The Association of Real Estate Agents (AREA) has welcomed the move by government to introduce a new legislation to regulate land and property dealers in a quest to streamline all sector operations.
According to AREA, the law will spell out clear terms of engagement in real estate transactions, thereby getting rid of fraud and eliminate unscrupulous players.
The new law will also eliminate speculation which, hitherto, has been a major challenge in the real estate market.
Over the years, fraud and other illicit financial transactions have pelted the industry, prompting the financial intelligence authority to look with a keen eye.
According to AREA, the sector is currently conducted in an unregulated environment, which has partly stifled its development over the years.
AREA president Shirley Kongai said the Bill, which will soon be tabled for the first reading in Parliament, comes to protect the interest of consumers in light of transactions that relate to real estate and to promote public confidence in the performance of real estate business.
Need for regulations
She said the rampant cases of fraud in real estate transactions and the comparatively high input costs across make it critical to harmonise the planning, regulation and practice of professionals.
Kongai said land is abnormally priced because the sector is still unstructured because there are no laws that govern landlords, brokers and agents.
She added that lack of reliable statistics and a unifying governing structure has also led to a lot of speculation, leading to skyrocketing land prices, which have driven the cost of construction up.
AREA’s former president, Andrew Mukiibi, said the Bill would also help government increase revenue mobilisation since many brokers have, hitherto, not been paying the full tax due, because they are not regulated.
He said the law would mandate registration of all licensed agents and also provide for acceptable commission rates and property values, thus create transparency in real estate dealings.
The remarks were made during a stakeholders’ consultative meeting on the final draft of the Real Estate Agency Bill 2020.
On May, 26, 2020, Parliament granted leave to West Budama North MP, Richard Othieno Okoth to draft and introduce a Private Members Bill called the Real Estate Agents Bill 2020.
While asking Parliament to grant him leave, Okoth said that most real estate agents make money through commission for services rendered in sale and purchase of properties in a largely unregulated sector.
Okoth observed that although Parliament passed the Landlord and Tenants Act in 2019, the Real Estate Agents were left out unregulated.
He added that the absence of the law to govern the operation of the real estate’s agents predisposes unsuspected sellers and buyers of property to some unscrupulous real estate agents.
He said that the introduction of the Real Estate Agent Bill will streamline and aid the real estate growth in the country.
According to the World Real Estate Federation president, Walid Moussa, lack of regulation often attracts opportunists and criminals, thus depriving the country of would-be credible investors by making the sector look unattractive.
Moussa said to date, Africa is still missing on the global real estate practitioners’ map, with many countries largely unknown to many potential investors.
The real estate and construction sector in Uganda is among the top contributors to the national cake, estimated at 10% of GDP.
According to the Uganda Bureau of Statistics (UBoS), the country’s urbanisation rate is estimated at 5% per annum, with Kampala alone projected to host 10 million people by 2050.
This puts the housing deficit at 2.5 million units, with most of the deficit registered in Kampala alone.
The Ugandan real estate sector grapples with financing costs because it is capital-intensive due to the high cost of land, taxes, as well as construction raw materials.
With the creation of new cities, Moses Lutalo, the country manager, Broll, said demand for housing is expected to raise even further, as more people move from the countryside to look for new opportunities in cities.