REAL ESTATES

EXPLAINER: Understanding the condominium law in Uganda

Condominiums provide a sense of a closely-knit community and the buyers may never feel alone because there will always be someone to smile too, someone to offer support. Community amenities like swimming pools, the bars, and Sauna and coffee places add to the sense of a closely-knit community.

Condominiums provide a sense of a closely-knit community and the buyers may never feel alone because there will always be someone to smile to, someone to offer support. Community amenities like swimming pools, bars, Sauna, and coffee places add to the sense of a closely-knit community.

KAMPALA – Condominium, is a new trend in Uganda and realtors say it is a concept worth adopting and investing in, especially in the town setting, where land is increasingly expensive and diminishing.

Abbas Rasheed, an industry expert in simple terms describes a condominium as one of a group of housing units where each homeowner owns their individual unit space, and all the dwellings share ownership of areas of common use.

Condominiums in Uganda are regulated by Condominium Property Act No. 4 of 2001 enacted on 23rd February 2001and Condominium Property Regulations enacted on 26th April 2002.

The Condominium Property Act 2001describes a condominium as a system of separate ownership of individual units in a multiple unit building, the individual units of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of those units.

The Condominium Property act 2001 allows for one to have a land title for a specific housing unit or condo within a building. This means that under the Condominium Property Act of 2012, property developers or company engages in the construction of apartments and sell them as is and give the buyer a title or certificate for the property the same way you would sell a stand-alone house on a plot of land.

Under this setting, legal say, there use of and access to common facilities, for example, swimming pools, elevators fire extinguishers, security, gardens, parking lots, cleaning of common areas, garbage collection services and controlled by the association of owners that jointly represent ownership of the whole condominium.

Rights of owners of common property

Section 14 provides for the rights of owners of common property to include support, shelter, and protection: passage or provision of water, drainage, gas, electricity, garbage, and air; passage or provision of telephone, radio & television services, and any other service of whatever nature.

Each unitholder, the act says has a right to full, free, and uninterrupted access and use of light through or from any windows, doors, or other apertures existing at the date of registration of the condominium plan.

Liability of the unit owner

Section 18 provides that the owner of a unit shall only be liable in respect of any interest entered on the condominium plan in proportion to the unit factor for his or her unit

Management and Use of Condominium Property

Section 19 provides for the establishment of a corporation that is responsible for the enforcement of its bye-laws and the control, management, and administration of its movable and immovable property and the common property.

This corporation, the act states have perpetual succession and a common seal. Legal experts also add Companies Act doesn’t apply to this kind of corporation. It seems that such a corporation is yet to be established formally.

Emerging Trends in the condominium property

A recent real estate sector report, compiled by Stanbic Properties Uganda Limited, a subsidiary of Stanbic Uganda Holdings Limited indicated that many Ugandans are slowly tapping into condominium property because of access to knowledge on mortgages concept.

The report indicated that Commercial Banks have started tapping into the Ugandan market which has helped Ugandans access this knowledge with some banks specializing in ensuring that Ugandans have access to reasonable credit to purchase homes.

An example of such a bank is Housing Finance Bank Uganda which has specialized in Mortgage financing.

The report indicated that most of the people who are purchasing condominiums are Ugandans who live diaspora having realized that Condominiums are less labor-intensive, secure, and affordable.

Mr. Abbas Rasheed, the general manager, Universal Multipurpose Enterprises, a company that deals in residential housing in the form of condominium apartments says in the near future, condos will widely be adopted everyone citing its affordability in terms of payment options (PHOTO/Courtesy

Challenges in the condominium sector

The report however noted that many Ugandans on the other hand have not fully embraced the concept of condominiums as they feel cheated owning units because the houses are in space, with the report adding that Ugandans still believe in the concept of having large compounds.

Real experts also say that interest rates on Mortgage to secure condos remain very high, the current Bank of Uganda Central Bank Rate (CBR), interest rates gravitate between 10% and 9%.

However, this has not translated to a reduction in commercial bank lending rates still high ranging from 21% to 24% per annum. Although the low CBR would mean that commercial banks follow suit and cut lending rates; The weighted average lending rate for local currency mortgage loans was 22.6% in 2018, up from 20% a year earlier, according to the Bank of Uganda.

The mortgage market is tiny – only 1.4% of the country´s GDP, unchanged in the past three years, but up from 0.3% of GDP in 2002.

Housing Finance Bank dominates Uganda´s mortgage market, with 55% of the total mortgage portfolio, followed by Stanbic Bank, Standard Chartered Bank, DFCU Bank, KCB Bank, and Centenary Bank.

For the developers, the tax on the materials is quite high and the developers end up pushing it to the final consumer in the long run, pushing the cost of the condominiums high which makes it very expensive to purchase. Real estate players also continue to decry the widespread corruption in the system, which delays approval processes, thus affecting their effort to deal with the housing deficit in the country.

Interpretation of Condominium Property act 2001

A condominium plan refers to a plan registered in accordance with this Act.

Property developer refers to a person or company who, whether alone or in conjunction with another person develops, sells or offers for sale to the public, units, or proposed units.

Property owner refers to a person who is registered as the owner of land title such as a freehold estate in a unit, mailo estate in a unit, the leasehold estate in a unit where the parcel on which the unit is located is held under a lease.

Division of building into units. A proprietor or developer of an existing or planned building may divide the building into two or more units by registering with the registrar a condominium plan in accordance with this Act.

Register of the condominium property. The registrar shall, upon an application for registration of a condominium plan, close the part of the register relating to the parcel described in the plan, and open a separate part for each unit described in the plan, and shall, upon the payment of the prescribed fee, issue a certificate of title in respect of the unit.

Application of the Registration of Titles Act.

The provisions of the Registration of Titles Act relating to registration techniques, procedures and practices shall, unless otherwise provided in this Act, apply to the registration of land dealings under this Act.

A certificate of title issued in respect of a unit comprised in a condominium plan registered under this Act shall, upon registration of the plan, be deemed to have been issued under the Registration of Titles Act.

A proprietor of a unit in respect of which part of the register is opened under section 3 may, subject to this Act, sell, transfer, lease, charge, or otherwise deal with that unit in the same manner and form as land held under the Registration of Titles Act.

Common property. The common property comprised in a registered condominium plan shall be held by the owners of all the units as tenants in common in shares proportional to the unit factors for their respective units

Change of use of the unit. An owner of a unit shall not change the use of his or her unit unless the corporation has, by unanimous approval, consented to the change of use or the planning and local authorities have approved the change of use.

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