Limitations to Landlord-Tenant Bill

Friday July 19 2019

 

By Jossy Muhangi

On June 26, Parliament passed the Landlord-Tenant Bill 2018 regarding the duties and rights of both landlords and tenants in rented commercial and residential premises. Yet, in spite of all the good intentions, the meanings of the words found in the Bill are equivocal, which questions the viability of the Bill.

There was a need for appreciation that illiteracy and language barrier limits the applicability of tenancy agreements. It is a fact that a significant number of Ugandans do not understand the content or the need for a tenancy agreement. While Clause 3 of the Bill stipulates that the tenancy agreement may be made by word of mouth or may be implied from the conduct of the parties, it is difficult to enforce such provisions in case of a dispute, for it is difficult to verify whether an agreement was reached by mere word of mouth or just by conduct. This shows there is a scope for education of both tenants and landlords.

Regarding the tenancy disputes having to be handled by the courts of law, we note that the inefficiencies in Uganda’s legal system in handling disputes may also be a great barrier to the feasibility of applying the said Bill. It is a commonplace for cases and enforcement of court orders to take months or even years. In this case, landlords are bound to lose a livelihood as they await a court decision. This calls for a special court to handle landlord-tenant disputes.

The new law requires that the landlord should not act in a way that annoys the tenant where the annoyances will be measured by the “amount” of the landlord’s interference with the rights of the tenant to enjoy the rented premises. The question of how that “amount of annoyance” will be determined still stands. What yardstick will be used to determine what kind and degree of annoyance calls for the punishments stated in clause 51(2) of the Bill?

More importantly, Clause 22(1) of the Bill interferes with the forces of demand and supply as it bars the landlord from increasing rent at a rate of more than 10 per cent annually. The landlord should be left to determine the price of his premises depending on the amount of demand and supply available at that time. He, however, has to inform the tenant in time (90 days’ notice) before he effects the rent increment as indicated by the Bill.

The issue of landlords not having to refuse to rent premises to a person on grounds of race, sex, colour, ethnic origin, tribe, birth, creed or religion, social and economic standing, political opinion or disability is not enforceable and contradicts constitutional rights of a landlord. The landlord has constitutional rights over his or her property and he is free to or not to rent it out to anyone for reasons only known to him, and in this case, the law cannot convict him for refusing to rent out his property to a person on any of the above grounds even if that was indeed the case.

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The most controversial provision is that all rent payments be done in the local currency is inconsiderate to the landlords especially those that got loans in dollars to construct the rented premises and have to pay back these loans in the same currency at the prevailing foreign exchange rates. The landlord still loses out during periods of depreciation. The Bill should specify who needs to pay rent fees in foreign currency and who should not.

In conclusion, the Bill puts tenants over landlords and property developers. The Bill also interferes with the forces of demand and supply in determining prices and may discourage future investments in the real-estate sector. This calls for revision of the Bill to accommodate local realities and context.

Jossy Muhangi,
jmuhangi@eprcug.or

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