A Real Property Register to Support the Property and Credit Market in Uganda
Lilian Mono Wabineno Oryema
Doctoral Thesis in Real Estate Planning and Land Law
Real Estate Planning and Land Law Department of Real Estate and Construction Management School of Architecture and the Built Environment Royal Institute of Technology (KTH) Stockholm, Sweden, 2016 Supervisors: Associate Prof. Peter Ekbäck: Royal Institute of Technology (KTH) Prof. Hans Mattsson: Royal Institute of Technology (KTH) Dr. Moses Musinguzi: Makerere University Dr. Eva Liedholm Johnson: Royal Institute of Technology (KTH)
Academic Dissertation for the Degree of Doctor of Technology Author: Lilian Mono Wabineno Oryema Title: A real Property Register to Support the Property and Credit Market in Uganda
ISBN 978‐91‐85783‐63‐2 TRITA‐FOB‐DT‐2016:2
© Lilian Mono Wabineno Oryema
Real Estate Planning and Land Law Department of Real Estate and Construction Management School of Architecture and Built Environment Royal Institute of Technology (KTH) SE‐100 44 Stockholm Sweden
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ABSTRACT An efficient property and credit market can be used by a government of a country to empower its citizens to achieve sustainable development. To improve the property and credit market government needs to ensure that its land records contain information that is beneficial to the actors in both the property and credit market. Studies have shown that land records in Uganda experience problems which have affected the property and credit market. The Government of Uganda has had attempts to solve these problems and one of the recent efforts include computerization of the land records. However the aspect of the information content and its adequacy for the property and credit markets has not attracted much attention. Therefore this research investigated the content of the real property register in relation to the requirement of the property and credit market in Uganda. The main aim of the research was to develop a model of a real property register that supports both the property and credit market in Uganda. The research established the needs of the different actors in the property and credit market. Based on the analysis of the needs of the property and credit market in Uganda, the gaps in the information provided by the current real property register were identified. The research methods included literature review, interviews, and questionnaires. Furthermore the registers were inspected at the different land offices. A conceptual model of a real property register was designed based on the information needs of actors and gaps in the current real property register. The study revealed that the basic information required by the property and credit market included information on size of the property, location, occupancy rights, easements, regulations among others. Although things such as location and size are there, easements, occupancy rights and public restrictions are not there. This has impacted negatively on the property and credit market by contributing to land speculation, insecure rights, high transaction costs, prolonged transactions, high information costs, principle agent problems, land grabbing, land conflicts among others. The study recommended that the current register should be remodelled to include the vital information such as easements, occupancy rights and public regulation that is needed by actors in the property and credit market. The register should be dynamic and create incentives to have people register the land. Keywords: Property rights, Real property register, Property market, Credit market, Uganda.
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SAMMANFATTNING Effektiva fastighets‐ och kreditmarknader kan användas av en regering i ett land för att stödja sina medborgare att uppnå en hållbar utveckling. För att förbättra fastighet‐ och kreditmarknaderna måste regeringen se till att landets fastighetsregister innehåller information som är till nytta för aktörerna i både fastighets‐ och kreditmarknaderna. Studier har visat att det befintliga fastighetsregistret i Uganda har brister som inverkar negativt på fastighets‐ och kreditmarknaderna. Ugandas regering har försök att lösa dessa problem och en av de senaste insatserna inkluderar digitalisering av fastighetsregistret. Däremot har frågan om registrets informationsinnehåll, och dess ändamålsenlighet för fastighets‐ och kreditmarknaderna, inte rönt någon större uppmärksamhet. Av dessa skäl har detta forskningsprojekt närmare undersökt informationsinnehållet i fastighetsregistret i relation till de behov som fastighets‐ och kreditmarknaderna i Uganda uppvisar. Det främsta syftet med forskningen var att utveckla en modell för ett fastighetsregister som kan gynna både fastighets‐ och kreditmarknaderna i Uganda. Forskningen inventerade inledningsvis behoven hos de olika aktörerna inom fastighets‐ och kreditmarknaderna. Baserat på en analys av dessa behov identifierades brister och svagheter i den information som tillhandahålls av det nuvarande fastighetsregistret. Forskningsmetoden innefattade litteraturstudier, intervjuer och enkäter. Därutöver granskades fastighetsregistret på plats vid olika registerförande kontor. En konceptuell modell av ett utvecklat fastighetsregister skapades utifrån de informationsbehov hos aktörerna och brister i nuvarande fastighetsregistret som identifierats. Studien visade att den grundläggande information som behövs för fastighets‐ och kreditmarknaderna innefattar bl.a. information om fastighetens area, lokalisering, olika rättigheter samt markanvändningsplaner. Information om area och lokalisering finns idag, men rättigheter och markanvändningsplaner saknas. Detta har inverkat negativt på fastighets‐ och kreditmarknaderna genom att bl.a. bidra till markspekulation, otrygga rättigheter, höga transaktions‐ och informations‐ kostnader, principal‐agent‐problem och markkonflikter. Studien rekommenderar att nuvarande registret bör utvecklas och struktureras för att kompletteras med viktig information såsom rättigheter och markanvändnings‐ regleringar vilket efterfrågas av marknadsaktörerna. Registret bör vidare vara dynamiskt och skapa incitament för att underlätta registrering av mark. Nyckelord: Rättigheter, Fastighetsregister, Fastighetsmarknad, Kreditmarknad, Uganda. iv
ACKNOWLEDGEMENT
Foremost, my thanks go out to God Almighty for enabling me successfully pass through this PhD journey which was full of both painful and joyful experiences. I would like to express my special appreciation and thanks to my supervisors, Assoc Prof Peter Ekbäck, Prof Hans Mattsson, Dr. Eva Liedholm Johnson of Division of Real Estate Planning and Land Law (KTH) and Dr. Moses Musinguzi of Department of Geomatics and Land Management (Makerere University) for your kindness, patience, encouragement, immense knowledge and for the continuous help, advice and support of my study and research. In the individual capacity of my supervisors, special thanks go out to Prof. Hans Mattsson who gave me a chance to be his student by helping me get registered at KTH and finding a direction for my PhD studies. For accepting to supervise me and making me appreciate and understand the field of Land Management during my master’s degree, I will forever be grateful. I kindly thank Assoc. Prof. Peter Ekbäck for accepting to become my supervisor from the start of the study. I also want to tell you that I am very grateful for the quick responses that you always offered me concerning my work and other issues regarding my study and stay at KTH. I would like to express my heartfelt gratitude to Dr. Musinguzi Moses, you have been a tremendous mentor to me. The good advice, support, motivation and friendship have been invaluable on both an academic and a personal level, for which I am extremely grateful. For everything you have done for me, I thank you and I could not have imagined having a better advisor and mentor for my PhD study. To Dr. Eva Liedholm Johnson, you have been an inspiration since my days of doing my master’s degree. You taught, advised and supervised me for my research work. You were there whenever I needed help. I will forever be grateful to you I want to thank Dr. Lydia Mazzi Kayondo, you are not only a dear friend but a person I look up to. Thank you for the patience, advice, information and support you always offered me during the studies and outside studies, I really appreciate. To the staff at the Department of Geomatics and Land Management especially Dr. Anthony Gidudu, Mr. Ronald Ssengendo, Mr. Brian Makabayi and Mr. Allan Mazimwe, I am extremely grateful for all the support you offered me to enable me complete my studies.
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My fellow PhD student Kerbina Moyo, thank you for being such a good friend, officemate and housemate. You were a motivation and encouragement at all times and in every situation. You made our "readings and writings" during our stay in Sweden a daily event to look forward to. We have come a long way. May the good Lord bless you abundantly. A big “Thank you!” also goes out to everybody who participated in this study more so during the time of data collection. The time and effort you took off to take the interviews and respond to questionnaires are well appreciated. I also thank Chris Tembo Omoding, Mary Adweo, Ivan Bamweyana, Joseph Bukenya, Timothy Nigiwan, Berocan Samuel and Brenda Nakyeyune for all your efforts towards the completion of this piece of work. I kindly want to convey my gratitude to members of my doctoral committee at Makerere University; you gave me a sense of direction at our first meeting. Thank you for the guidance and effort you put in reading my proposal. I would like to acknowledge and thank Sida for the financial support rendered to me during the entire study period. I am very grateful to Royal Institute of Technology (KTH) and Makerere University for the joint PhD program and giving me a chance to carry out my studies at both universities.
Please note addition of the name Oryema following my marriage on the 5th February 2011. As a result, the publications in relation to this research use my original names Lilian Mono Wabineno and not Lilian Mono Wabineno Oryema
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SPECIAL ACKNOWLEDGEMENT
Special thanks go out to my family for their love, support and cooperation without which I would not have completed my studies. Words cannot express how grateful I am to my mother-in-law, my mother, Auntie Patricia Achan, Mama Ken, Uncle Berocan Samuel and my siblings Carol, Emmaline and Jonathan for the sacrifices you made for my family and on my behalf. Thank you all for the encouragement, advice, prayers and above all being best of friends to my husband, children and I during this journey. To you all, thank you and I pray that God almighty the Father blesses you all abundantly.
To my beloved children Isaiah, Saviour and Blessings, I know it has not been easy more so when I was away. I would like to express my thanks to you for being such good babies; allowing me to travel at a time when each one of you was at such a tender age of below one year. May the God Lord that kept you when I was away continue to keep and bless you but above all hold our hands as your parents to bring you up as God fearing people.
Deciding to take on this PhD was not easy with thoughts of leaving my children for 3months every year. But my husband encouraged me to take on the task. I would like to express appreciation to my beloved husband Mr. Charles Oryema for standing still with God in all situations. For the spiritual, Physical and moral support you gave to our children Isaiah, Saviour and Blessings most especially when I was away, I wholly appreciate. Your continuous support to me in pursuing my study is invaluable to me. May God bless you and the children as we keep on standing and praying together as a family.
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TABLE OF CONTENT
ABSTRACT ...... III SAMMANFATTNING ...... IV ACKNOWLEDGEMENT ...... V SPECIAL ACKNOWLEDGEMENT ...... VII TABLE OF CONTENT ...... VIII LIST OF FIGURES ...... XII LIST OF TABLES ...... XIII LIST OF ACRONYMS ...... XIV 1. GENERAL INTRODUCTION ...... 1 1.1 Background to the Study ...... 1 1.1.1 Land Records in Uganda ...... 1 1.1.2 Property Market in Uganda ...... 2 1.1.3 Credit Market in Uganda ...... 3 1.2 Problem Statement ...... 4 1.3 Objectives and Research Questions ...... 5 1.3.1 General Objective ...... 5 1.3.2 Specific Objectives ...... 5 1.3.3 Research Questions ...... 5 1.4 Significance and Justification of the Study ...... 6 1.5 Scope of the Study ...... 7 1.5.1 Geographical Scope ...... 7 1.5.2 Content Scope ...... 9 1.6 Structure of Thesis ...... 9 1.7 Limitations of the Study ...... 10 2. RESEARCH METHODS ...... 12 2.1 Introduction ...... 12 2.2 Research Design ...... 12 2.3 Identification of Actors in both the Property and Credit Markets ...... 12 2.4 Data Types and Sources ...... 13 2.5 Data Collection Methods ...... 13 2.5.1 Documents and Records ...... 13 2.5.2 Questionnaires ...... 14 2.5.3 Key Informant Interviews ...... 15 2.5.4 Site Visits and Observations ...... 16 2.6 Sample Size and Selection ...... 16 2.6.1 Sample Size ...... 17 2.6.2 Sampling Procedure ...... 18 viii
2.7 Data Analysis Techniques ...... 18 2.7.1 Quantitative Approach ...... 18 2.7.2 Qualitative Approach ...... 19 2.8 Property Rights Modelling ...... 19 2.9 Validity and Reliability ...... 19 2.10 Ethical Consideration ...... 20 2.11 Challenges met During Data Collection ...... 20 2.12 Concluding Remarks ...... 21 3. LAND TENURE AND PROPERTY RIGHTS ...... 22 3.1 Introduction ...... 22 3.2 Land Tenure Systems ...... 22 3.2.1 Definition of Land Tenure ...... 22 3.2.2 Land Tenure Categories in Uganda ...... 24 3.3 Property Rights to Land ...... 30 3.3.1 Context and Meaning of Property Rights ...... 30 3.3.2 Bundles of Property Rights and Regimes ...... 32 3.4 Property Rights in Uganda ...... 34 3.4.1 Ownership Rights ...... 34 3.4.2 Leasehold rights ...... 35 3.4.3 Occupancy Rights ...... 35 3.4.4 Security Rights ...... 35 3.4.5 Easements ...... 36 3.5 Changing Face of Land Tenure in Uganda from Before Colonialists to Date: Bundles of property rights approach ...... 36 3.5.1 Pre‐colonial Property Rights Systems for the Period before 1900 ...... 36 3.5.2 Emergent Property Rights Systems in the Colonial Period ...... 39 3.5.3 Post Colonial Period ...... 42 3.6 Concluding Remarks ...... 46 4. AN OVERVIEW OF REAL PROPERTY REGISTRATION AND CONTENT OF REAL PROPERTY REGISTERS ...... 47 4.1 Introduction ...... 47 4.2 Definition of Important Terms of the Study ...... 47 4.2.1 Real Property ...... 47 4.2.2 Land Register and Cadastre ...... 47 4.2.3 Real Property Register ...... 50 4.3 Importance of Land Records ...... 50 4.3.1 To Individuals ...... 50 4.3.2 To Government ...... 51 4.4 Systems of Real Property Registration ...... 52 4.4.1 Deed System ...... 52
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4.4.2 Title System ...... 54 4.4.3 Modern Development of the Initial “Pure” Systems ...... 54 4.5 Contents of a Real Property Register ...... 58 4.6 Real Property Registration Systems in Selected Countries ...... 60 4.6.1 Sweden ...... 60 4.6.2 England ...... 63 4.6.3 France ...... 64 4.6.4 Uganda ...... 65 4.7 Modelling the Property Register and Rights...... 67 4.8 Concluding Remarks ...... 74 5. REAL PROPERTY TRANSACTIONS AND THE CREDIT MARKET IN UGANDA ...... 76 5.1 Introduction ...... 76 5.2 Real Property Transactions and Registration in Uganda ...... 76 5.2.1 Definition of Terms as used in the Property Market ...... 76 5.2.2 Description of the Property Market ...... 77 5.2.3 Procedures of Real Property Transactions ...... 79 5.2.4 Procedures of Land Registration ...... 82 5.3 Mortgage and Credit Markets in Uganda ...... 84 5.3.1 Definition of terms as applied in the mortgage and credit markets ...... 84 5.3.2 Arrangement of the Credit Market ...... 84 5.3.3 Procedure of Acquiring and Registering a Mortgage in Uganda ...... 85 5.4 Concluding Remarks ...... 87 6. PRESENTATION AND INTERPRETATION OF THE STUDY FINDINGS ...... 89 6.1 Introduction ...... 89 6.2 General Information about the Study Population ...... 89 6.2.1 Banks and Mortgage Officers ...... 89 6.2.2 Real Estate Agents ...... 95 6.2.3 Buyers/Borrowers ...... 96 6.3 Information Needs of the Actors in the Property and Credit Market ...... 96 6.3.1 Information Needs for Financial Institutions ...... 96 6.3.2 Information Needs for Buyers/Borrowers ...... 98 6.3.3 Information Needs for Real Estate Agents ...... 100 6.4 Impact of the Information Content of the Current Property Register to the Property and Credit Markets in Uganda ...... 102 6.4.1 Adequacy of Information provided by the Property Register ...... 102 6.4.2 Gaps in the Property Register ...... 104 6.4.3 Effects of the content of the Property Register on the Property and Credit Market ...... 106 7. MODEL TO SUPPORT THE PROPERTY AND CREDIT MARKET IN UGANDA ...... 114 7.1 Information Content of the Proposed Model ...... 114 x
