News

Features of the Landlord Tenant Bill of 2018

"Landlord Tenant Bill"

Introduction

The Parliament of Uganda passed the Landlord Tenant Bill of 2018 on the 26^th of June, 2019. The purpose of the Bill is to regulate the relationship between the landlord and the tenant, to reform and consolidate the law relating to letting of premises, to provide for the responsibilities of landlords and tenants in respect to the letting of premises and related matters.

Below is a concise review of the key features of the Bill;  

Nature of the Tenancy Agreements

A tenancy agreement may be in writing, by word of mouth, by a data message or implied from the conduct of the parties. Under the new regime, it is prudent that where there is a consideration in excess of Shs 500,000 (shillings five hundred thousand only) the tenancy agreement must be in writing or in the form of a data message to be enforceable.

Before executing a tenancy agreement, the landlord is under the obligation to obtain a tenants’ national identification card or alien’s identification card and the details of registration or any other form of incorporation for the case of a legal person. This will improve on the storage of data and reduce the current tensions where tenants disappear leaving huge outstanding rent obligations.

It will resolve the issue of informal arrangements that have for long dominated the real estate sector. However it is noteworthy that the same Bill that seeks to address the current problem of the informal arrangements leaves a lacuna by retaining the oral and implied agreements.  

Denominations  

All rent obligations and transactions should be made in Uganda Shillings unless otherwise provided under any enactment or is lawfully agreed to between the parties. Whereas this provision may cripple the real estate investment business especially for commercial tenancies, it is seen as a drive to cubing the continued weakness of the Uganda currency to the dollar.

The Bill restricts the payment of more than 3 months’ rent in advance for a period of 1 month. However this does not apply where the tenant in their own discretion in writing opt to pay rent in advance beyond the period specified.

Rent Increment

The Bill prohibits the Landlord from increasing rent at a rate more than 10% annually or such percentage as may be prescribed by the Minister in a Statutory Instrument. The landlord is required to give 90 days’ notice in a prescribed form in case of any proposed rent increment. Furthermore a landlord under a fixed term tenancy is prohibited from increasing the rent before the fixed term expires unless the agreement provides for a rent increase before the term expires. 

The prohibition on unnecessary and exaggerated rent increments will protect tenants from arbitrary rental increments.

Security for costs

The Bill expressly empowers the landlord to charge security deposit also referred to as security for costs provided the same does not exceed one month’s rent. This is a protection to the landlords who have had to incur extra expenses on repairs at the end of the tenancy which would have otherwise been met by the tenants.

Payment of taxes applicable;

The landlord is responsible for the payment of all taxes and rates imposed by law. This will reduce on the current exploitation of tenants by landlords.

Remedies for failure to pay rent;  

The Bill abolishes the remedy for distress for rent. A landlord may apply to court to recover unpaid rent and reasonable costs. This will reduce the cruel evictions of tenants by landlords, however the same subjects landlords to losses and extra expense incurred in obtaining vacant possession.

Restriction on the right of entry;

The landlord must give a tenant notice of not les than 20 hours before entering the premises. This will promote the implied term of quiet possession for tenants and limit unnecessary interruptions from landlords.

Termination of the tenancy:

The notice period for termination of business tenancies is not more than 12 months nor less than 6 months.

For residential purposes, the tenancy may be terminated after 60 days’ notice for a year to year tenancy, 30 days’ notice for a monthly tenancy and 7 days’ notice for a weekly tenancy.  This will reduce on the random terminations by landlords once they have obtained better offers from highly paying tenants. However it would appear to restrict commercial landlord’s ability to remove a problematic tenant.

Conclusion;

The enactment of the Bill is a move in the correct direction for Uganda as it regulates the landlord and tenant relationship that has for so long remained informal and largely determined by market practice. The Bill is however inclined to protect tenants as opposed to landlords. For this law to be relevant it must strike a balance between the interests of both the tenants and the landlords. The Bill is presently awaiting Presidential assent.