Tenants feel the pinch as landlords hike rent fees

Tenants countrywide are feeling the pinch after a section of landlords increased rent fees despite the slow recovery of business following the reopening of the economy from the two successive Covid-19 –induced lockdowns.

Some tenants are now getting priced out and others are being evicted from the commercial or housing units by their landlords for failure to meet their fee obligations.

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Parliament last month granted landlords and property owners powers to evict tenants who fail to meet rent obligations after 30 days. 

The proposal is contained in the Landlord and Tenants Bill 2022, which was passed by the Parliamentary Committee on Physical Infrastructure. 

It also permits the landlord to access the tenants’ premises and take their property as a means of recovering the accumulated rent arrears.

In Kampala, Mr Drake Lubega, one of the landlords owning many commercial buildings, is in the spotlight after he reportedly increased rent by Shs500,000 in most of his arcades. Other landlords are considering increasing the dues too.

Mr Eddie Mulinde, a traders dealing in textiles in one of Mr Lubega’s buildings in Kiyembe area, said   the business is still slow in the face of the Covid-19 pandemic. He wonders why some landlords are hiking the fees.

‘‘It seems Mr Lubega is unhappy because we reported him to our association, but even if it is the case, he needs to revisit his decision,’’ Mr Mulinde said.

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The chief executive officer of Kampala City Traders Association (Kacita), Mr Abel Mwesigye, confirmed receiving complaints about hiked rent fees from some of its members.

‘‘The buildings are privately-owned and some decisions are individually influenced, but we can confirm that some landlords have increased rent. Recently, we tried mediating between Mr Lubega and his clients. This is a matter we can resolve through dialogue and the landlord will listen,” Mr Mwesigye told Daily Monitor.

Mr Lubega couldn’t respond to the matter. One of his handlers, who answered his personal mobile telephone, said he was on a business trip in Dubai.

In Busoga Sub-region, Mr Shaban Muyaki, a landlord on Iganga Road in Jinja City, said the surge in operational costs on maintaining the buildings forced him to increase rent.

“Ground rent, electricity and water bills have been hiked and this leaves us with no option but to increase rent,” he said.

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Mr Muyaki said some tenants spoil buildings and do not accept to repair them as they leave, so it is necessary for us to increase rent to cater for renovation.

Ms Christine Gire, a landlady on Main Street, attributes their decision to increase rental fees on Jinja’s attainment of a City status, which she says has changed the infrastructural terrain, which has in turn motivated landlords to increase rental fees.

She said: “The cost of utilities are high and this being in a city, houses use flush toilets and electricity, while some tenants want their landlords to pay for such utilities, it is not reasonable because such costs are borne by the tenant.”

Ms Zula Nagawa, also a landlady in Jinja City, said she was forced to increase rental fees because of many taxes in form of ground and property, among others.

“They charge us property rent and ground rent, while Uganda Revenue Authority (URA) also charges us. Now, when you deduct all those expenses, you end up getting little profits yet you invested a lot in constructing the building,’’ she said. Mr Richard Wamika Richard, who owns three commercial houses on Kaiti Road in Namutumba Town Council, said his rooms now go for Shs2.5m, up from Shs2m per month. He said the increment came after prices of building materials shot up.

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Ms Robinah Mwebaze, who owns two commercial houses in Matyama Trading Centre, Namutumba Town Council, said she increased rental fees from Shs900,000 to Shs1.2m per month to match the increment in her children’s school fees.

In Gulu, the increasing number of investors in real estate business have caused a sharp increase in the rental fees of residential and commercial buildings in the city and its suburbs.  Mr George Aligec, the spokesperson of Gulu City Business Community, said more than 50 percent of the hospitality businesses have been taken over by Eritreans, Ethiopians and Somalis, who hire the facilities from the owners at higher values.

“We have records of many businesses that are being kicked out of commercial buildings. Tenants are also being evicted from residential buildings because new faces offer better payments, which is a disadvantage to the local people,” he said.

With growing competition, Mr Aligec said many foreign investors now engage directly with landlords and sign lease agreements that last for decades as opposed to the local occupants who would pay monthly.
He added that as the business community, they have held several meetings with landlords and landladies to harmonise on increased rental fees in vain.

