By Ivan Mathias Mulumba.
In Uganda today, owning land is nearly everyone’s dream. The location and value of the land are major factors that determine whether one buys it or not. This is critical because they influence what the land can be used for. Understandably, many people prefer to own land in perpetuity....
That is why they will opt for mailo or freehold land instead of getting a lease on land.
The challenge is that such land is sometimes out of reach for many people due to high price. Besides, location does not guarantee the returns in the projected payback period in case one is to make an investment in real estate.
In Kampala, for instance, much of the land that is suitable for commercial use is under leasehold tenure. But to many people, the term lease is like a time-bomb. Some even miss the opportunity of owning prime land because of the fear caused by the uncertainty of owning leasehold land.
People often have the following questions in mind: Will the lease be renewed upon expiry? Will I manage to pay the ground rent? All these questions are valid. But owning land is like choosing a school for a child. You must know what is required of you and the consequences of your decision. Rather than ignore prime real estate, we need to be bold if we want to become real-estate barons or if we are to live in neighbourhoods perceived to be ideal.
First, you need to know that what you put on the land matters a lot if you are to get value from it. Some developers are opting for condominium development and high-rise developments on land under leasehold tenure. Others are forming land ownership groups and developing the land as a group to offset development costs. The result is organised and planned development and maximisation of the value of land owned under leasehold.
Secondly, we need to understand the advantages of owning land under leasehold tenure. One of them is the fact that the initial cost of owning such land is low. The premium, which is the lump sum paid by the person getting a lease from the land owner, is a fraction of the market value. A lease also gives the lessee a chance to own land in a location where the owner would not be willing to sell their interests. It also encourages development and use of land since it would not make sense to continue making annual payment for land that one is not using.
However, there are some important considerations to make before taking a lease. For instance, a person opting for a lease ought to know the duration of the lease they are getting. They should always look out for a lease with a longer term because the longer the term of the lease, the better; especially if the title is to be used as collateral.
So, before you sign a lease agreement, you should have read and agreed to its terms.