Two draft bills for debate to regulate real estate industry

Thursday February 09 2017
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An apartment in Dar es Salaam. The envisaged laws seek to bring sanity to the real estate industry. PHOTO|FILE

Dar es Salaam. Tanzania is set for major reforms in the real estate sector as the government wants to support and closely supervise the unregulated but fast-growing economic activity.

Borrowing a leaf from India, South Africa and Kenya, the government has already drafted two housing-related bills and a policy which may be endorsed by the Parliament before the end of 2017.

They include the Real Estate Regulatory Authority Bill and the Real Estate Agent Bill which both seek to regulate the sector.

The two draft bills and the proposed Housing Policy will be discussed by various stakeholders any time this month, the deputy permanent secretary in the Ministry of Lands, Housing and Human Settlements Development, Dr Moses Kusiluka, told The Citizen in Dar es Salaam last week.

“With these bills, we will be in a position to know the exact number of houses in supply as well as the prices for both renting and buying,” he said, noting that the government is not planning to control prices but at least to make them open for competitiveness and add choices to customers.

In February, 2012 Members of Parliament from across the political divide endorsed a private members’ motion seeking to curb exploitation of hopeless tenants by landlords and real estate agents.

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Through voting by acclamation, the MPs supported the motion by Mr January Makamba (CCM – Bumbuli who is now the Minister of State in the Vice President’s Office for Union Affairs and Environment) calling for enactment of a specific law to regulate the real estate business and enable government collect billions of shilling in property tax. Mr Makamba told the National Assembly then that the Rental Housing Bill would protect over 14 million tenants from exploitation tendencies by unscrupulous landlords.

However, tabling of the bill had to wait for an unspecified time pending the creation of a housing policy by the government which is meant to set the pace towards introduction of the law. The policy. Along with Land policy, settlement policy and land acquisition and compensation policy, is being reviewed so it can reflect the new developments in the sector.

Presently, the sector is governed by different laws supervised by different levels of government. Local government authorities deal with mapping and planning areas for settlements. They also issue building permits. On the other hand, the Central Government - through the Ministry of Lands, Housing and Human Settlement Development – issues legal house and land ownership documents.

Data from Tanzania Tenants Association show that 60 per cent of urban dwellers live in rented homes, taking up to 40 per cent of their incomes.

Tanzania had its own Rent Restriction Act of 1984 which directed landlords on how to charge their tenants which was supplanted by the Land Dispute Settlement Act of 2002.

With the economic reforms of 1980s and 1990s, the country had to do away with the laws.

Besides, Tanzanians – craving for house ownership – are also subjected to several procedures from different public and private institutions where they get consultations on how to build a house. They procedures include obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections.

According to Dr Kusiluka, the government’s plan is to have the sector being coordinated under a single unit, complete with restricting the education system to meet the demands and requirements of the real estate sector.

“A single unit authority will set what kind of studies and levels should be acquired by someone who wishes to engage in the sector,” noting for instance that one will be required to hold at least a Diploma to work as a real estate agent.

A regulatory body will be set up to ensure that those working as real estate agents have the relevant skills and are legally licensed to do the job.

The need to regulate the real estate sector stems from the fact that the industry is growing.

Until 2007, Tanzania was running a housing deficit of three million units valued at $180 billion. The annual demand for houses in urban areas is about 200,000 units estimated to cost $12 billion, according to data from National Housing Corporation (NHC).

Yet, only about 15,000 units can be supplied per year. During the past few years however, some private developers have also come in, necessitating the need for the regulator to oversee the areas (sectors) which need urgent investments and do not.

“The authority will be in position to show the developers and the investors the right direction – including the type of buildings that they should inject their money into, going by the market demand and supply,” he said adding that the body will also oversee the number of all houses and apartments for rent and for sell.