7.1.1 Property Owner ...... 114 7.1.2 Property Rights and Restrictions ...... 115 7.1.3 The Parcel ...... 118 7.1.4 Conceptual Models of the Real Property Register in Uganda ...... 119 7.2 Dynamic Register ...... 124 7.2.1 Transfer...... 125 7.2.2 Subdivision ...... 126 7.2.3 Amalgamation ...... 128 7.2.4 Reallotment ...... 129 7.3 Concluding remarks ...... 130 8. CONCLUSIONS AND RECOMMENDATIONS ...... 132 8.1 Introduction ...... 132 8.2 Summary of Findings ...... 132 8.3 Conclusion ...... 133 8.3.1 Specific Objective 1 ...... 133 8.3.2 Specific Objective 2 ...... 136 8.3.3 Specific Objective 3 ...... 138 8.4 Research Contributions ...... 139 8.4.1 Provision of Knowledge ...... 139 8.4.2 Policy Perspective ...... 140 8.4.3 Other Contributions ...... 140 8.5 Recommendations ...... 141 8.5.1 Integrated Real Property Register ...... 141 8.5.2 Real Property Register as opposed to Land Register ...... 141 8.5.3 Incentives for Land Registration ...... 141 8.5.4 Dynamism ...... 142 8.6 Recommendations for Further Studies ...... 142 REFERENCES ...... 144 APPENDIX I ...... 156 APPENDIX II ...... 157 APPENDIX III ...... 168
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LIST OF FIGURES
Figure 1‐1: Location Map of Uganda in Africa ...... 8 Figure 1‐2: Location Map of Kampala and Wakiso District with the Neighboring Districts in Uganda ...... 8 Figure 2‐1: Modelling of the Property Register ...... 19 Figure 4‐1: Examples of register content in relation to subject, right and object ... 49 Figure 4‐2: Connections between man and land through rights ...... 68 Figure 4‐3: The legal cadastral domain model after alterations due to Swedish real property legislation ...... 70 Figure 4‐4: Static model of system of land registration ...... 72 Figure 4‐5: Dynamic model of system of land registration ...... 72 Figure 4‐6: Three necessary procedures for change in land law ...... 74 Figure 6‐1: Experience of mortgage officers ...... 90 Figure 6‐2: Type of mortgages ...... 91 Figure 6‐3: A graph showing the motive for mortgage application ...... 92 Figure 6‐4: Amount of information shown in the register according to mortgage officers...... 106 Figure 6‐5: Other challenges faced in obtaining information from other sources than the register ...... 108 Figure 6‐6: Period taken to obtain a mortgage ...... 110 Figure 6‐7: A graph showing the average number of successful mortgage in all banks per month ...... 111 Figure 7‐1: Conceptual model showing presentation of mailo rights ...... 120 Figure 7‐2: Conceptual model showing land rights on customary rights ...... 121 Figure 7‐3: Conceptual model for freehold rights ...... 122 Figure 7‐4: A conceptual model for a property register ...... 123 Figure 7‐5: In case of transfer ...... 125 Figure 7‐6: The case of a subdivision ...... 126 Figure 7‐7: The case of amalgamation ...... 128 Figure 7‐8: The case of reallotment ...... 129
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LIST OF TABLES
Table 1‐1: Research questions ...... 5 Table 2‐1: Organization and number of people interviewees ...... 16 Table 3‐1: Land tenure systems in Uganda ...... 30 Table 3‐2: Bundles of property rights associated with positions...... 34 Table 3‐3: Private, common, public and open access property ...... 34 Table 3‐4: Bundle of rights associated with land before 1900 ...... 38 Table 3‐5: Bundles of rights in the colonial period ...... 41 Table 3‐6: Bundles of rights in the post‐colonial period from October 1962 to October 1995 ...... 43 Table 3‐7: Bundles of rights in the period from Oct‐1995 to date ...... 43 Table 4‐1: Differences among registration system ...... 56 Table 4‐2: Comparison of data elements in land administration systems ...... 58 Table 6‐1: Commercial banks and the average value of mortgages given ...... 94 Table 6‐2: Information needed from the property register by the banks ...... 97 Table 6‐3: Evaluation of the information needed by the mortgage officers from the property register ...... 98 Table 6‐4: Information needed from the property register by the buyers/borrowers ...... 99 Table 6‐5: Evaluation of the information needed by buyers/borrowers from the property register ...... 99 Table 6‐6: Type of information needed by the real estate agents from the property register ...... 101 Table 6‐7: Information needed from the property register by both actors in the property and credit market in Uganda ...... 101 Table 6‐8: Information provided by the property register according to the mortgage officers...... 102 Table 6‐9: Information provided by the property register according to the buyers/borrowers...... 102 Table 6‐10: Sources of information about property ...... 104 Table 6‐11: Distinguishing information obtained from the property register and other sources as presented by the mortgage officers and buyers/borrowers ...... 105 Table 6‐12: Showing the reasons buyers/borrowers have ever failed to secure a mortgage...... 112 Table 6‐13: Showing reasons by mortgage officers for failure of buyers/borrowers to obtain mortgages...... 113 Table 7‐1: Property rights system in Uganda ...... 118
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LIST OF ACRONYMS
BLB Buganda Land Board BOU Bank of Uganda CCO Certificate of Customary Ownership CGV Chief Government Valuer CO Certificate of Occupancy DFCU Development Finance Company of Uganda DLB District Land Board DLO District Land Office FIG International Federation of Surveyors HFB Housing Finance Bank ICT Information and Communication Technology KCCA Kampala Capital City Authority LC Local Council LIS Land Information System LSSP Land Sector Strategic Plan MDGs Millennium Development Goals MoFPED Ministry of Finance Planning and Economic Development MoLHUD Ministry of Lands, Housing and Urban Development NDP National Development Plan NHCC National Housing and Construction Company NLIS National Land Information System NLP National Land Policy PIN Parcel Identification Number PSCP Private Sector Competitiveness Project ROSCA Rotating, Savings and Credit Association RRR Right, Restriction and Responsibility SMEs Small and Medium Enterprises URA Uganda Revenue Authority
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CHAPTER ONE
1. GENERAL INTRODUCTION
1.1 Background to the Study
1.1.1 Land Records in Uganda Land records constitute both descriptive records and maps which are kept in a land register1 (register book). The Departments of Land Registration, Surveys and Mapping in the Ministry of Lands, Housing and Urban Development (MoLHUD) are responsible for the real property registers and maps respectively. The register book prescribed under the Registration of Title’s Act (1924 and sec 37(1)) is where records of certificates of titles, all dealings and matters affecting the land are entered and registered. Land registration leads to a certificate of title whose terms and conditions depend on the type of land tenure (see section 3.2.2). The Constitution of Uganda recognizes four land tenure systems namely: customary, mailo, leasehold and freehold. Land records pertaining to the four land tenure systems are kept in three separate registers namely mailo register for mailo land, customary register for customary land and freehold/leasehold register for freehold and leasehold land. The nature, format and content of land records have to some extent affected the property and credit market in Uganda. For a long time, the land records were maintained in hardcopy format which had its own limitations such as limited accessibility, torn documents, missing information among others. According to Cheremshynskyi & Byamugisha (2014), efforts to improve the condition of land records are reflected in the various studies, such as: i. A comprehensive review of the registration system and proposals for the rehabilitation of the system report by D. W. Greenwood of 1990; ii. Proposal for a project for the rehabilitation of the land survey and register report by G. Larson of 1990; iii. A base for a Land Information System in Uganda by Swedesurvey of 1996. Each of the studies, though commissioned for a slightly different purpose, recommended that the real property register should be rehabilitated.
1 In Uganda the word land register is used interchangeable with the word property register. Detailed explanation is given in the proceeding chapters. 1
The outstanding problems facing the property register, as identified by the various studies included: the documents were in bad conditions as they were exposed to wear and tear, the strong rooms in which the land records were stored were in bad condition as they did not have enough ventilation putting them at a risk of rain and dust, the documents were outdated and some were missing, the documents were prone to forgery as a result of the manner in which they were handled, there was too much back door practice such as bribery, and that the registers were incomplete among others. These problems have greatly affected both the property and credit markets given that actors in these markets rely on the property register. When records are missing, in bad conditions, inaccurate and information is inadequate, it reduces the credibility of the property register as a source of credible and reliable information to support the credit and property markets. It is estimated that the property register in Uganda has 500,000 land titles under the custody of the Department of Land Registration, 8,500 survey files and 16,500 cadastral maps under the custody of the Department of Surveys and Mapping. Currently the land records which were manually held are now computerized.
1.1.2 Property Market in Uganda Land markets are very important because they enable allocation of land to potential users, which makes it easier to access credit thus promote investment (Baland, Gaspart, Place, & Platteau, 2000). Zevenbergen (2002) argues that, it is difficult for a country to develop in absence of an efficiently operating land market, since it plays a central role towards sustainable development. Just like the other East African countries, the land market in Uganda is very vibrant (Deininger & Mpuga, 2003; Giddings, 2009; Lastarria‐Cornhiel, 2003) most especially in the central region which houses Kampala the capital and the largest city in Uganda. The central region has the biggest percentage of registered land in Uganda and most of this land was surveyed during the colonial era. The cost of land in Kampala has increased over the years (Giddings, 2009; Kalema & Kayiira, 2012) such that majority of the population cannot afford to buy land using owner equity but rather get a mortgage from a financial institution. The increase in the cost of land can be attributed to the fact that in the past years people considered land as a source of getting livelihood predominantly through agriculture but people have realized the monetary value of land thus the emergency of real estate agents and brokers. Due to some problems associated with the property market and the property register such as; high costs for obtaining information on a property, bureaucratic
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tendencies and delays in the registration process, people find it difficult to transact in the formal way and have their properties registered (Ahene, 2009). The series of problems in the property market and the property register has made most people to be reluctant and not motivated to acquire land titles. These problems have also affected the operation of the property market making it inefficient. There are no stringent laws and regulations governing transactions in the property market. Because people are finding registered land more relevant than before, there has been increased demand on the property market and in response, government has found the need to regulate this sector/market. The government is in the process of drafting a bill that will regulate the activities and dealings of real estate agents, brokers and other actors in this market.
1.1.3 Credit Market in Uganda All over the world, efforts have been made to make mortgages accessible to ordinary people to own homes in the recent years (UNHABITAT, 2005). The property and credit market in Uganda is fast growing but it is still characterized by high prices and high interest rates (Ahene, 2009; Giddings, 2009). Unlike before in the 1990s where a few people acquired loans to leverage or buy real property, it has become the trend to get loans to finance purchases, constructions, completion, extensions and improvements of properties for either own occupancy or rental purposes. This is because most people are middle and low income earners who cannot afford to depend on their incomes for a living and at the same time make tangible development or investment from the same income. Also with the increasing prices of real property and privatization of public housing, people have turned to mortgages to achieve their dreams of property ownership (Ladu, 2011). The financing offered by the lender is not more than 70% ‐ 80% of the open market value of the property being purchased or the cost of construction. When a loan is taken, the buyer/borrower usually pays back the principal (amount borrowed) plus the interest rate. Ahene (2009) and Mugabe & Ilungole (2009) observed that the average interest rate offered by banks and mortgage finance institutions in 2009 was 20% for Small and Medium Enterprises (SMEs). According to Bank of Uganda’s economic survey, residential and commercial mortgages stand at 22.02% and 21.81% respectively with the loan to purchase land attracting the highest interest rate of 26.44% (Were, 2011). According to Sanya (2013), Uganda had the highest lending rate in the region of East Africa as of July 2013 standing at 23%. These high borrowing rates are caused by different factors, one of them being that the credit institutions assume high levels of risks as it is not secure to attach land as collateral because of the poor state and confusion at the land registry (Ahene,
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2009). The situation at the land registry is an obstacle to the property and credit market because: firstly there is lack of trust in the authenticity of the titles and this discourages would be property buyers; secondly it takes a long time to register properties and mortgages, which affects the property buyers and banks (Kibirige, 2006). Also the financial institutions are reluctant to provide financing due to various encumbrances on land and uncertainties in titling (Giddings, 2009). Although the banking sector in Uganda has grown over time with 25 commercial banks, out of which only five (DFCU bank, Stanbic bank, Standard chartered bank, Housing finance bank, and Barclays bank) are outstanding mortgage givers.
1.2 Problem Statement The Ugandan property register supports documentation of land under four land tenure systems recognized by the country’s Constitution. The register, which in principle is based on the Torrens system of land registration, was designed to be juridical in nature and hence the emphasis was biased towards ownership rights registration. Apart from this bias, some of the legal rights emanating from existence of overlapping interests on land, such occupancy rights on the mailo tenure systems are not recorded in the register. Furthermore, the design of the content and format of the register did not take into account the needs of the property and credit market, considering that the sector was not developed at the time. Overtime, the property and credit market has registered exponential growth in Uganda due to various economic reforms in the last 30 years. The number of land transactions has equally grown. This growth implies that the role of the property register can no longer be limited to juridical, but will continue to expand to support the property and credit market. The inefficiency in the current property register is manifested in the high mortgage interest rates, in which a reasonable component is to collect property information, which is either nonexistent in the register or is poorly recorded. The high mortgage rates can only accommodate the very few who have the potential to service the mortgage and lock out other potential buyers/borrowers who cannot afford the rates. Previous and current efforts to improve the property register have been emphasizing rehabilitation of records, re‐engineering of business processes and computerization of the records to make transactions safer and faster. However, little or no effort has been directed towards redesigning the register to align it with the needs of the expanding and changing property and credit market. If the register is not re‐designed to focus on the needs of the property and credit market, the role
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of this sector in national development as envisioned in vision 2040 and other strategic development plans of Uganda will be hampered. This research therefore investigated the content of the property register and specifically addressed the issue of representation of property rights for meeting the needs of property and credit market.
