transactions in local currency are operating normally. Globally over 90% of the economies charge rent in their local currencies as a best practice.

Issue No. 2:  Terminating of tenancy by notice:

It is not true that termination of tenants can only be effected by the landlord after a six (6) months notice. The bill provides a number circumstances under which termination of tenancy can be effected by either the landlord or the tenant, under sections 37 – 43 summarized as follows:

a) Termination may be by mutual consent between the landlord and the tenant;

b) Termination by vacating premises by the tenant with consent of the landlord;

c) Termination at the lapse of the tenancy;

d) Termination after notice by the landlord in which case notices are issued as hereunder:

(i) For a weekly tenancy, a 7 days’ notice is given;

(ii) For a monthly tenancy, a 30 days’ notice is given;

(iii) For a yearly tenancy, a 60 days notice is given.

The above termination of tenancy does not remove/exonerate the obligations of the tenant to  pay rent for a period he/she has occupied the premises as provided in Section 45, which stipulates that upon being given notice, the tenant must clear all the rent arrears, must compensate the landlord for any damages if any.

Therefore the fear expressed that this provision will lead to the tenant to abandon the premises of the landlord without payment of the rent/ fulfilling his/her obligations does not apply. S. 45 is clear on this. Besides the bill also proposes/provides for security which is kept by the landlord.

Issue No. 3: Prohibiting the landlord from increasing rent above 10% annually:

This is a global practice in which Governments regulates landlords and tenants. Countries like Germany, UAE, S. Africa, the USA, Canada and Asian countries do not increase their rent rate by more than 5% in their regulations annually. In Germany for example, a landlord cannot increase rent above 4% within 4 years; while, in United Arab Emirates, landlords  cannot increase rent by more than 4% within a year. The rational is based on the annual inflation rate of the countries. Therefore the role of Government in stabilizing the economy is of vital concern such that the housing sector does not increase inflation in the country.

Issue No. 4:  Subjecting the tenant to annoyance by the landlord:

This is based on the principal that when someone rents a premise he/she should be given privacy and should enjoy peaceful occupation. There is a global recognition that when some landlords want to increase rent or want tenants to vacate their premises without a legal procedure, they resort to actions that annoy the tenants so that they the premises voluntarily. This provision is meant to deter this and protect the tenant from harassment by the landlord and it’s clearly defined in the law.

Issue No. 5:  Introduction of Alternative Dispute Resolution mechanisms other than Courts of Law:

Contrary to the public concern the bill permits the landlord and tenant to resolve their disputes through local council (LC) system as the first instance of dispute resolution. Also the existing distress for rent (Bailiffs) Act (Cap 76) has remained in force and gives the landlord a shorter legal mechanism of resolving the dispute. The Ministry will issue regulations to ensure that the professional code of conduct of the bailiffs respects the property rights of all parties.

Issue No. 6:  Enacting different laws to regulate commercial and residential properties:

The bill handles broad principals of the rights and obligations of both landlords and tenants which include among others:

a) Payment of rent and evidence of payment documents and retained by both parties;

b) Evictions;

c) Increment of rent ;

d) Termination of tenancy;

e) Subletting;

f) Security deposit; and

g) Tenancy agreement between landlord and tenant.

The above broad principals affect both the landlord and the tenant regardless of whether the property is commercial or residential. However details of distinctive management of commercial and residential properties shall be stipulated in the regulations.