The Landlord and Tenant Act, 2002 (“the Act”) is a new addition to the constitution of Uganda. It was assented to by H.E. the President on April 12, 2022 and passed into law in June 2022. This is the ultimate law governing rental operations within the real estate industry in Uganda.
The Act repeals the Rent Restrictions Act, Cap 231 and establishes tribunals to govern the relationship between landlords and tenants.
Parties to a tenancy agreement are free to negotiate the agreement and mutually agree the terms. However, the Act sets out terms that shall be implied in every tenancy.
We highlight the key aspects of this law that will be crucial to any tenant-landlord relationship, click on any to skip to it using below list:-
Rental Payment
Rent Increase
Termination
Failure to Pay Rent
Security Deposit
Forms of Agreement
Rental Payment:
The tenant is obliged to pay rent on the date and in a manner agreed upon with the landlord and the landlord shall issue a receipt upon such payment.
Except where the tenant and the landlord mutually agree otherwise, a landlord shall not require a tenant, in the case of a tenancy of more than a month, to pay rent more than three(3) months’ in advance or in case of a tenancy of less than one month, to pay rent more than two(2) weeks in advance.
Per this law, all rental obligations and transactions shall be made in Uganda Shillings unless otherwise agreed to between the parties.
The above provisions leave it to the landlord and tenant to determine the amount and manner of payment. They also imply that any rental transactions in foreign currencies must have been expressly agreed upon within the tenancy agreement.
Rent Increase:
The Bill prohibits the Landlord from increasing rent at a rate more than 10% annually or such percentage as may be prescribed by the minister in a statutory Instrument. The landlord is required to give 60 days’ notice in a prescribed form in case of any proposed rent increment.
Furthermore, a fixed term tenancy prohibits the landlord from increasing the rent before the fixed term expires unless a provision for the same has been clearly specified in the agreement before the term expires.
This will check on the disputes that tend to arise, especially as a result of spontaneous rental increments by landlords. It is worth noting, however, that this clause may also leave tenants vulnerable to unjustifiable increments by the landlords as long as it’s within the limits of this act.
Termination of the tenancy:
The notice period for termination of commercial tenancies is a minimum of six(6) months and maximum of twelve(12) months.
For residential purposes, notice of termination for a weekly tenancy shall be seven days’ notice, thirty days’ notice incase of a monthly tenancy and sixty days’ notice incase of a yearly tenancy.
The landlord and tenant may agree upon a notice period exceeding the above mentioned but not below as any such term that suggests a lesser notice period shall be void.
This will check on the unfair terminations by landlords once they have obtained better offers from other prospective tenants. However it would appear to restrict commercial landlords’ ability to remove a problematic tenant.
Remedies for failure to pay rent:
Where a tenant defaults on rent and is in arrears, the landlord may apply to a court of competent jurisdiction to recover unpaid rent and reasonable costs.
Without prejudice to the above right, where default continues for a period of more than thirty(30) days the landlord shall be entitled to re-enter the premises and take possession in the presence of an area local council official and the police.
The Bill abolishes the remedy for distress for rent.This will reduce the cruel evictions of tenants by landlords, however the same subjects landlords to losses and extra expenses incurred in obtaining vacant possession.
Security Deposit:
A landlord shall require a tenant to pay a security deposit for the purposes of securing the performance by the tenant of his or her obligations under a tenancy.
A landlord shall not require more than one security deposit or require the payment of, or receive, under a security deposit, an amount exceeding the rent payable for one month’s occupancy of the premises to which the agreement relates.
The landlord shall specify to the tenant in writing, the terms and conditions under which the security deposit or any part of it may be withheld by the landlord upon termination of the tenancy.
Without limiting the general effect of the above subsection, a security deposit shall not be withheld on account of normal wear and tear resulting from ordinary use of the premises.
This law is expected to go a long way in offering clarity on matters security deposit in the rental market in Uganda.
Form of Tenancy Agreements:
A tenancy/rental agreement may be in writing, by word of mouth, data message or implied from the conduct of the parties.
Following this law, any tenancy where there is a consideration in excess of Ugx 500,000 (shillings five hundred thousand only), the tenancy agreement must be in writing or in the form of a data message to be enforceable. Any other means contrary to the prescribed will not be actionable within Ugandan courts.