1.3 Objectives and Research Questions
1.3.1 General Objective The general objective is to contribute to the remodelling of the current real property register to support the property and credit market in Uganda.
1.3.2 Specific Objectives 1. To determine information needs of actors in the property and credit market of Uganda. 2. To evaluate the impact of information content of the property register on the property and credit market in Uganda. 3. To describe a model of a real property register that supports the property and credit markets based on the information needs of the actors in the respective markets.
1.3.3 Research Questions The research questions were generated from the specific objectives stated above. Each specific objective had a research question as shown in Table 1‐1.
Table 1‐1: Research questions Specific Research Question Objective Specific i) What are the information needs of actors in the property objective 1 and credit market regarding property rights and information? Specific ii) To what extent has the content of the property register in objective 2 regards to property rights supported the activities of the property and credit market in Uganda? Specific iii) How can the content of a real property register be objective 3 modelled to support the property and credit market in Uganda?
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1.4 Significance and Justification of the Study The National Development Plan (NDP) (2010/11 – 2014/15) has a vision of transforming the Ugandan society from a peasant to a modern and prosperous country within thirty years. The theme of the NDP is growth, employment and social‐economic transformation for prosperity. One of the strategic objectives to achieve the NDP theme is to promote science, technology, innovation and ICT to enhance competitiveness. The proposed study therefore is in line with the above objective number five of NDP since it will be promoting innovations in the land sector, which will enhance part of the business environment in Uganda. The proposed study was aligned with goal 8 of the Millennium Development Goals (MDGs), which is about global partnership for development. Information in the real property register will easily be shared across countries if it’s well modelled as one of the reasons of modelling property rights was to have standard way of representing property rights in a property register, which will enable easy information sharing between different countries. This will encourage investors from other parts of the world to come and invest since they are assured of secure property rights which will enable them get mortgages. Chapter three of the Uganda National Land Policy (NLP) that was approved in 2013 contains policy statements on; promoting efficient, effective and equitable land markets on all land tenure regimes, creating an enabling atmosphere for attracting investments to achieve sustainable and equitable development. One of the strategies the government points out to is to make sure that there is an operational land market that is based on an efficient property register system that guarantees titles, provides accurate information, and is open to public scrutiny. This research will go a long way in promoting a conducive environment for investments in Uganda since modelling of property rights will help provide accurate information in the property register. Uganda’s Vision 2040 is “A trans‐ formed Ugandan society from a peasant to a modern and prosperous country within 30 years”. This involves making Uganda move away from having a predominantly poor to an upper middle income population. One of the ways this can be achieved is by making citizens realize the potential of holding land through investing and developing it. This study will help to improve on the potential of investing in land as incentives to register land will be realized. There are various goals of a real property register, borrowing two of the goals given by Van der Molen (2001) as; improving land tenure security and regulating the land market. It can be noted that with rights well represented and viewed, the people
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purchasing land will have certainty of holding land which will enable continued investments on land without fear thus continued economic development. A good property system should enable the public actively participate in the land market by being simple, fast, cheap, reliable, and free of corruption and also encourage individuals to make transactions, have access to registration and wide spread ownership (Enemark, 2007). The real property register was considered in view of the property and credit market because these two markets are key to achieving economic growth through investment. When there is security of property rights then cost of transactions are reduced and people can easily acquire funding for investment activities which encourages more people to invest in land and this in turn translates into increased economic growth and reduced poverty levels. Now that Uganda is developing and implementing a multipurpose National Land Information System that will contribute to putting in place a land administration system that is efficient to be able to facilitate and improve on land delivery services and also improve tenure security, the study is of importance since the information about property rights forms an important element of the component of the content of a real property register, LIS and registration system. In light of the above concerns, it was clear that the research would go a long way in addressing Uganda’s information needs and creating an enabling environment for investment in land which would lead to sustainable and equitable development.
1.5 Scope of the Study
1.5.1 Geographical Scope The geographical scope for this study was Uganda. It was not limited to any particular area in Uganda since the property registers covers the entire country. However, data collection predominantly covered Kampala and Wakiso districts. This is because these two districts possess all the four land tenure systems and importantly they account for more than 50% of land records in the registers. Furthermore, Kampala is well established in terms of the credit market and financial institutions as compared to the other districts. Whereas Kampala is a purely urban area, Wakiso is made up of urban, rural and peri‐urban areas. Wakiso and Kampala are part of the six pilot districts for the National Land Information System (NLIS).
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Figure 1‐1: Location Map of Uganda in Africa Source: GIS Department of AWE Ltd Uganda (2015)
Figure 1‐2: Location Map of Kampala and Wakiso District with the Neighboring Districts in Uganda Source: GIS Department of AWE Ltd Uganda (2015) 8
1.5.2 Content Scope For the purpose of this research, the study focused on the information to be entered in the real property register particularly rights on land and how to theoretically design the real property register. The property and credit markets were limited to those in the formal sector and those in the informal sector were ignored. Although the informal market accounts for a sizable share, they suffer a problem of poor documentation which promotes irregularities and malpractices in the sector hence it is not possible to attain data for research purposes. On the other side transactions in the formal market are well documented and data accessibility is easy. Out of the twenty five licensed commercial banks in Uganda, only five were chosen. This was because they were outstanding at issuing out mortgages. They include DFCU bank, Stanbic bank, Standard chartered bank, Housing finance bank, and Barclays bank.
1.6 Structure of Thesis The thesis is organized into eight chapters. Each chapter comprises of a particular component of the research as explained below. Chapter one: General introduction This chapter gives the general introduction to the research. It introduces the research to the readers, making them understand why the research was carried out. It includes the background of the study, problem statement, objectives, research questions, significance of the study, scope of study, and finally limitations of the study. Chapter two: Research methods Methods and instruments that were used in data collection and analysis in order to meet the objectives and produce the research outcomes are discussed in this chapter. This chapter comprises of an introduction, research design, data types and sources, study population, data collection methods, sample size and selection, data analysis, modelling of rights, dissemination of research findings, Validity and reliability issues, gender, environmental and ethical considerations. Chapter three: Land tenure and property rights Chapter three discusses and analyses the different reforms in land tenure and property rights in Uganda since before colonial times to date. It includes an introduction, an analysis of property rights and land tenure, and finally classification of land tenure and property rights in Uganda.
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Chapter four: An overview of real property registration and content of real property registers The chapter describes and analyses the different land registration systems and contents of property registers internationally. Also a comparison and evaluation of the content of selected countries is discussed. The chapter has an Introduction, importance of land records, systems of land registration, principles of land registration, contents of a land register and land registration in selected countries which include Sweden, England, France and Uganda. The chapter also discusses modelling of property registers. Chapter five: Real property transactions and the credit market in Uganda This chapter discusses and analyses the procedures of property transactions, land registration and mortgage acquisition in Uganda. It entails an Introduction, property transactions and registration in Uganda, mortgage and credit market in Uganda and concluding remarks Chapter six: Presentation and interpretation of the study findings Study findings are presented, interpreted and analyzed in this chapter. The chapter dwells mainly on specific objective one (To determine information needs of actors in the property and credit markets of Uganda) and specific objective two (To evaluate the impact of information content of the property register on the property and credit markets in Uganda). Chapter seven: Model to support the property and credit markets in Uganda This chapter fulfils specific objective three of the study (To describe a model of a real property register that supports the property and credit markets based on the information needs of the actors in the respective markets). The conceptual model of the property and credit markets is discussed in this chapter. The dynamic nature of the property register is also discussed. Chapter eight: Conclusions and recommendations The chapter summarizes and draws conclusions on all the three specific objectives. It gives a summary and conclusions of the entire thesis and finally discusses recommendations and prospectives for further studies.
1.7 Limitations of the Study Efforts to improve the property register in Uganda would require a multidisciplinary research covering a wide range of areas such as policy, legislation as well as technological aspects. However, this study focused specifically on the information content of the register. Because of this, the research does not provide all the answers required for improving the property register in Uganda. The research does not discuss who shall be responsible for the work that must be done 10
before the registration. But that must be decided at the same time as the content in the new register is decided in detail. This research provides an insight into what information would be incorporated in the register to enhance the property and credit markets in Uganda. Furthermore, the study utilized data from formal institutions and did not consider informal institutions. There could be a number of other issues about information requirements in the informal sector not identified by this study.
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CHAPTER TWO
2. RESEARCH METHODS
2.1 Introduction This chapter describes the scientific techniques employed in acquiring data and information for the study. Furthermore it describes the research design adopted for the study, the sampling techniques as well as the methods for data analysis.
2.2 Research Design Traditionally, social research is expected to follow one of the approaches either qualitative or quantitative when it comes to the style and nature of research and investigation (Denscombe, 1998). However for this study the nature of research questions required a combination of both approaches. Therefore this research adopted a mixed model (Tashakkori & Teddlie, 1998) combining both a qualitative and quantitative approaches. The mixed model was adopted to facilitate triangulation and complementarity of research results. The qualitative approach was used to collect information needs of the actors in the property and credit market in Uganda which concerned specific objective 1. For specific objective 2 which was to evaluate the impact of information content of the current real property register on the property and credit market in Uganda, both the qualitative and quantitative approaches were applied. The qualitative approach focused on the quality of the information content while the quantitative approach focused on the impact of the register on the property and credit market in Uganda.
2.3 Identification of Actors in both the Property and Credit Markets The data collection process started with identification of the actors in both the property and credit market to be involved in the research. The actors were identified on the basis of their role in the property and credit market. The broad categories included the custodians of the register, the professionals, financial institutions and the general public. In each of the broad categories, the list of actors was narrowed down to those that frequently interact with both markets and the property register. Those singled out included: i. The real estate firms who not only buy and sell properties but also arrange mortgages for clients; ii. The buyers/borrowers who obtain mortgages from financial institutions using property as collateral; 12
iii. Banks which provide mortgages; iv. Ministry of Lands Housing and Urban Development (MoLHUD) which is the custodian for the real property register.
2.4 Data Types and Sources Both primary and secondary data were collected. Primary data was basically raw data from the field and was used to examine the respondents’ perception on the nature, adequacy and amount of information in the property register as well as the role it plays in the credit and property market. It was obtained by use of questionnaires, interviews and field observations. The secondary data was obtained from internet search engines, books, journals, periodicals, reports, statistics abstracts and Government archives. The Ministry of Lands, Housing and Urban Development (MoLHUD) as well as the zonal District Land Offices (DLO) of Kampala and Wakiso were particularly useful in obtaining data on the contents of the existing property register. Therefore, since this was a mixed approach research, it entailed both qualitative and quantitative methods of collecting data.
2.5 Data Collection Methods As pointed out in section 2.3 above, this study employed both quantitative and qualitative research approaches. The data collection methods were selected to suit these approaches. Various data collection methods were used for the research as described below.
2.5.1 Documents and Records This was in form of using both published and unpublished sources. Documents and records were used to obtain preliminary baseline information on the real property register, property markets and the credit markets. Information on real property register was obtained from consultancy reports in the MoLHUD. The reports were from early 1991 to 2015 and had been compiled as part of the effort to improve information management in the property register. Information on property markets was obtained from previously published researches mainly MSc and PhD theses as well as magazines focusing on the property and the construction industries. Information from the credit market was got from technical reports published by Bank of Uganda (BOU), Ministry of Finance Planning and Economic Development (MoFPED), newspaper articles and Institute of bankers. Information on concepts definition and best practices was obtained from textbooks while latest researched information was obtained from journals and conference proceedings. 13
It should be noted that even if literature review helps in providing information from previously concluded studies, Kothari (2004) observes that literature from previous studies should not just be taken as to mean that they are true. However he points out that before secondary data is used, it must possess the characteristics of being reliable, suitable and adequate. Literature was continuously reviewed from the time the study began until it came to an end.
2.5.2 Questionnaires The questionnaire approach was preferred as a data collection method because of the large number of scattered respondents who were required to answer a set of similar questions. These were used to collect the bulk of raw data from the field to address study objective one (To determine information needs of actors in the property and credit market of Uganda) and two (To Evaluate the impact of information content of the current real property register on the property and credit market in Uganda). Two different questionnaires targeting different categories of respondents were designed: one for mortgage buyers/borrowers while the other was for mortgage officers in different banks (see APPENDIX II: A & B respectively). These two categories were considered to have different roles in the property and credit market and they also have different perspective and opinions about the property register, property market and credit market. While designing the questionnaire, questions where the responses could easily be determined were structured while those whose response could not be determined were left unstructured. The questionnaires were self‐administered and had structured, unstructured and matrix questions. The structured and matrix questions helped elicit consistent responses which eased the coding and quantitative analysis of the data. Before the questionnaires could be administered, they were pretested on selected respondents under each category. The pilot study was done to; see if the questions were clear, appropriate and easy to understand by the respondents, check the wording of the questions and to also check the length of the questionnaire(s). The pilot study was made under the same conditions as the main study was going to be made in order to generate consistent results. During the pilot study, 10 questionnaires were distributed to buyers/borrowers from each of the five banks while 3 questionnaires were issued to the mortgage officers of each of the same banks. In total 50 were distributed to buyers/borrowers while and 15 were issued to mortgage officers making a total of 65. For the main study 138 questionnaires were issued to buyers/borrowers while 50 were issued to mortgage officers. The information obtained from the pilot questionnaires revealed gaps which were addressed to generate final questionnaires. Questionnaires were chosen as a tool
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for data collection because much information was to be collected from a large group of people. This made it possible to collect all this much information from the many people within a short period of time.
2.5.3 Key Informant Interviews Key informant interviews were conducted to complement and supplement the information obtained from the questionnaires. Three categories of key informants were interviewed in order to obtain information about the functioning of the two markets and the property register. The first category were custodians of property registers and included staff of the District Land Offices (DLOs), officials from Ministry of Lands, Housing and Urban Development (MoLHUD) particularly those in the land registry and those working on the National Land Information System (NLIS). The second category was officials from the financial institutions who included heads of mortgage departments and mortgage officers. The third category was the real estate agents who interact with the property register, property buyers and sellers and financial institutions.
Table 2‐1 shows the organizations and number of people interviewed from the corresponding organization. Face to face interviews were preferred for individuals in the 3 categories essentially because the respondents were few and easily accessible. The interviews enabled acquisition of in‐depth information by engaging individuals in a discussion beyond what was in the interview guide. The interview guide was pretested on 2 officials from each of the 3 categories of respondents. The purpose of pretesting was to determine whether the questions in the interview guide were clear, comprehensive and hence capable of being understood and correctly interpreted by the interviewees. After pretesting, the interview guide was improved by editing out unclear questions, deleting unnecessary questions and including additional questions (See APPENDIX III).