“When you move around the streets of Gulu City, from Ring Road, Christ Church, Customs corner, you see that people are changing what used to be residential houses to commercial houses so that they can increase rent fees,” Mr Aligec, said. In a press briefing recently, Mr Norbert Mao, the DP President General, tasked city authorities to protect the local and indigenous traders.

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According to Mr Mao, authorities need not to over tax local traders.
“We don’t want to see our local traders being pushed away by the invasion of foreign investors simply because they cannot afford high taxes, rental fees, and other charges,” he said.

Mr Alex Ocira, a hardware dealer in Gulu City, who was in December pushed out of the building by a landlord after an Indian businessman offered to double the Shs350,000 rent fee, said government should intervene. 

“Without any prior notice, the landlord asked me to vacate his premises on grounds that he wanted to renovate the structure. Days after I was evicted from the house, I saw an Indian establishing an electronics business in it,” he said.

Some landlords, however, won’t increase rental fees for now since traders are recovering from the hard economic times traders.

Mr Kizito Dick, the proprietor of Kizito Towers, said he is not considering increasing rent given the struggling business environment.

‘‘Increasing rent at such a time amounts to forcing traders out of business. I know landlords have pressure from banks over outstanding loans, but its better we maintain the current rental fees,’’ Mr Kizito said.

Mr Moses Kalangwa, a businessman with a footprint in Kayunga, Jinja and Mukono districts, appreciates that traders are still struggling to recover from the ripple effects of Covid-19.

‘’You cannot increase rent at this time, traders don’t have money and business is still slow, but we believe, we will recover gradually’’ Mr Kalangwa said.

‘‘I have not increased, Kayunga is an upcountry town where traders can only afford Shs 400,000 which is small money,’’ he said.

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Mr Gabriel Aliga, a landlord and businessman in Obongi district, however, said due to bad economic situation in the district, he has not increased his rental fees.

“I agreed with my tenants in our meeting not to increase the rent because once we do so, many businesses will collapse,” he said.

Upcountry wrap
Ms Stella Mama, a landlady in Adjumani town confirmed to Daily Monitor that she increased her rent because of hike in utilities.

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Ms Agustina Mandera, a tenant in Adjumani Town, who operates a Mobile money business, said she was paying rent of Shs150,000 for a single room, but after the reopening of the economy, her landlady increased the rent to Shs250,000 for the same room.

 “This increase has affected my business greatly but I have no option but to continue paying because this is where I eke my livelihood,” he said.

In Buliisa, Mr John Bigirwenkya, a landlord the town council, said he has not increased rent because he fears that his tenants will run away.

“My tenants have been paying Shs70,000 and lam not considering increasing it because they might run away,” he said.

Ms Dinah Basemera, the proprietor of Nyasonga restaurant in Buliisa town council, said her landlord increased rent from Shs100,000 to Shs240,000 per month.

“Previously, I have been paying Shs100,000 as rent but this year, the rent was doubled to Shs240,000 per month and we have been asked to pay for the full year,” she said.

Ms Basemera said the landlord informed them that his houses are on demand. 

“He told us that this is a new district in the heart of oil city and rental houses are on high demand,” she said.
Mr Wycliffe Ndiguragandi Tumwesigye, a tenant said the landlord increased the rent fee by Shs10,000 from Shs40,000 to Shs50,000 for behind rooms while front rooms facing the road side have been increased to Shs60,000 from Shs50,000.

“Our landlord gave us a notice of increased rent for his house and we have no option,” he said. 
Mr Peter Musiime, a landlord in Fort Portal City, said he is renovating his commercial houses in order to increase rental fees.

“I have been charging my tenants per month Shs250,000 but after renovations, I will increase it to Shs350,000. We are paying high taxes to the city authorities,” he said. 

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In Ibanda District, the rental fees charged by landlords have been increased, leaving the tenants crying foul. 
Mr Godfrey Tumwesigye, a shop operator, said the landlords are taking advantage of the high demand for space to do business to hike the rental fees.

“There is high demand for space to run businesses such as clinics, Drug shops, stationers, veterinary drug shops,” he said.

Ms Annet Kyokuhiirwa, one of the landlords in Ibanda Town, said they are charging Shs1.5m per month from a tenant, who wants space to house commercial businesses such as banks, while single shops are being charged Shs500,000 every month.

