Uganda has witnessed a boom in real estate.
By James Abola and Philip Karugaba (email the author)
Posted Thursday, January 27 2011 at 00:00
Posted Thursday, January 27 2011 at 00:00
Real estate simply refers to land. In law, land includes any buildings on that land.
Since 2000, Uganda has witnessed a real estate boom. There has been an increase in the number of real estate agents and a transformation in the nature of their business.
The old National Housing and Construction Company (NHCC) de facto monopoly has long since been shattered with many private developers now putting up more housing units than NHCC has done recently.
There are also more banks offering loan products for the purchase of real estate, a business once done exclusively by Housing Finance Company of Uganda (Hfcu).
There are also more banks offering loan products for the purchase of real estate, a business once done exclusively by Housing Finance Company of Uganda (Hfcu).
So how does one gain by investing in real estate?
There are essential two sources of income from real estate, one is reaping capital gains from buying and selling land and the other is by developing the land and collecting rent from its use and occupation.
To demonstrate the capital gain on land, in 2002 an acre of land at Kiwatule was advertised for sale at Shs60,000,000. In 2009 the same acre sold for Shs400,000,000; if you could find it! The price increase represents capital gain.
To demonstrate the capital gain on land, in 2002 an acre of land at Kiwatule was advertised for sale at Shs60,000,000. In 2009 the same acre sold for Shs400,000,000; if you could find it! The price increase represents capital gain.
Where to find property
Find a good broker, call them what you will, brokers (bulokas) or real estate agents. It is still an unregulated market and anybody can become an estate agent.
While some agents have wide market knowledge and can source you a property anywhere you please, many are localized in particular areas. You could scout your target neighbourhood and look out for the signs. Alternatively, you could browse the property pages in newspapers.
Another good source of property is court bailiffs, selling off property under orders of court or auctioneers selling off mortgaged property. If you have got the time or fuel or both, you can drive around and with a bit of luck find the kind of property you are looking for.
Due diligence
Several stories abound about real estate scams. You can avoid becoming part of this statistic by conducting due diligence. Once you have identified the plot you should do your homework on it.
Title search
Several stories abound about real estate scams. You can avoid becoming part of this statistic by conducting due diligence. Once you have identified the plot you should do your homework on it.
Title search
Obtain a copy of the title deed and have a lawyer conduct a search on it at the land office and give you an opinion. The search helps to confirm the validity of the title, its proprietorship and whether it can be so sold.
It is very important that the land has a title and that the person you are dealing with is named as owner on the title, except for sales by banks or under court orders.
It is very important that the land has a title and that the person you are dealing with is named as owner on the title, except for sales by banks or under court orders.
Boundary opening
It is also advisable to have a surveyor open the boundaries on the land and confirm to you in a written report. This will keep you out of boundary disputes with your neighbours. You will be amazed how angry your neighbour will be if you stray so much as a foot into his plot.
Location of the property
Location should be the first, second and last item on your due diligence checklist. The difference between an excellent property and a poor one is usually down to the location. Location is in turn determined by several factors, of which we shall discuss a few. What is in the neighbourhood of the property can improve or depress its location; a rubbish dump, sewage treatment plant and a chemical-intensive industry are neighbours that depress a location while a good school, a shopping mall, an upcoming residential estate are neighbours you would love to have. Availability of amenities such as power, water and a sewer line help to improve the location of a property. A good access road is another important locator; some people have acquired plots of land that have no access roads and have had to painstakingly negotiate with several neighbours to lease access roads to them. Another important locator is the view that the property commands; hilltop properties and lakefront properties tend to command good prices because of the view they offer.
Understanding land titles
A land title is the document that proves ownership of registered land. It may also be called the certificate of title, title deed or duplicate certificate of title (for technical reasons relating to the law of land registration).
Uganda recognizes different systems under which land can be held and this is called land tenure. Each system has its own peculiarities and these get reflected in the certificate of title.
Uganda recognizes different systems under which land can be held and this is called land tenure. Each system has its own peculiarities and these get reflected in the certificate of title.
While the different forms of land tenure have interesting history, we consider that beyond the scope of this book and focus on the particular distinctions between the different land tenure systems and how they are shown in the certificate of title.
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