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Table 2‐1: Organization and number of people interviewees Nature of Organization Number of organization interviewees Government Ministry of Lands Housing and Urban 3 Organization Development (MoLHUD) Kampala District Land Office (DLO) located at 1 Kampala Capital City Authority (KCCA) Wakiso DLO 1 Real Estate National Housing and Construction Company 3 Agents (NHCC) Akright Projects Limited 3 Jomayi Property Consultants 3 Canaansites Limited Uganda 2 EastLands Agency 2 Banks‐ Head Development Finance Company of Uganda (DFCU) 1 of mortgage Stanbic Bank 1 section Standard Chartered Bank 1 Housing finance Bank (HFB) 1 Barclays Bank 1
2.5.4 Site Visits and Observations Site visits were made to two land offices namely Wakiso and Kampala. These sites are part of the six pilot districts for the LIS computerization project. These offices have been adopted as Ministry Zonal Offices (MZOs) as part of the Ministry’s strategy to decentralize land information services. Through the LIS project, the MZOs have been equipped with modern hardware and software for processing land transactions although they still maintain the registers in manual form. They provided good case studies for assessing the transitions from manual to the computerized systems. The purpose of the site visit was to acquire information about the content and state of the registers through direct observations. Observations focused mainly on storage media, security and safety of information as well as general assessment of the service delivery at the MZOs.
2.6 Sample Size and Selection This study employed random sampling techniques for selection of respondents for the questionnaire, who were mainly buyers/borrowers and mortgage officers. Random sampling was carried out differently for each of the categories to ensure a good representation of the views of each category. Purposive sampling technique was used to select respondents for the interview who were mainly heads of mortgage departments in banks, officials from MoLHUD and officials from real estate agents. The study targeted the following:
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2.6.1 Sample Size While the number of interviewees from interviews is relatively small and easy to identify, that of the buyers/borrowers is large and indeterminate. According to Cochran (1963), where the estimated sample size to the study is large but not known, the estimation of those to be involved in the study will be based on the formula below:
2 z pq n d 2
Where n Desired sample size z Standard normal deviation at the required confidence level or the Z‐value of a confidence level2 d Level of precision wanted for the study or confidence levels p Proportion of the target population estimated to have characteristics being measured. qp1 This study set 5% level of significance which is consistent with similar studies in Uganda and conforms to that recommended by Fisher (1950) for such studies as the risk at 5% is bearable. The Z‐value of 95% confidence level is 1.96 and d=0.05. The desired maximum variability for the study was set at 90% meaning that p=0.9 and q=0.1 The sample size n was therefore then computed as follows
1.962 0.9 0.1 n 138 0.052
The above implies that for this study to attain a 5% level of significance the minimum sample size was 138 respondents. Previous similar studies such as: Aksorn & Hadikusumo (2007, 2008), Idoro (2010) and Lubega, et al. (2000), adopted an average sample size of 84 which is significantly lower than the sample size adopted in this study. This suggests that this study was designed to generate results that were comparable in quality than the previous studies. A total of 138 questionnaires were distributed to the buyers/borrowers while a total of 55 questionnaires were distributed to the mortgage officers making a total of 193. Since the mortgage officers had a well‐defined number and known, the above formula was not applicable to them. After collecting, editing and sorting out
2 A Z‐value represents the probability that a sample will fall within a certain distribution. It is read from the Normal Probability Table. 17
the questionnaires, a total of 161 were found valid for analyses representing 83% response rate. Out of which 112 were for the buyers/borrowers while 49 were for the mortgage officers. The high response rate was achieved because of self‐ administration of the questionnaires which eliminated inconveniences such as posting and delivery which are the major causes of low response. The few non responses were mainly due to unavailability of the respondents due to their tight schedules.
2.6.2 Sampling Procedure As mentioned previously under beginning of section 2.6, different sampling procedures and techniques were used for various categories. These are explained below. i. Purposive sampling was used to identify officials from MoLHUD, DLOs, head of Mortgage sections and real estate agents in the study areas. This sampling technique was used to capture information from a group of experts with knowledge and experience in the property and credit markets. As part of their routine work, these experts had engaged in transactions which necessitated them to consult the property register. This technique was further supplemented by the snow ball technique to capture the views of other experts originally not anticipated in the study but recommended by the interviewees. ii. Stratified random sampling was used for buyers/borrowers and mortgage officers. Because the two categories were considered to hold unique opinions and required special attention which would greatly inform the study. In each of the strata, a representative sample was selected using simple random sampling. A list of names and contacts of buyers/borrowers and mortgage officers was obtained from the target banks. These were then used as sampling frames.
2.7 Data Analysis Techniques Both qualitative and quantitative data analysis techniques were employed for the analysis of data for the study. The qualitative techniques were used for qualitative data while quantitative techniques where used for quantitative data.
2.7.1 Quantitative Approach Data preparation was done by checking, coding and categorizing the data. All this exercise was done in view of assembling or reconstructing the data into a meaningful fashion (Jorgensen, 1989). Analysis of data was done through statistical testing using Statistical Package for Social Sciences (SPSS®) Version 17. Presentation and display of data was by use of tables, pie charts and bar graphs.
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2.7.2 Qualitative Approach Since most of the qualitative data was from interviews, transcribing the interviews into text was done as a form of data preparation. Coding and categorization of the data was done for analysis and finally written interpretation of the findings was made as a form of presentation and display of data of its qualitative nature. However some of the qualitative data in the questionnaires was converted to quantitative data using a likert scale.
2.8 Property Rights Modelling Modelling the real property register was done using Unified Modelling Language (UML). Before the conceptual model was developed, the content of the current property register and the needs of the actors in the property and credit market were established. These helped in establishing the gaps in the information content of the current property register. It is from these gaps that an improved content of the register was modelled as shown in Figure 2‐1.
Information content of Information needs of the property register actors
‐ Documents and ‐ Documents and records records ‐ Questionnaire ‐ Questionnaire ‐ Site visits and ‐ Interviews Observations ‐ Interviews
Conceptual Modelling using UML
Improved Model of the property register
Figure 2‐1: Modelling of the Property Register
2.9 Validity and Reliability Validity and reliability were checked by; triangulation were by different methods (observations, questionnaires and interviews) where used to collect the same data, during the interviews and questionnaires same questions were asked in different ways, also questions with the same answers were dropped in the questionnaires and checks were done by sorting the data that was collected. 19
2.10 Ethical Consideration According to the normal code of ethics of social researchers, information collected will not be made publicly available without consent (Denscombe, 1998). Land being a sensitive issue in Uganda, respondents were reassured on this point. It was indicated in the cover letter (See APPENDIX I) that the information that was being provided was to remain confidential and would be used for the purpose of the PhD study only. Ethical considerations like privacy and secrecy were to be respected and maintained where necessary. All authors of publications and other materials used in the due course of the study and write up of this thesis have been credited and acknowledged through the citations and references. Also the individuals who participated in the study where informed about the purpose of the study before any data was collected from them.
2.11 Challenges met During Data Collection i. No records of past buyers/borrowers‐ initially the study had targeted individuals who obtained mortgages since the year 2000 so that the response was wide spread between those who acquired and finished paying off the mortgage before LIS and those during the new LIS. However this was not possible as the banks do not keep good records of those who have finished paying the loans. When one services the loan, they are deleted off the system. So most of our respondents were individuals who were still servicing the mortgage ii. Respondents were not willing to give out information‐ buyers/borrowers were hesitant on giving information because they thought the banks had other motives behind. Most respondents thought the bank was using this information to track those who have failed to pay up the mortgages or those who have defaulted on monthly payments. Some buyers/borrowers who were contacted refused to be part of the respondents. However the respondents were made to understand that the questionnaires were for study purposes and not to be used against them by the bank. iii. The banks were hesitant to give information about buyers/borrowers. The banks were finding it hard to give information concerning mortgages more so their clients. It took them some time to be able to give a list of names of buyers/borrowers and their contact information. On the other hand it was easy for them to give us information on the mortgage officers. iv. Location of buyers/borrowers: some individual buyers/borrowers were hard to locate and reach but most of them were reached.
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2.12 Concluding Remarks The methods of data collection were dependent on the type of data to be collected and how reliable and valid they were. The above methods were found to be the most appropriate in collecting the type of data that was needed for the study. The nature of the population that the information was being obtained from also played a role in determining the methods. For the first specific objective (To determine information needs of actors in the property and credit market of Uganda), interviews, questionnaires, documents and records were used as data collecting methods while field visits, observations, interviews, documents and records were used for the second specific objective (To evaluate the impact of information content of the current real property register on the property and credit market in Uganda). The last objective (To describe a model of a real property register that supports the property and credit markets based on the information needs of the actors in the respective markets) was attained from a combination of all the methods. The study was mainly qualitative in nature however in the analysis a combination of both was done.
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CHAPTER THREE
3. LAND TENURE AND PROPERTY RIGHTS
3.1 Introduction Land is an important resource to all human activities; it is considered to be limited in nature, unmovable and permanent (Doebele, 1987). Toulmin and Quan (2000a: 1‐2) as cited by Ubink (2008) points out that, in African economies land is of great importance as food, income, employment, export earnings as well as social value and symbolic and ritual associations are generated from it. It is a resource of which life on earth will not continue to exist in its absence (UNECE, 1996). It is a basic element to every country since all activities of man take place on it. Land tenure and property rights exist concurrently because property rights are a component of land tenure, however there exists a distinction between the two. It can be observed that land tenure can never be discussed without talking about property rights.
3.2 Land Tenure Systems
3.2.1 Definition of Land Tenure Land tenure defines a system in which individuals or a group, can access land or property, stay with it or even use it and later depose it off. Various definitions have been given by different scholars (FAO, 2002; Nkwae, 2006; Payne, 2004; USAID, 2013) to define land tenure. Land tenure according to FAO (2002) “Is the relationship, whether legally or customarily defined, among people, as individuals or groups, with respect to land. (For convenience, “land” is used here to include other natural resources such as water and trees.) Land tenure is an institution, i.e. rules invented by societies to regulate behaviour. Rules of tenure define how property rights to land are to be allocated within societies. They define how access is granted to rights to use, control, and transfer land, as well as associated responsibilities and restraints. In simple terms, land tenure systems determine who can use what resources for how long, and under what conditions.” According to Garvelink (2012), land tenure can be defined as a set of rules which determine how societies use, posses, leverage, sell or dispose off land. Land tenure is a derivative of the concept of natural resource tenure, which in essence refers to the terms and conditions under which natural resources are held and used (Bruce 1986; Moyo, 1995; Shivji et al., 1998). The concept of ‘tenure’ is a social component
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that defines the bond between individuals and groups in terms of the rights and obligations they have to control and use of land (ECA, 2004) From the above definitions of land tenure, it can be pointed out that land tenure is the relationship between man and land. It defines how land can be used by the different parties who have interests in it. In other words, it gives a guideline of the different rights that can exist in a particular piece of land and how the rights are executed. The guidelines are normally established by the state or customs while the rights may accrue to individuals, families, communities, or organizations. It is also seen that land tenure systems regulate who uses land, for what duration of time and under what terms and condition. A land tenure system is said to be sustainable if it shows the actual relationship between the different parties who have interest in a particular land (FAO, 2002; UNECA, 2003). Stronger land tenure security does not only ease access of land, improve land productivity and promote investments in land (Besley, 1995; Deininger & Ayalew, 2008) but it also reduces poverty levels as the poor and landless have the opportunity to easily access land to improve on their livelihood (Deininger, 2003, 2005; Finan, Sadoulet, & de Janvry, 2005). Land tenure in most of the African countries consists of both customary and statutory systems operating together, thus a country having both customary and statutory law concerning land in place. In some other African countries, the operation in parallel of the customary and the statutory tenure system has led to a hybrid tenure system for example mailo tenure in Uganda. According to FAO (2002) land tenure can be classified as formal or informal. Formal tenure is that which is recognized by statutory law while the informal is the tenure that is not recognized by the law. The UN‐Habitat classification identifies tenure in categories of formal, irregular and homeless (Payne, 2004). However it should be noted that it is hard to distinguish formality and informality unless Standard parameters of measurement are set. In Uganda, the Constitution and the Land Act have classified land tenure regimes in terms of the law and the duration the rights are held. Land classified by law makes land rights either informal (customary) or formal/statutory (leasehold, freehold and mailo). The category based on duration is that the rights are timeless bound/absolute (customary, freehold and mailo) or time bound (leasehold). However the NLP categorizes the land tenure regimes into private, government and public, basing on the manner or purpose of which such land is held. But there seems to be no clear explanation of what is government or public land in the Uganda land laws. The NLP has tried to differentiate the two by stating that
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“Government land shall be land vested in or occupied by the government in accordance with the constitution or acquired by the government abroad…Public land shall be land reserved or held and used for public purpose which included public open space and land on which public infrastructure is located…” ("National Land Policy," 2013) However, the classification of land being public and government could as well be fitted in classification of duration or by law. Under duration they would be considered timeless bound while under law they would be considered statutory or formal.
3.2.2 Land Tenure Categories in Uganda Article 237 of the Constitution of Uganda states that, land belongs to the people3 and it will be held according to the land tenure systems as defined in the Constitution. Property rights in Uganda are affected by the existence of a multiplicity of systems that variously prescribe the manner in which land can be acquired, utilized or disposed off. The Ugandan constitution of 1995 prescribes four land tenure systems as customary, freehold, leasehold and Mailo. Apart from the customary tenure, which was only legally recognized in 1995, the other three have been in existence since the colonial era. According to National Land Policy of Uganda, land tenure will be categorized in terms of the manner and the purpose of which land is help. This will be as private, public and government as explained below. i. Private Land This is land that is held and owned by private individuals and non‐government legal entities. These include the following:
‐ Customary Is a system of land ownership based on customary rules formed from norms and cultures of clans, families or communities of which these rules are applicable to. Since many customary rights are not documented in any accessible manner, it has presented issues during attempts to formalize customary tenure. It has also consequently affected transactions on customary land hence limiting the property market. Customary tenure currently covers approximately 68.6% of Uganda (MoLHUD, 2010) and is spread all over the country. Most of it is found in the Eastern and Northern parts of the country, with some traces found in parts of Western Uganda. Customary landholders do not have or own land titles but can
3 By the word “people” it is meant citizens. 24
obtain a Certificate of Customary Ownership (CCO) and a freehold title obtained if the land is converted to freehold tenure. Rights to control, use and ownership of customary land are derived from being a member of a clan, family, tribe or a given community. Membership is retained by fulfilling certain obligations in accordance to the clan, family tribe or community one is affiliated to. The system does not rely on the exercise of force, nor on the evidence of rights guaranteed by statute, but on the fact that they are recognized as legitimate by the community, enforced in the customary courts, or even merely by social pressure and generally known though not normally recorded in writing (Ahene, 2009). In Uganda today, two general customary systems can be distinguished4: The communal land system where land is owned by the community and user rights are guaranteed for farming, seasonal grazing, access to water, pasture, burial grounds, firewood gathering, and other community activities and; Individual/family or clan customary tenure where the family and clan has control over land. Generalization can be made about principles of customary land basing on Yudelman (1964) assumptions: There is no private ownership of land; security of tenure is guaranteed as long as the laws and customs are obeyed; and every member is guaranteed the right to the use of land. Most literature (East African Royal Commission, 1955; Kiapi, 1975; Makubuya, 1981) to mention but a few, have pointed out that customary land tenure system is a hindrance to development. This conclusion is drawn on the basis that customary land is collectively owned, misused and decisions made are based on collective basis rather than individual. Nsamba‐ Gayiiya (1999) says that people are only ignorant about customary land tenure to regard it as being informal and communal. However, there have been changes in customary land holding under which the above arguments are inaccurate and may not hold. There have been various forms of transactions taking place on customary land (Bruce & Dorner, 1982; Feldman, 1974; Ike, 1977). According to Busingye (2002), customary land in Uganda today is tending to individualization as sales of such lands is rampant. In many ethnic groups, before a sale was made in the past, clan members and family had to be consulted first. However this is not the case anymore, as sales of customary land held by a father who is the leader of the family are made without any consultations. The clan, family members and friends are only witnesses to the sale agreement. This has made such type of customary land become individualized and having a freehold nature.
