UGANDA, Kampala | Real Muloodi News | There are times it is beneficial or even necessary to lease land in Uganda. Perhaps you don’t have the upfront capital to purchase land outright, or perhaps your situation doesn’t qualify you to be granted land ownership rights. In such cases, you can enter into a leasehold tenure agreement to lease land for an extended period, usually 49 or 99 years.
In a recent interview with Daily Monitor, entrepreneur Caleb Ssentongo wanted to grow pine trees, but did not have enough land on which to grow them. In order to kick-start his project, he decided to enter into an agreement with someone who had the land, and pay them annually to use it.
“I had the startup capital; the land was unavailable. A rich man in Kalungu owned 20 acres, so I negotiated to use five with a specific annual pay while I awaited my pine harvest,” Ssentongo says.
Today, Ssentongo is in his seventh year of a 20-year lease agreement. His trees are growing well, he has a good relationship with the landlord, and he is positive about achieving his dream.
Many Ugandans, like Ssentongo, often have projects to fund; yet don’t have the land needed to get the project off the ground.
There may be other reasons preventing the purchase of land, such as not being a citizen of Uganda. The Ugandan government promotes and encourages foreign investment, however, the laws of Uganda don’t allow foreign investors to buy land outright. Land ownership rights are granted solely to citizens.
However, foreign investors can still attain land under the leasehold tenure system, and lease land for up to 99 years from citizens or from the Government, with the opportunity for renewal. Further, long-term leases can be used as collateral to obtain a commercial loans, according to Bujagali Property Agency.
Noah Ssonko, a real estate manager at Eco Land Property Service, notes how the lease land tenure system can facilitate investor dreams.
You can get a leasehold title for commercial land use from government agencies like KCCA and the municipality or the local council. In contrast, Safari Lodges and forestry projects get theirs from the National Forest Authority and Uganda Wildlife Authority.
Individuals, companies, churches and institutions like Buganda Land Board can all lease land for specific periods, so long as they hold Mailo or Freehold land titles; leases can only be given on these land systems.
“If you plan to have a lease, you need guidance from a professional such as a real estate dealer or a lawyer to guide you through the verification process to identify the land before you start using it,” Noah Kiganda Ssonko says.
Getting a Leasehold Title
Dennis Obbo, spokesperson for the Ministry of Lands, Housing and Urban Development (MLHUD), outlines the requirements of acquiring leasehold title, noting;
- An applicant must first fill in Forms 8, 10, 18, 23.
- Attach a set of three original deed plans.
- Accompanied by three passport photographs.
- Attach receipts of payment.
- Add a forwarding letter requesting a leasehold title signed by the district land officer in the same district.
- Applicants must present the complete set of original documents and attach photocopies of the same documents to the land administration department for perusal.
“If the photocopy is stamped ‘received’ and returned to the applicant, the applicant checks with the Department of Land Administration after 10 working days to confirm their approval or rejection, and is given a letter of advice on the fees to be paid,” Ssentongo explains.
He says that the individual requesting the leasehold title must pay stamp duty, which is 1% of the premium and ground rent. That paperwork is signed and stamped by the district land board chairperson. Lastly, the secretary of the Uganda Revenue Authority (URA) embosses the documents.
The expenses involved include 1% of the premium and ground rent paid to URA; registration costs USh 10,000; guarantee of title at USh 20,000; issuance of title at USh 20,000; and lease preparation at Shs20,000, all of which are paid at the ministry or district.
Terms and Conditions of Lease
A typical lease agreement includes the names of the landlord and tenants, as well as terms and conditions of the lease, including;
- The purpose of the land, or what you want to do with it, should be specified. For example, you cannot have property leased to you by the National Forestry Authority and then use it to erect commercial structures.
- It is critical to consider how long someone intends to use the land. For example, if you plan to cultivate pine trees, Ssentongo suggests a 20-year agreement because pine takes 15 to 20 years to develop.
- The payment details, such as the premium and yearly instalments, should be explicitly indicated in the agreement.
- The contract should also specify the size of the agreed land.
Kiganda says, “Depending on the agreement, “The landlord should also have a right to inspect and monitor his land to determine if it is used for the intended purpose. Also, there should be use and time factor limitations. For instance, if you agreed to use the land for seasonal crops, you are not supposed to grow long-term crops such as coffee or pine that require lengthy growing periods.”
The agreement should also have the following;
- The contract should indicate the terms of termination, and both the tenant and landlord should be free to end the arrangement.
- The lease agreement should explicitly state the automatic renewal clause, subject to the period’s terms and conditions. (Should indicate the expiration date).
For example, if you rented land 49 years ago, the premium and rental costs may have been much lower when compared to today’s purchasing power. As a result, these values should reflect today’s equivalent.
“Upon expiry of the lease, a tenant may have accumulated a significant amount of valuable property and assets and may not wish to lose them. Oftentimes, the landlord may claim their property after expiry. So the clause of automatic renewal protects the tenant against discontinuity. It is to the tenant’s best interest to include the automatic renewal clause to his lease agreement. The automatic renewal clause protects a tenant’s personal property from claims by the landlord at lease expiry,” Kiganda remarks.
Transfer Rights
A tenant may give another individual their lease right by selling their lease before the lease term expires. The new tenant must be introduced to the landlord and will remain bound by the lease’s terms and conditions until it expires.
Kiganda says, “It is also possible that a tenant does not totally go out of the lease agreement but instead sub-leases the land to another person.” “In the situation where I do not want to sell my lease, the agreement should mention the freedom of subleasing to third users.”
Lawfully, both parties, the tenant and the landlord, should be safeguarded. Hence the agreement should cover even the topic of death.
“If the landlord or tenant should die during a lease term, the surviving party is expected to honour the lease. The heir to the property usually becomes the person in charge of the property after death,” he says.
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