Land, property dealers to be licensed under new Bill

The Real Estate Agency Bill, expected to be tabled before Parliament soon, will require all dealers and agents in the country to be licensed in order to conduct any business related to land or properties.

The Bill, drafted by West Budama County North MP Okoth Othieno, who in May sought leave of Parliament to work on the draft, will also require establishment of the Real Estate Committee in the State Housing Ministry to enforce policy issues as well as provide guidelines on which the sector shall be run.  

It also seeks to establish a register in which all agents, dealing in land, housing and anything related to real estate, who hold required qualifications, shall be registered.

“A person shall have his or her name entered into the register where he or she is a subscribed member of the Association of Real Estate Agents of Uganda,” part of the draft Bill reads, noting that such a person shall be a holder of a real estate-related degree, diploma or a certificate obtained from a recognised university, college, institute or training school.

The Bill, which is yet to be tabled before Parliament, according to Ms Shirley Kongai, the Association of Real Estate Agents of Uganda president, if passed into a law, shall seek to weed out fraud and losses in the real estate sector as well as spell out commission rates, which is currently feed into prices of land and properties.  

“This [commission rates] will help in pricing of properties … unlike [now] whereby different agents have had different rates most of which have been unrealistic,” she said in a statement.

Under the Bill, agent shall also be required to have proof of practical experience in property or land dealership of not less than five years or a body corporate, whose main objective is to conduct real estate business.
The Bill, if passed, will bar unlicensed agents from engaging in real estate business and deem it criminal for anyone breaking the law.
 
Such a person, on conviction, shall be liable “to a fine not exceeding five hundred currency points or imprisonment for a period not exceeding two years, or both”.
Duty of agent                                               

The Bill also requires agents to hold trust accounts where money paid by clients shall be held. Uganda’s real estate sector has been growing with a gross domestic product contribution of 10 per cent. However, the sector is largely unregulated and plagued by fraud.
This has resulted into land and properties being sold multiple times thus causing disputes that have some times  ended into fighting and killing.  

The Bill, if passed, will also abolish any claim of commission or expenses by an agent from a client for real estate agency transaction unless the transaction is performed under a written and legally binding agency agreement.

Mr Vincent Agaba, the Avarts Housing founder, which has 14 years of real estate business experience, at the weekend told Daily Monitor, the law regulating real estate was long overdue and has had adverse effect on financial inclusion.
“When you deny the public property through speculative prices, you deny them financial inclusion because for most people to access credit they must have land as collateral, meaning more people without titled land, will be excluded from credit … which has a multiplier effect,” he said.
   
On her part, Ms Kongai said the requirements in the Bill will improve transparency in real estate dealings, which is a key factor of the business currently lacking.
Real estate stakeholders have so far held four meetings since September 2019 in regards to the Bill, and intend to have four others.

Ms Kongai said the Bill is currently awaiting the award of a Certificate of Financial Implications by the Ministry of Finance before it can proceed to the first reading.

KEY ISSUES IN THE BILL

The Bill consists of eight parts and one schedule.

1. Preliminary                                             

This part of the Bill deals with the application of the Act and interpretations.

2. Regulation of real estate agents                        

This part deals with registration and licensing of real estate agents.                                              

3. Duties relating to real estate agency business          

This part spells out the duties relating to real estate agency business.  It provides for matters incidental to the operations of the Real Estate Committee as the supreme administrative organ for the implementation of the Act.                                                               

4. The register and registrar 

This part deals with the duties of the registrar of the Committee.  
        
5.  Trust accounts   

This part deals with the management of trust accounts that are held on behalf of the clients.    

6. Records    
This part deals with the records that must be kept by agents and how such records must be kept.                   

7. Miscellaneous                                            
This part deals with powers to make regulations for the proper functioning of the Act and transitional provisions.
 
Schedule: Currency point                          

This part provides for a currency point to be equivalent to twenty thousand Uganda shillings.

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