4 This description of contemporary customary tenure is based on Busingye (2002). 25
The Land Act 1998 of Uganda mandates that a CCO may be acquired by customary landholders on former public land regardless of how the land is held (family, community, association or individual) and that these same landholders may convert the land to freehold tenure. With these provisions, individuals can get ownership rights out of customary land and that with time customary land tenure may be no more since people are interested in having freehold rights as compared to customary rights. However, studies show that since the adoption of the Land Act in 1998, very few people have applied for the CCO. This could be attributed to; firstly, the high levels of illiteracy and ignorance amongst the customary land holders; secondly, since most people who own land under this tenure system are peasants, they may not be able to afford the fees and costs involved. The conversion procedure is bound to be complicated and confusing, as public education around the Land Act has largely been ineffective (Okuku, 2006). ‐ Freehold Freehold is the land tenure that grants the least limitation on right of ownership which is the greatest interest in land for an indefinite period of time. In Uganda, freehold was based on the English fee‐simple. It is located predominantly in the Western and Eastern parts of Uganda, although some parcels exist in the Central region. This type of tenure is the most preferred mode of holding land in Uganda because it is assumed that it provides increased tenure security being that there are full ownership rights of use, exclusion and alienation. The root of this tenure system is traced way back in 1900 when the Buganda kingdom signed an agreement with the British government. Freehold land title is issued to the owner of this type of land and the portion of land under this type of tenure is very small as compared to the other land tenure systems. The current land law allows for conversion from customary land to freehold, hence indirectly demonstrating the superiority of the freehold tenure. ‐ Mailo Mailo land tenure means the holding of registered land in perpetuity subject to statutory qualifications. Mailo tenure is a hybrid system of the traditional customary and the modern freehold system. Its roots are traced way back in 1900 when the British colonialists tried to extend colonial rule to Uganda. Under the mailo system, the registered owner’s interests co‐exist with the interests of un‐ registered occupiers (locally known as kibanja or bibanja holders) 5 hence creating
5 “Kibanja” (plural: bibanja) holders or owners are tenants on land by occupancy who could be bonafide or lawful occupiers. 26
overlapping interests on the same piece of land. This type of tenure is predominant in the central region of the country (Buganda) and some parts of Bunyoro in western Uganda. Mailo land tenure can be said to be freehold but different in such a way that mailo is subject to customary and statutory rights of lawful or bonafide occupants of the land6 (Mugambwa, 2000). It can be said to be a hybrid system of the traditional customary and the modern freehold system. It is also one tenure system that permits the separation of ownership of land from the developments on the land made by a lawful and bonafide occupant of land (Land Act, 1998). In other words it has some characteristics of freehold and others of customary. According to Mabogunje (1992) mailo land tenure system is considered to be an officially adoptive system. One problem associated with this tenure is that the land lord cannot make decision on land without consulting the tenant by occupancy (kibanja holder). According to Section 4 of the Land Act, the mailo land owner holds the land in perpetuity and has all the powers of a freeholder but on the other hand the land is subject to customary and statutory rights of lawful or bona fide occupants. According to (Coldham, 2000) this shows severe restrictions of the powers of a mailo land owner. It also sends a signal that full ownership rights of a land owner are being interfered with, which is contrary to the constitution about land ownership (Nsamba‐Gayiiya, 1999). The legal recognition of dual interests in land under the mailo tenure where by either parties (the owner and the tenant by occupancy) cannot make decision on land without consulting the other, has affected the property market in Uganda. This problem between land lord and tenant (tenant by occupancy) is so intense that political and legal land reform efforts such as the Land Reform Decree of 1975, The Constitution of 1995, the Land Act of 1998 and the Land Policy of 2012 have attempted to address the issue of dual interests on mailo land, with limited success. The Land Act has been amended twice since 1998 and each time, the amendment was intended to streamline some aspects of the mailo tenure system to ensure the two parties live in harmony without having a sore relationship leading to massive evictions. As proof of ownership, the owner of mailo land is issued a certificate of title while the occupant is given a Certificate of Occupancy (CO).
6 Detail explanation of a bonafide and lawful occupant of land can be got in the Land Act of Uganda, 1998 section 29. 27
‐ Leasehold Leasehold can be defined as holding land for a known time frame based on conditions in an agreement between the registered owner and the tenant. Leasehold tenure is mostly evident on public land of which they are granted by the District Land Boards (DLB) and Uganda Land Commission on behalf of Government (ULC). It can also be granted on customary, mailo and freehold. There are two types of leases, namely private and statutory. Private leases are those granted by virtue of a private agreement between the landowner (lessor) and another person (lessee), while statutory leases are those that were by statute granted to the controlling authorities especially in urban area due to the Land law reforms of the 1970s. A lease granted for 3 or more years is entitled to a certificate of title. According to the Land Act 1998, non‐citizens of Uganda can acquire leases on land for a period not exceeding 99 years but not hold land as freehold and mailo. Private leases can be converted to freehold with the consent of the land owners while for the official leases, any lease that was granted to a Ugandan citizen out of former public lands7 might be converted into a freehold according to the Land Act 1998. Table 3‐1 summarizes the land tenure systems in Uganda. ii. Public land According to the NLP (2013), ”the state shall define public land as land reserved or held and used for a public purpose including public open spaces, public infrastructure and land with reversionary interest held by the DLB under section 59 (8) of the Land Act”. Public land is land held by the state on behalf of the citizens and is used for public purpose. It is either vested in or acquired by the government on behalf of the citizens. Private land acquired by government does not necessarily loose former tenure but becomes public land only by virtue of ownership and purpose. Though the land law reforms of the 1970s converted most of the land into public land, most of the former public land was alienated through the grant of leases, allowing customary settlements thereon and conversions of the same into freeholds. The land that was not alienated is still public land and Government may acquire more land from individuals, for public purpose hence public land. ULC and the District land Boards are the custodians of public land. The current Land Act (1998) of Uganda contains provisions that allow occupants who hold leases to convert to freehold tenure. According to section 28 of the Land Act (1998), ”Any lease which was granted to a Ugandan citizen out of former public land and was subsisting on the coming into force of this Act may be
7 These are leases which were granted by a former controlling authority (either ULC or any statutory body such as the urban council) and had been current when the Land Act came into effect in 1998. 28
converted into freehold if the board is satisfied that the following conditions have been complied with—that the leasehold is authentic and genuine; that there were no customary tenants on the land at the time of acquisition of the lease; that if there were any customary tenants on the land at the time of acquisition whose tenancy was disclosed, those tenants were duly compensated;...... ” However with this provision, there still exist some public lands that are not yet converted to freehold. Public land is mostly allocated to private investors in form of leases. Before the coming of the constitution of Uganda in 1995, public land was regarded as a land tenure system. However, with the coming of the constitution, public land is not a land tenure as customary settlers and leaseholders on former public land were given the madate to convert their land to freehold system. iii. Government land According to the NLP (2013), ”the state shall define Government Land as land vested in or acquired by the government in accordance with the constitution; or acquired by the government abroad; or land lawfully held, occupied and/or used by government and its agencies for the purpose of carrying out the functions of government”. This is land owned by the state of which freehold land titles are issued in the names of ULC. Government land includes land which is owned by government ministries, departments and agencies. Therefore even if there are 3 categories of land tenure regimes in Ugandanamely private, public and government that are classified in the NLP, it can be observed that there are four land tenure systems mainly freehold, customary, mailo and leasehold. Private, public and government land could be on either freehold, customary, mailo or leasehold tenure. Table 3‐1 shows the geographical incidence and distribution of the different land tenure systems that are recognized in Uganda.
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Table 3‐1: Land tenure systems in Uganda Tenure Key features Geographical Availability of area Incidence by percentage Customary “Traditional” land tenure, varying in Country wide but 68.6% different areas. More individualized predominant in in South and West, more communal North, North East in North and East. and West Nile. Freehold Registered ownership in perpetuity. Predominantly in 18.6% Freehold title issued. South and West. Mailo Limited form of freehold which Central rand Mid‐ 9.2% recognizes both tenants’ and Western regions landlord rights. Mailo title issued. Leasehold 49 or 99 year leases, with Country wide, 3.6% development conditions, Ground especially in rent and premium payable, urban areas. Leasehold title issued. Source: Information in the table was generated by the author from LSSP (2001‐2011) and MoLHUD (2010) In Table 3‐1, customary land is dominant with 68.6% followed by freehold, mailo and leasehold with 18.6%, 9.2% and 3.6% respectively. Land is held under those tenures either as private land by individuals for their own private purposes or as public land by the state in trust for the people for public purpose. Leases are more evident on alienated public land especially in urban areas, also ownerships by foreigners automatically convert into leases and customary tenure is more common unalienated public land, mailo land is mostly private save for instances of compulsory acquisition by government, freehold tenure grants are common on formerly public land upon conversion of customary tenure or transfers by government. Although most of the unregistered land is categoried as customary in the table, some of it is unalienated public land to which no tenure has been established especially for land vested in the government under the constitution and public land arising from the Land Reform Decree of the 1970s. Leases on private land (customary, freehold and mailo) are not reflected in Table 3‐1 and that is why the total of the land tenures is 100%. But if the leases on private land are included then the percentage on leasehold shown in Table 3‐1 would be more than 3.6% thus making the total availability of area by percentage more than 100%.
3.3 Property Rights to Land
3.3.1 Context and Meaning of Property Rights A right can be defined as “a claim that is legally and socially recognized and enforceable by an external legitimized authority, be it a village‐level institution or some higher level judicial or executive body of the State” (Agarwal, 1994). Meinzen‐Dick, et al (1997) citing Besley, (1995); Place and Hazell, (1993) observes that secure property rights in land culminates to higher productivity and efficient 30
use of the land as it encourages investments. This is because entrepreneurs will not invest if they do not expect to keep the fruits of their investment (Johnson, McMillan, & Woodruff, 2002). With insecure rights, there is fear that both the property or asset of investment and the returns generated from the investment will be lost without fair compensation being paid (Milgrom & Roberts, 1992). Therefore, secure land tenure and property rights is one of the contributors of economic development to any country. However, it should be noted that unless property rights is combined with other important aspects like a good, efficient land and trustworthy administration and legal systems, tenure security may be hard to achieve since property rights alone have a minimal impact on tenure security (Garvelink, 2012) According to Payne (2004), property rights is what one is permitted to use such land for. Property rights can better be defined in simple terms as the relationship between a person regarding the use and something which in this case is land. Like land tenure, different scholars have attempted to define property rights in various ways. According to Schlager and Ostrom (1992) citing Commons (1968), a property right is power to perform certain actions related to a particular territory (in this case land or property). Libecap (1989) defines property rights in terms of social institutions that set the boundaries for entitlements persons have to a particular piece of land or water. A right will determine how an individual or persons will use the land resource. Property rights can be seen to mean institutions and arrangements which could be informal or formal that control, influence, or regulate access to land, the rights people hold on the land and the benefits (Bromley, 1997; McElfish, 1994) For property rights to be well defined there should be rules or laws and customs or traditions to control and govern the operation and existence of rights (Agrawal & Ostrom, 2001; Schlager & Ostrom, 1992; Snare, 1972). This is because where there are no rules, property wouldn’t exist instead there would be persons and things (Snare, 1972). The rights and duties held are enclosed in the rules and norms which define what is accepted and enforced by an institution which in most cases is an authority. Every individual will know how the property should be used, who to use the property and what violation of property rights will lead to (Bromley, 1991; Meinzen‐Dick & Gregorio, 2004; Wiebe & Meinzen‐Dick, 1998). Well defined property rights and institutions in land are a prerequisite for proper land management. When land rights are well laid out, there is sustainable management on land which culminates to improved welfare of individuals and economic growth of a nation.
