How Landlord, Tenant Act will reform tenancy in Uganda
Purpose:
President Museveni on June 10th, 2022 assented to the Landlord and Tenants Bill. 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.
Highlights of the Act
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.
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.
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.
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.
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.
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.
Significance of the Landlord-Tenancy Act 2022 to Ugandans
The Bill seeks to promote stability in the rental sector by consolidating laws governing the relationship between landlords and tenants.
The Act has stablished tribunals to handle disputes between landlords and tenants.
Parties to a tenancy agreement are free to negotiate the agreement and mutually agree the terms. However, the Act sets out terms that shall be implied in every tenancy.
Tenants will no longer have to worry about arbitrary evictions as the Act proposes clear procedures on how tenancies can be terminated by either party. Where a landlord seeks to terminate the tenancy, they are required to give the tenant a notice in the prescribed form stating when the tenancy terminates and the reason for the termination.
The parties to a tenancy will be free to mutually agree on the applicable rent. Where a landlord seeks to increase rent, they must give the tenant at least a ninety days’ notice.