Ntungamo mayor Jacob Kafureeka, one of the property owners, said he has not yet increased his rent fees, but if situation worsens, he is likely to increase.
“I will increase because the prices of essential commodities such as soap, salt and fuel have been doubled,” Mr Kafureeka said.

Ms Alice Kafooda, a landlords in Ntungamo, said the councils have increased ground and property rate. 
“The government has done nothing to safeguard us in terms of taxes, so we have to increase rent to shield our business,” he said.

In Ntungamo Municipality, the relative rent for a room has been at Shs50,000, but it has now increased to Shs80,000 per month. 

“There is high demand of both commercial and residential houses for rent and landlords are using the chance to get the lost money during Covid-19 lockdowns,” Mr Francis Basiime, one of the landlords in Mbarara City, said.

In Kabale, a section of landlords said that the increased government taxes are forcing them to increase rental fees.

“Rental tax levied by the Uganda Revenue Authority, property tax and ground rent being charged by the municipal councils is pushing us to increase the rental fee,” Mr Leopold Twesigye, a businessman and a landlord in Kabale, said.

Mr Richard Muhanguzi, another landlord and businessman in Kabale Town, said the government should stop the levying of duplicated taxes on land lords.  

“The government should stop imposing heavy taxes on local investments that are recovering from Covid- 19 lock down. They should announce tax holidays for at least 5-years to support local investment and trade,” Mr Muhanguzi said.

In Mbale and Tororo, landlords have attributed the increment in the rental fees to increment in the cost of building materials, land and inflation.

Mr Robert Wamboya, a businessman and landlord on Naboa road, said: “Initially a bag of cement costed Shs25,000 but it is now at Shs27,000. This calls for rental increase.” 

Mr Muzamiru Madoi, another landlord and resident of Nkoma in Northern City Division, said the cost of a plot of land has also increased to about Shs50 million in Mbale City.

“There is no need to question why landlords have increased rental fees. The price for everything is rising,” he said.

Mr George Alfred Obore, a landlord in Malaba Town Council, said the government has failed to support landlords to recover from the Covid-19 effects.

“The government asked landlords not to evict tenant but they have never come up to support us to recover what we lost in the last two years,” he said.

Mr Osuna Otwani, another landlord in Tororo Town, said his tenants have arrears of more than six months that accrued after government imposed a second lockdown.

In Soroti Town, Mr Charles Ekinu, a landlord on Gweri Road, said he is planning to increase the rental fees.
 “I have organised new tenant agreements on rental increase, which will take effect at the time when the paid up period expires,” he said.

Mr Richard Epilu, a businessman dealing in agricultural produce, said it is unfortunate that landlords throw the burden of government taxes on tenants. 

Survey

A survey by Uganda Bureau of Statistics (Ubos) released last year indicated that the prices of residential properties for both purchase and rental units  increased across the five divisions of Kampala Metropolitan Area in the third quarter of the 2020/21 financial year. 

According to Ubos, prices of residential properties were much higher in the Kampala Central and Makindye cluster, which increased by 26.1 percent compared to Kawempe and Rubaga, which rose by 10.5 percent.

The law

The Landlord and Tenants Bill 2021 permits landlords to access the tenant’s premise and take their property as a means of recovering the accumulated rent arrears.

“Provided that where the default shall continue for a period of more than 30 days, the landlord shall be entitled to re-enter the premises and take possession thereof in the presence of the area Local Council officials and the police, without prejudice to the right to recover the rent arrears,” the Bill reads in part.

The landlords are also required to issue a 60-day notice before increasing rent charges. Relatedly, the increment of rent should not exceed 10 percent when the landlord considers 

Compiled by Fred Wambede, Al-Mahdi Ssenkabirwa &Ivan Ssenabulya, Philip Wafula, Tausi Nakato, Denis Edema, Abubaker Kirunda & Ronald Seebe Andrew Mugati & Alex Ashaba, Felix Ainebyoona, Elly Karenzi, Sheillar Mutetsi, Elly Katahinga & Milton Bandiho, Robert Muhereza, Simon Peter Emwamu, Joseph Omollo  & Emmanuel Arineitwe, Micheal Ojok, Tobbias Jolly Owiny , Taibot Marko, Robert Muhereza & Emmanuel Arineitwe.