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3.3.2 Bundles of Property Rights and Regimes A bundle of right concepts is used to describe the different rights and interests that exist in property ownership. Some researchers have linked a bundle of rights concept to a bundle of sticks were each stick represents a right in land or property that the owner holds (Meyer, 2013; Simpson, 1976). The actions taken on a property will determine what amount of rights is needed to be transferred. For example in a case of sell or inheritance, then all the bundles of rights that exist in ownership of the property or land will be transferred to the buyer or the person inheriting. And in case of a lease, only a part of rights most especially use rights will be transferred to the lessee and the owner of the property will remain with some rights. “People often think about property rights in a narrow sense as ownership—the right to completely and exclusively control a resource. But property rights are better understood as overlapping “bundles” of rights” (Meinzen‐Dick & Gregorio, 2004). Property rights should be viewed as a “bundle of rights” which guides the way land is acquired, and used. A property can be associated with one or more rights as many people who could be individuals or a group can have different property rights in the same property or resource. This can be well explained in the example Alchian and Demsetz (1973) give, that one party may own the right to till the land, while another party perhaps the state may own an easement on the same land to traverse or otherwise use the land for specific purposes. According to Simpson (1976), each stick in the bundle differs from time to time in terms of the numbers (number of rights), thickness (size or quantum of each right) and length (duration of each right) with the owner of the land being the one who has the right to distribute the sticks. Property rights regime explain how different rights in a property are arranged (Ekbäck, 2009). They are authority systems that show the rules of use of various natural resources and they possess a feature due to the fact of collective knowledge regarding what is scarce and what is valuable thus rights being possibly and certainly worth protecting (Bromley, 1992). Three to four property rights regimes have been identified by various scholars (Alchian & Demsetz, 1973; Bromley, 1992; Clarke & Kohler, 2005; Demsetz, 1967; FAO, 2002) and they are: Private property which is held by an individual who could be a natural or legal person; Common property usually held as a collective property by a group of people who make decisions collectively. Members of the group have the right to access and use the property as well as exclude non‐members; Public/state property held and regulated by the state; and Open access property which is commonly referred to as nobody’s property with every one having access and use to the property as
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there are no rights defined to make exclusion possible. Apart from the four systems above, there exists hybrid systems such as co‐ownership or joint ownership of which one would wonder where they belong. According to Ekbäck (2009) these will fall either in common property if ownership is dependent on group membership or private property if the condition does not hold. It is important for one to think beyond ownership if different rights to land held by people and the restrictions and rules on land are to be understood since an individual or institution rarely holds full ownership but holds bundles of rights (Bomuhangi, Doss, & Meinzen‐Dick, 2011). Rights exist in various forms for any given piece of land or property8 but the various forms can be categorized in such a way that they are easily combined and also broken down for a range of purposes into: a use right which is the right to enter (access) a property and pick (withdraw) something from it for some economic benefit; transfer rights include the right to having property change hands from one individual or group to another. It encompasses the alienation which includes right to sell, inherit, rent, lease, mortgage etc; and control or possession rights which is about management and exclusion of the property (FAO, 2002; Guerin, 2003; Meinzen‐Dick & Gregorio, 2004). However, Ekbäck (2011) adds one fundamental right which is the right to the value of a property. These rights can be vested in a person or a group depending on the property regime at hand. It should also be noted that whereas these rights exist and can be exercised by particular individuals in one property regime, it may not be the case in the other regime (See Table 3‐3). According to Ostrom & Schlager (1996), there are five types of positions (right holders) that exercise the above mentioned rights as shown in Table 3‐2. The positions are owner, proprietor, claimant, authorized user and authorized entrant. The owner holds the full bundles of rights (access, withdrawal, management, exclusion and alienation) meaning that he has the power as if it was his own private property. Proprietors have the full bundle of rights minus the alienation right. Claimants have access, withdrawal and management rights while authorized users boost of access and withdrawal rights. The authorized entrant has the smallest number of rights which is the access right only.
8 Various examples of land and property rights are listed and can be viewed from FAO (2002,pg 10). 33
Table 3‐2: Bundles of property rights associated with positions. Owner Proprietor Claimant Authorized Authorized user entrant Access rights + + + + + Withdrawal rights + + + + Management rights + + + Exclusion rights + + Alienation rights + Source: Ostrom & Schlager (1996) Although Ostrom & Schlager (1996) used the above concept to analyze common property regimes, the concept is equally applicable for the analysis of other types of property regimes and land tenure (Bomuhangi et al., 2011; Crewett, Bogale, & Korf, 2008). This was further elaborated by Guerin (2003) in Table 3‐3 who attempted to analyze the different types of property basing on the Ostrom & Schlager’s bundle of right concept. Nsamba‐Gayiiya (1999) also observes that land tenure can be viewed in a perspective of “a bundle of rights”. Also bundles of rights can be found in any tenure regime (Lastarria‐Cornhiel, 2002). It is therefore from this basis that the changing land tenure systems in Uganda are being explained in reference to the bundle of rights they have.
Table 3‐3: Private, common, public and open access property Owner Example Access Withdrawal Management Exclusion Private Private Fee simple Controlled by By owner By owner By owner title to land owner Common Group Common land Controlled by By joint By joint By joint joint owners. owners owners owners Public State National park Controlled by None By state By state state Open access No one Ocean fishery Uncontrolled Uncontrolled None None Source: Guerin (2003) Land rights manifest themselves in form of ownership or of usufruct rights (Agarwal, 1994). Ownership rights can be said to be primary rights while usufruct rights are considered to be secondary rights. Secondary rights are those which are exercised alongside ownership rights.
3.4 Property Rights in Uganda Real Property rights relating to land in Uganda can be identified as below.
3.4.1 Ownership Rights Ownership rights are rights held by the owner of real property. The owner could be a natural/legal person or a corporate entity which could be a company. The owner has full ownership rights and duties to execute transfers, use and possession. Ownership of land in Uganda is defined under the Constitution 1995 and Land Act
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1998 in form of the land tenure system. The land tenures are freehold, leasehold, mailo and customary for private individuals and public for government. Apart from leasehold, the other rights form primary rights which are primarily exercised by the owner.
3.4.2 Leasehold rights Leasehold can be defined as holding land for a known time frame based on conditions in an agreement between the registered owner and the tenant. Leasehold tenure is mostly evident on public land of which they are granted by the District Land Boards (DLB) and Uganda Land Commission on behalf of Government (ULC). It can also be granted on customary, mailo and freehold.
3.4.3 Occupancy Rights With occupancy rights one is deemed to have the rights when they are staying on land that belongs to someone else who is a registered user and owner as a bonafide or lawful occupant. Occupancy rights are those rights people staying on the land have other than the land owner. According to the Land Act of Uganda 1998, occupancy rights are registrable and can be transferred in form of inheritance, sell, sublet or pledge as long as there is consent from the registered owner of the land. When occupancy is registered, a Certificate of Occupancy (CO) is issued. The CO shows proof of holding land as an occupant and protects the occupant from evictions.
3.4.4 Security Rights An example of a security right is a mortgage and a lien. They are both encumbrances on real property but different in such a way that a mortgage can be considered a sort of a lien. A lien is when a property is pledge to fulfill an obligation which could be loan or any debt, tax amongst others while mortgage is a pledge of property to fulfill a loan. A mortgage according to the Mortgage Act (2009) “Includes any charge or lien over land or any estate or interest in land in Uganda for securing the payment of an existing or future or a contingent debt or other money or money’s worth or the performance of an obligation and includes a second or subsequent mortgage, a third party mortgage and a sub mortgage” The owner of the land (mortgagor) normally grants the land to the bank (mortgagee) to act as security and incase the owner of the land fails to meet the claim then the land is sold to cover up for the claim and expenses. The Mortgage
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Act also points out that a person on any land tenure may mortgage their interest in the land.
3.4.5 Easements This is also considered to be a secondary right where people are granted certain rights over another individual’s land without possessing it. Easements are very important in the day to day running of the society because there is a need to guarantee certain rights of access on another individual’s property be it in a private or customary setting. For example in places where water sources and foot path are shared. Easements are granted for the benefit of a property in Uganda.
3.5 Changing Face of Land Tenure in Uganda from Before Colonialists to Date: Bundles of property rights approach Uganda as a country has gone through various land tenure reforms since the colonial era to date. As land tenure reforms were taking place, property rights were being transformed. These series of land tenure reforms have always led to a new relationship between owners and users of the land. According to Batty (2005), land reform involves the changing of rules, regulations, customs and laws regarding land ownership. It is normally government initiated with the aim of improving the use and possession of land. They are of two types: The redistributive reform, which changes the patterns of land distribution and occupation; and the land tenure reform which changes the tenure relations between land owners and users without necessarily altering the land distribution. For the case of Uganda, only the latter has been applicable. The main objective of the various land tenure reforms in Uganda was to unite people and to integrate all their property into a unified legal system that is accessible to all the citizens of the country (Batungi, 2010). From the discussion below about the changing land tenure and property rights system, it will be noted that not at any time did a reform result into a single tenure system, instead various land tenure systems have emerged. The discussion will analyse the different bundle of rights that exist(ed) in each tenure reform.
3.5.1 Pre‐colonial Property Rights Systems for the Period before 1900 Before 1900, the only land tenure system available was a customary like tenure in the entire country. All literature indicates that customary land tenure was predominant in all the regions of the country. There were three broad customary
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land tenure systems (Mugambwa, 2000): Communal or tribal9, clan tenure10 and the nomadic tenure11. Customary rules governed access and usage of land. The organization of the different communities differed due to variations in customs and norms. It differed by way of organisation and operation. Common to all systems was the fact that land was held in allodial title whereby the land was independent of any superior land lord and vested in the community as a corporate entity. But in areas where the kingdoms were very strong e.g in Buganda, the kingdom/king was a superior landlord with big junks of land. Every person and household had the right to access land but land was only transferred through inheritance and no other means (Lastarria‐Cornhiel, 2003). In 1899 when Sir Harry Johnston arrived in Uganda, the land tenure system in Buganda had started changing since Buganda kingdom had established a government operating on a semi‐feudal system (Batungi, 2010). Even with the changing tenure system, the land still belonged to the community (James, 1971) and it was only the Kabaka who was allowed to deposit off land. The predominantly customary tenure had evolved into: Rights of the Kabaka12 to grant land to chiefs who were occupying political offices as a reward for the political service being rendered. The estates were known as “Obutongole”. According to West (1965), the chiefs who were in charge of “obutongole” estates ‘owned’ the peasants who occupied those estates but not the land itself. This was because they could only get free labour and tributes inform of food crops from the peasants but inheritance and transferability of the estates was impossible as they were politically attached. Rights of clans over land which was only occupied by clan members. It was known as “obutaka”. According to Mukwaya (1953), the clan’s claim to estates was either they had stayed on the estates undisturbed for more than one generation or the estates were granted to the clan by the king. The land could only be transferred through inheritance and not other forms of alienation like selling and mortgaging. This showed that these kinds of estates only had productivity value as clan heads got tribute and rent from the occupiers of the
9 The ownership of land was vested in the ruler as owner or trustee of the land for members of the tribe. This tenure system was prevalent in Buganda, Bunyoro, Toro and Ankole. 10 This was common in Acholi and Kigezi. Here tenure ownership was according to clan or as opposed to tribe. Within the clan and tribal umbrella, specific individual of family rights were recognized to fields, agriculture products and homesteads. 11 Grazing rights were vested in the entire members of the tribe with no specific rights vested in individuals. This is mainly found in the Karamoja region. 12 Kabaka means King. 37
land but had no monetary value as it could never be sold, leased or even mortgaged (James 1971). Individual hereditary rights which were granted to any individual by the Kabaka inform of private estates known as “obwesengeze”. Since the estates granted were private and permanent property, the grantees had the full bundle of rights of access, transfer and control. The estates were inheritable and alienable. Rights of peasants which constituted occupancy and use rights on the above three types of estates were known as “Kibanja13”. According to Batungi and Rüther (2008), the peasants were obliged to give free labour, tribute of beer, and food crops to the head of the estate they were staying on as well as military service if they were to remain in possession of their land (Kibanja). Thus the peasants had no full ownership rights. In the rest of the country, each community had varied customary practices. In the semi‐arid regions of the country, where it was a common practice to move animals from one grazing ground to another basing on the season of availability of water and pasture, access to land was based on agreements between the different parties (who could be clan heads, households, etc) involved (Lastarria‐Cornhiel, 2003). Whatever the case in which the different ethnic groups were organised and operated, there was one clear aspect of no individual ownership of land. Use rights rather than ownership rights existed for different individuals in the communities with ownership rights vested in the clan, family and communities. Table 3‐4 shows the land arrangements that existed in the pre‐colonial era with their associated bundles of rights.
Table 3‐4: Bundle of rights associated with land before 1900 Bundle of rights Land in Buganda Other parts of Uganda Obutongole Obutaka Obwesengeze Kibanja Customary Use Rights Access Y14 Y Y Y Y Withdrawal Y Y Y Y Y Control Management Y Y Y Y Y Rights Exclusion Y Y Y N 15 Y Transfer Alienation N ‐16 Y ‐ ‐ Rights Type of User Proprietor unclear Owner unclear unclear
13 Kibanja was land held by peasants who were occupants or had occupancy rights. 14 Y means Yes the rights exist, 15 N means No the rights do not hold; and 16 ‐ means partial rights exist. 38
Apart from “Obwesengeze” where there existed full ownership, the rest did not. Obutongole being political offices, there was no right to transfer of any form as one only held the land as long as they occupied the office. As much as the Obutaka and customary lands had the use and control rights, alienation was only partial as only inheritance was allowed and not other forms of transfer like sale, mortgaging and leasing. On top of not having exclusion rights, the Kibanja holder also could not sale, mortgage and lease, but inheritance was allowed thus partial rights of transfer. In the other parts of the country were customary land existed, there were full use rights but alienation was restricted to inheritance.
