UGANDA, Kampala | Real Muloodi News | Before investing in land in Uganda, you should know what you are purchasing land under the land tenure system.
According to the 1995 Ugandan constitution, there are four recognised types of land tenure systems in Uganda. These are freehold, leasehold, mailo, and customary tenure.
Under this legal system, land administration is decentralised. Land tenure determines how property rights are allocated and establishes land tribunals.
It is never too early to start thinking about investing in land. Vincent Agaba, a young Ugandan man that was trying to make ends meet, experienced a hard time acquiring property. He finally succeeded in buying a plot in 2003.
By saving his pocket money, Vincent bought land in Nkozi. After being away for about a year, he returned to find that the person who sold him the land had sold it to someone else.
The same seller was able to get Mr Nkozi another piece of land with the help of the local government.
Even though his new plot of land was not as good as the first one, he accepted it because he had no other option.
Vincent spent lots of money searching for the land title, and even with the help of surveyors, it took him about two years.
The long wait paid off. Years later, Mr Nkozi sold his land five times the original purchase price.
Alex Matovu, a partner at Signum Advocates, advises potential buyers to avoid these complications, by visiting the site, contacting residents and local authorities to get more information about the land and by performing a search at the registry before the purchase is made.
Trying to understand these rules before or after acquiring a piece of land is overwhelming.
Knowing these terms and which tenure system the land you have or planning to purchase allows you to make informed decisions.
Let’s look at each in detail;
Mailo Land Tenure
In this system, the land is registered under the Registration of Titles Act and owned indefinitely. The owner holds a land title for the land in most cases.
The Land Act recognises and guides occupancy by tenants (called Kibanja owners) and their relationship with their landlords and separates developments made by lawful tenants.
There are estimated 19600 square miles, confined to Buganda, of land held under this tenure system.
The Buganda agreement resulted from allocations made by the British Colonialists to Baganda notables through the 1900 Buganda Agreement.
The government restored the tenure system to the Constitution after being demolished by the 1975 Land Reform Decree.
All land titles under Mailo tenure occurred before 1928. Currently, altered land titles happen through subdivision of land or change of ownership.
The Mailo owner can lease, mortgage, pledge, sell or subdivide the land. The State guarantees such transactions through application processes overseen by Zonal Offices of the Ministry of Lands in the area.
The ministry completes a land survey, and a new title is issued for the transferred land or subdivided. It is possible to check land registration by presenting the plot and block number of the land to the Registry of Titles.
Here are some crucial facts about Mailo Land Tenure
- Only Ugandan citizens are eligible for this land tenure
- A company owned by foreigners can only own Mailo land in Uganda. A company registered with Ugandans having the majority of 51% non-transferable shares and foreigners holding 49% shares, the status of the Mailo land remains considered.
Advantages of Mailo Land Tenure
The benefit of Mailo land tenure is that the owner can lease the land for their benefit. In this case, the owner is an “absentee landlord” who receives rent from tenants and still benefits from the property’s profit over time.
Disadvantages of Mailo Land Tenure
Mailo land tenure is criticised for creating problems like dual ownership because more than one person claims the rights of ownership and usage of one plot.
The biggest takeaway with Mailo land tenure is that a buyer must always make sure that the tenants are informed of the land sale.
Freehold Land Tenure
In this system, the owner owns the land in perpetuity. Additionally, the registered certificate of title denotes the land as freehold tenure.
Little land in Uganda falls under this system. Here the owner has full powers of use, abuse, and dispose. Again, the State guarantees all transactions through the Registration of Titles Act.
Other transactions include selling, leasing, and letting.
Only Ugandan citizens are entitled to own land through this system.
Persons or businesses interested in freehold tenure land should pursue a Certificate of Title through the Sub-County Land Office, the District of Land Office, and the Zonal Offices of the Ministry of Lands.
Agreements between the British and Kingdoms of Toro and Ankole during colonial times established freehold land tenure.
Additionally, the British issued freehold to churches and religious institutions through the Crown Ordinance of 1803.
Advantages of Freehold Land Tenure
The benefit of freehold tenure is that the property belongs to the owner who has complete control over it. The owner is not required to make any other payments, like rent, service charges, and the likes.
Disadvantages of Freehold Land Tenure
On the flip side, the owner is responsible for all costs related to maintaining the property and any administrative fees.
Additionally, since the ownership is permanent, the owner may not sell for a profit if the community’s properties experience a decrease in value.
Customary Land Tenure
Under customary tenure, the land is owned based on the traditions, norms, and customs of an indigenous community in Uganda. Groups of people can communally own land.
Communal groups require an administrative structure or authorities such as elders, tribal heads, or clan heads to manage their community.
Individual ownership is an option as long as the community in charge of the land accepts it.
The holders of land under customary land tenure may obtain a Certificate of Customary Ownership under the Land Act by applying to the Parish Land Committee.
However, they are not obligated to obtain this certificate. Tenants can be apportioned land with boundaries marked by trees, mark stones, and the likes.
About 75 per cent of the land in Uganda is under customary tenure. There are more than 60 indigenous clusters.
Each cluster differs in traditional systems, each having its unique processes of managing, using, and transferring land; these form a collection of customary tenure structures.
According to the 1998 Land Act, anybody using land in that community is bound by the rules of that community.
Advantages of Customary Land Tenure
Customary land tenure reduces the risk of land being monopolised.
It also allows for equitable distribution. It will enable fairer access to land ownership to the community.
Disadvantages of Customary Land Tenure
Sometimes this type of land is owned by more than two and limits development if there is no consensus. However, individual land ownership is more economically efficient.
Leasehold Land Tenure
Leasehold tenure is whereby property rights are granted to another party from the property owner (who may be an individual, an organisation, a company, an institution such as the Buganda Kingdom, or the government) for a period that is usually 49 or 99 years in exchange for rent.
The lease grantee must use the land under agreed terms and conditions as agreed with the owner under a contract or by law and entitled to a Title Certificate.
Land that is under Mailo, freehold, or customary tenure can be leased to another party.
Advantages of Leasehold Land Tenure
Leasehold land tenure is an excellent solution for any investor with short-term needs, and it is the only option for foreigners in Uganda.
Disadvantages of Leasehold Land Tenure
It is usually more disadvantageous to the tenant rather than the landlord. The landlord may choose not to renew the lease, and the terms on the lease may limit the tenants’ use of the property.
It requires maintenance costs and they are paid by the tenant. However, a substantial contract can prove to be highly favourable to both the landlord and the tenant.
Distribution of the Different Land Tenure Systems in Uganda
Below is a map of Uganda that indicates the distribution of land tenure systems.
According to the map, the Mailo tenure is common in the central and mid-western region, while the native freehold is in the south western region.
The Northern and West Nile regions mostly have customary tenure. Leasehold tenure is scattered around the country, but can mostly be found in urban areas.
The 2010 Statistical Abstract published by the Ministry of Lands, Housing and Urban Development shows that the “central region has the greatest percentage of registered titles of about 98.04% and 50% in Mailo and Leasehold respectively.
The Northern region on the other hand has not had most of its land registered because of its reliance on the customary system.”
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