3.5.2 Emergent Property Rights Systems in the Colonial Period When Sir Harry Johnston came to Uganda, he had special instructions from the Queen of England to grant freehold estates which were the largest estates in Britain (to the Kabaka/King, regents and principal chiefs), gain rights over unused and unoccupied lands for the crown and establish boards of trustees which would administer and protect peasants in rent‐free rights to the land they occupied (West, 1965). To achieve this, the British signed agreements with different kingdoms causing a transition from customary to other systems of land holding. The first agreement which was a negotiation between the British and Buganda kingdom was signed in 1900. At that time, the kingdom had attained a semi‐feudal system with a firm government which was organised and powerful in all the African dependences and this made the reason for the British to enter into agreement first (West, 1972). The British knew that if the strongest territory would fall to their demand, so would the rest considering the fact that they were weaker. The agreement known as Buganda agreement resulted into the redistribution and formalisation of customary land into individual ownership. Buganda’s land was designated as being 19,600 square miles17. The agreement no doubt transformed the relations of rights on land as land lords acquired full ownership rights as land could privately be owned while peasants attained occupancy rights on land. The agreement resulted into crown and mailo18 land. Crown land was administered by the government on behalf of the British and government had the mandate to alienate this type of land under freehold or
17 The 19,600 square mile was apportioned in such a way that the King/Kabaka of Buganda got 958 square miles, 8,000 square miles was distributed equally amongst 1,000 chiefs and private land owners and the rest was crown land vested in the colonial government (West, 1972). 18 The term ‘Mailo’ is a “Luganda” language corruption of the English word ‘mile’ derived from the fact that in the new system, the land allocations were expressed in multiples or fractions of square miles (Batungi & Rüther, 2008). 39
leasehold grants (Deininger & Ayalew, 2008). Customary land owners who lived on land that was converted to crown land became tenants at sufferance or illegal tenants who only had use rights and were prone to evictions as freehold and leaseholds could be granted having occupiers on land and without asking for their permission. Mailo land was a resultant formal customary tenure which ended up as a western form of landlord/tenant system with absolute individual ownership. Mailo land was held in both private and official estates. The obutongole and obwesengeze were turned into official and private mailo estates respectively, of which they were held by the beneficiaries in absolute ownership as landlords (Mukwaya, 1953). The peasants19 who had previously settled on those estates/lands as tenants or customary usufructuary holders became tenants on private property (Lastarria‐ Cornhiel, 2003) and had to pay ground rent (busuulu) and tribute on produce (envujjo) for the crops like cotton or coffee they grew (Rugadya, 1999). Similar agreements were signed in Tooro and Ankole kingdoms. These agreements resulted into crown land which was the same concept as that in Buganda and freehold estates. The freehold estates were called native and adjudicated freehold. The word Native was used to convey the fact that the estates were specifically granted to native chiefs and adjudicated because the land was demarcated, surveyed and land titles were issued. The native freehold was the same as mailo. Leases could be granted on freehold and mailo land. Just like there existed Busuulu and Envujjo law in Buganda, Landlord and Tenant Law of 1937 and 1947 were introduced in Tooro and Ankole kingdom respectively. The provisions in the three laws were similar. Despite the fact that the three laws existed, tenants in the three kingdoms were still being oppressed and exploited by the land owners. In the other parts of Uganda20, where the tribal forms of government were not so pronounced, customary land was turned into freehold tenure without consulting the indigenous leadership (Batungi and Rüther, 2008). The historic achievement witnessed in Buganda suggests that customary leaders in areas other than Buganda might also have been able to adapt to the western forms of individual land ownership had they been exposed to a process similar to the Buganda experience. In 1922, the Crown Lands Declaration Ordinance came into place and this resulted into the conversion of all customary land outside Buganda into crown land. Freehold and leasehold titles were granted out of customary land of which the
19 Peasants were mostly cultivators. 20 The extension of British rule to other kingdoms and districts, which later comprised Uganda protectorate, started with the Buganda kingdom as the nucleus in 1894 and ended with Karamoja district in the northeast of Uganda in 1926. 40
occupiers had to move off the land or remain as tenants at will. The agreement only recognized mailo and crown land there by leaving out customary tenants. The Crown Land Ordinance of 1903 made it clear that persons occupying land under customary tenure were never regarded as owning the land (McAuslan, 2003). This was the same for the rest of the country where customary land was in existence. Okuku (2006) made two observations about land during this period; first, land could be transferred by way of sale by individuals who had no legal obligation to the king or people settled on their land. Second, land had become an investment. These observations are further confirmed by Batungi (2010) who points out that the advantages of mailo tenure system were only realized much later when peasants who had acquired enough money would also become landlords after buying out the rights of the landlords from their own bibanja at open market value. He continues that the landlords would then process formal land titles for the peasants ‘converted to landlords’ and therefore it is quite logical to say that in the Buganda kingdom, land acquired economic value with effect from 1900 when the Uganda Agreement was signed. Table 3‐5 shows the bundles of rights that existed in the colonial period.
Table 3‐5: Bundles of rights in the colonial period Bundle of rights Crown Freehold Mailo Leasehold Customary official Private Use Access Y Y Y Y Y Y Rights Withdrawal Y Y Y Y Y Y Control Management Y Y Y Y Y Y Rights Exclusion Y Y Y Y Y ‐ Transfer Alienation Y Y N Y ‐ ‐ Rights Type of User Owner Owner Proprietor Owner Unclear Unclear
From Table 3‐5, it is observed that freehold, private mailo and crown land had full bundles of rights while official mailo was inalienable. Crown land was invested in the government who had a right to transfer it more especially in form of freehold and leasehold. If a peasant who was occupying land or a leaseholder wanted to sell the land, then they needed consent from the owners before and this made the type of user not to be well defined as one is left to wonder whether they are owners, proprietors or even claimants in case of the peasants. Customary tenure as before, there was only one form of alienation which was inheritance and not through mortgage, sales, etc.
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3.5.3 Post Colonial Period When Uganda gained independence in 1962 the land tenure systems that existed before, continued to operate. Crown land was then re‐named public land under the Public Land Act of 1962. Public land is land held in trust for the citizens of Uganda by Uganda Land Commission (ULC) and the District Land Boards (DLBs). In the Public Land Act of 1962, indigenous Ugandans still had a right of occupancy over public land but leaseholds and freeholds could be granted by the government on any public land even that in occupancy by the indigenous Ugandans. This meant that even where the customary rights existed, they could be overridden by government to grant public land as leasehold and freehold as permission from the customary owners was not required. The act also recognized private mailo owners as owners in perpetuity while official mailo was vested in the Buganda Land Board (BLB). Because of the massive conversions of public land to leasehold which left customary occupiers landless as they were evicted, the Public Land Act of 1969 was enacted which stopped issuance of freehold and leasehold on any public land occupied by the customary tenants without any proof of consent from the customary occupiers. In 1975, the Land Reform Decree (LRD) was passed by then the president of the Republic of Uganda Idi Amin. The objectives of the decree were to: put in place a law which would enable the government to put in place good agricultural practices; and to solve the problems of landlord‐tenant relationship on mailo land where by although the landlord owned the land, he found it hard to invest in the land since on that same piece of land existed tenants who had occupancy rights but had no mandate to develop the land (Batungi & Rüther, 2008). The decree came with changes that altered the land tenure systems and rights that were in existence: All land was declared public on which leases could be obtained and administered by Uganda Land Commission (ULC) but vested in the state on behalf of the people; Mailo ownership converted into leasehold of 199 years and 99 years for public bodies and individual respectively while freehold interests were abolished; and customary land owners became tenants at sufferance who could be evicted anytime. The decree created a more complex situation regarding dual or overlapping interests on land (Deininger & Ayawel, 2007) that existed since the 1900 agreement. It converted all land tenures to leasehold without making any attempt to solve the existing overlapping rights problem (Baland, Gaspart, Place, & Platteau, 2007). It also meant that only two land tenures existed at that time which were leasehold and public land.
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The changes in the law meant that People were having usufruct rights on land since they only owned interests in terms of leases. Public land could be transferred in only lease form and no any other form. This decree existed in theory but was never implemented in reality because; there was resistance from the public who were not willing to take up the new changes since they were never consulted, there was lack of personnel and budgetary constraints to enable the implementation of the new reforms.
Table 3‐6: Bundles of rights in the post‐colonial period from October 1962 to October 1995 Bundle of rights Public Leasehold Use Access Y Y Rights Withdrawal Y Y Control Management Y Y Rights Exclusion Y Y Transfer Alienation Y ‐ Rights Type of User Owner Unclear When the Land Reform Decree, 1975, declared that all land was public, customary tenants who became tenants at sufferance had minimal security of tenure (Coldham, 2000) on the land they once held as the land could easily be leased without any form of consent from them. These tenants were perceived to be illegal on the land. People had full use rights and control rights but transfer rights were unclear as shown in Table 3‐6.The decree existed for the next 20 years in theory until 1995 when the Constitution of Uganda came into existence. The coming of the Constitution of Uganda in 1995 saw some changes on how land was owned and governed in Uganda. It abolished the Land Reform Decree of 1975 which was theoretically in place. It restored mailo and freehold land tenure systems in addition to the leasehold tenure that existed. Customary tenure system was also recognized.
Table 3‐7: Bundles of rights in the period from Oct‐1995 to date Bundle of rights Freehold Mailo Leasehold Customary Use Access Y Y Y Y Rights Withdrawal Y Y Y Y Control Management Y Y Y Y Rights Exclusion Y ‐ Y Y Transfer Alienation Y Y or ‐ ‐ ‐ Rights Type of User Owner Unclear Unclear Unclear Even though the constitution recognizes ownership of land in four land tenure systems i.e. customary, freehold, mailo and leasehold, it can be noted from Table 3‐7 that it is only freehold that exhibits characteristics of private ownership when it
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comes to bundles of property rights. Freehold has a full range of rights which are exercised by the owner. The owner has the right to use, control and transfer. The other land tenure have some bundles missing or are not well defined to make it known what type of right holders they are. According to Pottier (1999) customary land tenure is a form of land ownership in the “traditional African sense” where there exists only use right for the people. There is no individualized ownership but rather access to land resources via the community (Atwood, 1990; Ault & Rutman, 1979) which could be a family, tribe or clan. In contrast to customary tenure, freehold, mailo and leasehold tenures could be described as the “western based” where there exist individual ownership of land with exclusive rights (Ault & Rutman, 1979; Macpherson, 1962). Mailo and freehold tenure rights are held in perpetuity while leasehold is held for a period of time. However even if there is an element of rights being held in perpetuity, mailo land has restrictions when it comes to alienations of the rights, most especially during sales as there exist dual interests in land. Bundles of rights on mailo land for a tenant constitutes full right of use, some rights of exclusion and some rights of alienation (Troutt, 1994). Whereas the tenant has full access and withdrawal rights, they can only exercise a part of alienation as rights can only be transferred without any restrictions through inheritance and consent needs to be sought from the landlord in case of assigning, sub‐let, pledge or sub‐division. Exclusion rights are also not fully exercised by the tenant for example the tenant cannot exclude the landlord to harvest items like sand, wood and minerals but they can exclude them from cropping on the land (ibid). In the same effect, the landlord cannot fully alienate without the consent of the tenant except in instances of inheritance. It is then difficult to categorize a landlord and tenant as an owner or proprietor or claimant. Under Section 3(5) of the Land Act, a leaseholder is given rights to exercise his power as those of a freeholder, the powers have to be subject to the terms and conditions of the lease agreement. This also creates a vacuum on whether a leaseholder is a proprietor or owner as that means that he is limited at performing certain duties to the lease agreement. Also when matters of alienation come in, for example the leaseholder cannot mortgage the property without consent of the owner. Therefore basing on the above arguments it is noted that a part from freehold, the other tenure systems may be unclear to categorize. Despite the fact that various land reforms took place in Uganda, it is evident that the existing current land tenure and property rights systems are not different from those that existed during the land tenure reforms of the period 1900 to 1994. The most interesting thing is that these land tenure systems have exhibited the same
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characteristics all through. For example, mailo land tenure has always had sitting tenants from the date it was created to date. Customary land ownership is also largely still in the same state although it is changing in some societies. Even if the Land Act and the Constitution recognizes customary land tenure, the challenge is that it is not fully absorbed into the legislation of Uganda. The cultures on customary land that existed before haven’t changed. The clan, tribe and family leaders still have the upper say on how the land is managed. Tribe leaders still determine the procedures and conditions of operation therefore the law does not develop its operations to the level of regulating rights and obligations. Freehold and leasehold still exhibit the same characteristics as from the beginning. This means that the land tenure reforms that took place failed to meet their objectives. The one common objective with all the reforms was to introduce a unified land tenure system. The failure to these reforms can be attributed to various reasons but the main one is the political and legal framework. All the tenure reforms were politically motivated but not supported with a legal framework. Whenever a land reform took place, the legal perspective was considered after the political satisfaction had been earned. For example the envujjo and Busuulu law, the Land Act, the national land policy, all came years later when the reforms were already on ground but don’t seem to be working as expected. But it should be noted that the legal and political perspective move hand in hand or more so the legal institutions should be put in place before the reforms are enacted. De Soto (2000) points out that in a property revolution, a leader has to do at least three specific things: take the perspective of the poor, co‐opt the elite, and deal with the legal and technical bureaucracies. Most often efficient utilization of property rights as an input for economic growth requires considerable resources and appropriate institutional setup and legal backup (Tefera & Holden, 2008). McAuslan (2003) also makes the same observation that without the appropriate political environment and support for land law, reform and/or an aid project to support such reform in the key parts of the government machinery, reform will not take place. He continues that a land reform program is first and foremost a governance reform program and failure to grasp that fundamental point will render land reform programs promoted either internally or externally as wasted effort or resources. Because of this mistake, land reforms in Uganda have not fully been a success. This is evident from the land act 1998 whose objectives have never been fully attained21 after 12 years of its enactment.
21 Some of the objectives not attained by the Land Act include; to resolve the land use impasse between the registered owners and the lawful and bonafide occupants of this land, to provide security of tenure to all land 45
It should also be observed that use rights which include the right to access and withdrawal manifest themselves in all the land tenure systems regardless of whether it is formal or informal. These use rights seem to be inheritable in all the land tenures and this makes these types of rights secure (Atwood, 1990; Noronha, 1985) as they can be transferred in a lineage of one generation to another. It is only freehold that exhibits full ownership rights with all the bundles of rights while others have some bundles of rights lacking. This goes to show that each land tenure system is unique in its own sense and different right holders exists for each system.
3.6 Concluding Remarks Property rights are fundamentals when it comes to land management and land administration more so if sustainable development is to be achieved using efficient land and credit markets. Property rights need to be well defined and protected if anything meaningful is to be achieved in order it to ignite the property and credit market. But that does not mean that all property rights should be registered. Some can be included in the property register while some can be left to act as overriding interests in land. Else the property register and the property registered itself is chocked with many interests and instead creating unnecessary costs for actors in the property and credit market thereby tending towards achievement inefficiency and ineffectiveness.
users including customary tenants and lawful or bonafide occupants on registered land, to provide an institutional framework for the control and management of land under a decentralized system amongst others.
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CHAPTER FOUR
4. AN OVERVIEW OF REAL PROPERTY REGISTRATION AND CONTENT OF REAL PROPERTY REGISTERS
4.1 Introduction This chapter presents an overview of land registration and contents of the real property registers in a few selected countries, Uganda included. The chapter defines some of the important terms used in land registration, the importance of taking and keeping land information records to various stake holders and different systems of land registration.
4.2 Definition of Important Terms of the Study As Hansson (2007) notes, the core terms of every research should be well defined so as to avoid ambiguity and vagueness of the meaning of the word most especially if the term has more than one meaning. The term should be clearly defined so as to show the extent to which it was used for the purpose of that particular research. With a clear definition, the readers and users of that particular research will not confuse the context in which the term is applicable in that particular research with its usual meaning. Also when ambiguity and vagueness is avoided, reasonable degree of inter subjectivity when communicating about results and theories is achieved (ibid). Below is the context in which different key words were used for this particular research.
4.2.1 Real Property Real property included land and any other items fixed on and in it like buildings.
4.2.2 Land Register and Cadastre Within the field of land registration systems, the use of terminology is very unclear throughout the world (Zevenbergen, 2002). There seems to be important, and very confusing, distinction that deals with the terms land registration and cadastre for which no universal definitions exist. For example ‘land register’ is used to refer to descriptive text which accompanies a map in a cadastre by European authorities when communicating in the English language yet a ‘land register’ in English speaking countries is not a cadastre record (Simpson, 1976).
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The term land register (land registration) and cadastre22 have been used side by side such that sometimes “it becomes so confusing to distinguish the two terms for which no universal definition exists” (Zevenbergen, 2002). The history of the cadastre23 and land records dates way back from the Egyptians around 3000BC where land records based on surveys were kept in a royal registry. Maps and description of land boundaries were kept together with written records on land (Pieper, 2010). Historically, land records were established for two purposes: i. Taxation purpose: This involved keeping land information for generating money from taxation by the state or government. The land records or register which contained this nature of information was known as a cadastre. ii. Conveyancing purpose: This has records of land for private persons and it mostly contains ownership and other land rights data. The purpose of this register was for security of land ownership and creditors’ interest (Osskó, 2001). This type of register was known as the land register. The land register and cadastre were strongly related but the content contained in each of the records differed. Countries whose main concern was to keep land records for private needs had the land register while countries that had both private and public needs for the information on land had the cadastre and land register exist in parallel. Land registration can be defined as a process of having rights in land formally recorded in a land register (Dale & McLaughlin, 1988; Henssen, 1995). The register can be a register of title or deeds. According to Mattsson (2004a) who gives illustrations in Figure 4‐1, the land register provides identity of the property owner and shows the different rights (legal or equitable) which exist on that land to whom the owner(s) has or have been identified. In other words the land register deals with the subject and the right. It is then said that a land register is a register of properties showing legal rights of rightful claimants (Bogaerts & Zevenbergen, 2001). The content of the land register describes and identifies the owner of a given piece of land, the rights and restrictions on land. This will be able to answer the posed questions of “who” and “how”. This information is important during transactions, mortgages and transfer of ownership as the different parties will know what kind of rights and person(s) they are dealing with.
22 The integrated system of a land register and cadastre can also be called cadastral systems, land administration system or system of land registration (Zevenbergen, 2004b). 23 Cadastre is a French word which means a public register of quantity, value and ownership of real property. 48
Registers
Subject Inskrivningsregister (Sweden) Tingsbok (Denmark) Grundbuch (Germany) Land register (UK) Ownership Right right Fastighetsregister (Sweden) Matrikel registret (Denmark) Kataster (Germany) Object Land (nothing in UK) area
Figure 4‐1: Examples of register content in relation to subject, right and object Source: Mattsson (2004a) On the other hand, the cadastre largely deals with information on the object and to a small extent the rights. Since the cadastres were meant for taxation purposes, they should focus on land and its tax potential rather than the rights unless the taxes depend on the nature of land tenure (Mattsson, 2004a). The cadastre is an information system without a legal backing which contains only a map and other descriptive information about the geographical and administrative area (Bogaerts & Zevenbergen, 2001). This meant that rights are not of any paramount importance in a cadastre. A commonly used definition of a cadastre is by International Federation of Surveyors (FIG) “A Cadastre is normally a parcel based, and up‐to‐date land information system containing a record of interests in land (e.g. rights, restrictions and responsibilities). It usually includes a geometric description of land parcels linked to other records describing the nature of the interests, the ownership or control of those interests, and often the value of the parcel and its improvements. It may be established for fiscal purposes (e.g. valuation and equitable taxation), legal purposes (conveyancing), to assist in the management of land and land use (e.g. for planning and other administrative purposes), and enables sustainable development and environmental protection.” (FIG 1995) From the above definitions, it can be pointed out that the cadastre can no longer be considered to serve taxation purposes only. It performs other functions such as control of land use, secure legal land rights and helps in regulating and implementing development on land (Enemark & Sevatdal, 1999). Generally from the above definitions it is widely noted that even if the land register and cadastre perform different roles, they complement each other. Both cadastre 49
and land register are land records. Because of the narrow gap being witnessed between cadastre and land registration, the two have been termed as land administration (Twaroch & Muggenhuber, 1997; Zevenbergen, 1998) and multipurpose as both systems are integrated. “In practice, the difference between the land register and cadastre is not evident but the difference is observed in terms of their organizational structures with different authorities having responsibilities” (Larsson, 1991). It is increasingly becoming evident that these two should be integrated or even amalgamated into one register to form a unified land information system and as time goes on, the difference between the two will be no more as is in the case with some countries e.g Sweden. For the purpose of this research, the word ‘real property register’ will be used to refer to a multipurpose system which is a combination of both a cadastre and land register.
4.2.3 Real Property Register This is an integrated register of both the land register and a cadastre. It contains information that is contained in a land register and cadastre as separate entities. In Uganda, a land register is what is used but for the purpose of this research, the term real property register will be used to mean a land register in the Uganda concept.
4.3 Importance of Land Records Benefits of land documentation apply both to individuals and the state. Each entity has gains from having land registered. Simpson (1976) points out that the private function of land registration is related to the advantage which individual citizens get while the public function of land registration relates to the welfare of the state and community as a whole. Benefits of land registration accruing to each entity can be as follows:
4.3.1 To Individuals According to Henssen & Williamson (1990) and Larsson (1991), from the individual, citizen or private sector point of view, benefits of land recording can be said to be as follows: i. Land registration offers legal land security and protection for both the owner of the registered land and other parties who have interests in that particular registered land. With parties having confidence in the use and ownership of the land without being threatened by insecurities like evictions, it results into possibilities of making long term investments on land.
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ii. Land documentation makes transactions on land between the involved parties easier, cheaper and more secure which heightens the land market. Consequently access to land is improved; conveyancing of unregistered land is often expensive, unsafe and takes a long time. iii. Increased legal security reduces boundary disputes and land litigations resulting in better social and human relationships between neighbours, reduction in work for courts and cost savings for individuals. iv. The funds necessary for these investments can, again as a consequence of the increased legal security, be borrowed easily: A cheaper and long‐term credit (e.g. mortgage) system can be developed. The availability of long‐term credit by using titled land as a security in urban areas leads to increased land development and an improved land market. In rural areas it promotes long‐ term farm planning, better cropping patterns, long‐term crops and soil conservation practices. Besides it enables the farmer to buy efficiency improving equipment and invest in farm improvement programs. The consequences of such a credit system based on land recording are thus in principle a significant increase in productivity, an increase in revenues or income and an increase in value of the land.
4.3.2 To Government To government or society or public point of view, benefits of land documentation can be as follows (Henssen & Williamson, 1990; Larsson, 1991): i. It enables government to establish an efficient and equitable system for justified levying of land or property tax. This tax, based on realistic value, needs information on location, size and ownership or stewardship of the land or property. Besides, in relation to land management policy it can offer an incentive to place unused or underdeveloped land on the market by taxing this highly; thus speculation can be avoided. ii. For activities concerned with the development of land in case of land reform, land consolidation or land readjustment, the data of the land recording system constitutes a necessary mechanism on behalf of the desired situation. These activities give information on the present land use, the determination of the optimal future land use, the implementation of that future land use and the management of the implemented use. iii. For the government, a mechanism becomes available to control whether transactions meet the requirements of planning, spatial management, the
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allowed maximum of land per owner (land ceiling), maximum sales price or the restrictions of land ownership by aliens. A country covering recording system makes it possible for government to determine the amount of private, communal and State land. For some countries this possibility is already a sufficient justification for the establishment of a land recording system. iv. Also on behalf of the execution of a multitude of other governmental tasks a useful tool is created. For example valuation on behalf of several activities, statistics of buildings, corporations, population, elections, food production and distribution. This is the multitude cadastre concept. v. The collected basic data of the cadastral map can also serve as basis for other necessary large scale maps, which will in the longer term result in a considerable saving of time and costs. vi. A parcel based land recording system, including the cadastral maps, can be the basis for the concepts of an extensive land information system. So for instance the parcel identifier can serve as key for the integration and coupling of several kinds of land data. In that case the system functions as a multipurpose cadastre. vii. A large part of the mentioned advantages are in fact cost savings for the government in the longer term. These savings of costs become even more interesting if one realizes that the costs, especially of the maintenance of the land recording, could be recovered by fees, i.e. for issuing certificates and for recording transfers.
4.4 Systems of Real Property Registration
4.4.1 Deed System The deed is a document which acts as an evidence showing occurrence of a particular transaction (Henssen, 1995; Larsson, 1991). To show evidence of ownership of land in this system, one needs to have the title deeds which include documents such as sale/ purchase agreements, wills, lease contracts, mortgage deeds and many others and these are the same documents that are considered when one is registering land for the first time in the deed system. The title deed is legally recognized immediately it is registered in the land register of deeds. According to Kaufmann & Steudler (1998) the deed system is man related where by the person who is in possession of the deed or documents describing the transfer of the land and the rights is the owner or rightful claimant of the land. The deed system can be said to be man related as the main concern is the “man” (person) holding the land documents or deed and not the rights in the land or the land itself.
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In this system, the register is of owners dwelling on “who owns what” (Enemark, 2009). The deed system came in place after the system of land transfer that was in place, the private conveyancing method had disadvantages24(Zevenbergen, 2002). The deed documents were registered in a registry to help keep records of transactions. Although the deeds were registered, there was no guarantee of the title deed (Henssen, 1995; Henssen & Williamson, 1990; Larsson, 1991) and registration was not compulsory. This meant that if anything happened to the rights (title), no one was responsible for any actions to be taken but the owner had to get a way to sort out the problem. According to Henssen & Williamson (1990), a deed registration has sometimes two types of registers: one for use rights and the other for security rights such as mortgages. During a deed transaction when one (supposed buyer) wants to acquire land, the buyer has to trace the deeds or agreements that were signed by the different people who had ever owned the land to make sure that the transaction is not fraudulently being carried out and also for one to know the original and previous owners. Because of the problems that were being experienced with the deed system, some countries moved to the title system while other countries decided to improve the deed system in order to strengthen it. Some of the improvements over time have included guaranteeing of the deed title which has strengthened security of the land owners, registration is now compulsory in most if not all countries using the system, computerization of the records to make sure that the cost and time in searching for the deeds is reduced. According to Zevenbergen (2002), deed registration system exists in different forms such as being simple, unorganized for instance in the United States while in South Africa it is organized and improved that operates almost like a title registration system. The deed system is witnessed in Europe, South Africa, Parts of Asia and Africa (Williamson, Enemark, Wallace, & Rajabifard, 2009) and the English common law systems (Henssen & Williamson, 1990). According to Zevenbergen (1994) the following flaws are with the deed system: i. It shows that transfer of ownership took place but does not guarantee the transaction; ii. The fact that it is not compulsory to register (all) changes of ownership, so that a correct impression at one moment may become erroneous later on;
24 The history, advantage and disadvantage of each land transaction method and evidences can be found in Zevenbergen (2002) for further reference and reading. 53
iii. The parcel of land is not well described; iv. The stored deeds which are in a chronological order are sometimes poorly indexed making accessibility hard.
4.4.2 Title System Most countries using the title system started with the deed system but moved in order to get greater reliability and simplicity (Williamson et al., 2009). In the title system, the right itself is registered as opposed to the deed. The different rights in the parcel of land, the details of the owner or rightful claimant and the land together with its restrictions and appurtenances are registered in a land register of titles. This registration then creates a title or right (Henssen, 1995) which is the outcome of the transaction (Henssen & Williamson, 1990). The rightful claimant of the land is legally recognized as the true owner after registration is complete and his/her name appears in the register or the title. In the title system, the parcel is of the main concern because whereas rights in land and the owner of the land will always change, the parcel or land does not change when land is transferred unless in case of subdivision, partitioning, reallotment and amalgamation. Thus it can be said that unlike the deed approach which is man based, the title approach and register is parcel based. With title registration the register is a proof of title and state guarantees the title (Lawrance, 1980) so it takes up responsibility in case of any damages. The register is that of properties focusing on “what is owned by whom” (Enemark, 2009). The land title has three sections in which encumbrances, description of the land or property and disruption of the owners are recorded respectively. The section dealing with encumbrances can be said to be a debit part while the other two are the credit part. (Henssen & Williamson, 1990)
4.4.3 Modern Development of the Initial “Pure” Systems
The difference between deed and title registration system reflected in Table 4‐1 shows what originally existed when the title system had just been introduced as an alternative to the deed system. The distinction between registration of deeds and title is deemed old fashioned (Williamson et al., 2009) as there is no clear cut line between the two system (Henssen & Williamson, 1990) as per now. According to Palmer (1999) “the conceptual model of a simple dichotomy represented by these two extreme types of registration systems is not reflected in practice”. Most if not all countries lie in between the two systems with no country having a pure deed or title system.
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Countries that are considered to have deed registers have most of the components of their registration system leaning towards the deed system but with a few components of the registration of title system. This is also true for the countries considered to have a registration of title system. For example “improved registration of deeds system, like the one of the Netherlands, where the actual legal situation as derived from the deed register is registered systematically and orderly in a cadastral register (cadastre), tends in practice towards a registration of title. In this case acceptance of the correctness of the carefully compiled deed registers in combination with cadastral registers works in practice as satisfactorily as in a well maintained registration of title.” (ibid).
Originally the deed system was based on the persons who own the land rather than the parcel of land as it is in the title system. But this situation no longer holds as “the operation of the deed system has substantially improved by being parcel based rather than proprietors” (Simpson, 1976). Also, unlike before where there was no guarantee of title by the deed system, both systems now guarantee title. These few examples go to show that the two systems have evolved from what they traditionally used to be to an extent whereby it is difficult to differentiate a pure deed from a title system. There are some countries like New Zealand, Trinidad and Tobago which have a mixed system because they are moving from the deed system to the title system with reason that the title system is better in the sense that there is easy access to credit facilities which encourages economic growth. However as much as the deed system has its negative side (such as; since only a single transaction is recorded, it is up to the would be purchaser to determine the authenticity of the deed from the chain of the previous transactions) so is the title system (it is very expensive to register land). With its advantage, the title system impacts positively on the economy (Feder & Nishio, 1998; Feder, Onchan, Chalamwong, & Hongladarom, 1988) while it also has some negative side (Leonard & Narintarakul Na Ayutthaya, 2003; Pinckney & Kimuyu, 1994; Rattanabirabongse, Eddington, Burns, & Nettle, 1998).
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Table 4‐1: Differences among registration system ASPECT DEEDS REGISTRATION TITLE REGISTRATION Legal origin The deeds system is associated with The old Hanseatic city‐state system Roman/Dutch law in Europe and early developed in Germany and spread into common‐law conveyancing in England the New World, where systems broke and its colonies. away from the cumbersome deeds conveyancing to simple land registration systems. Cultural origin Now used in Latin‐culture countries in Common‐law countries and new emerging Europe (France, Spain, Italy, Benelux), nations. German style found in Germany, South America, parts of Asia and Africa, Austria, Switzerland, and Nordic countries. and extensively in the United States. Legal Title is a concept that is transferred Title in principle is transferred only if and consequence when the deed is executed. The title when the document is registered. The title therefore runs through the “chain of record determines the title. Any deeds,” and each deed must be perfect unregistered documents can create rights enough to transfer the title up the chain among the parties, but they do not affect the land. Concept of Title exists in law and is transferred Title exists in the register. The official title through deeds. The deeds remain record is compelling evidence of essential evidence of landownership ownership. Searching All the deeds making up the title need to Only the last entry of the owner on the be searched, as do their registered official record needs to be searched, not copies. the documents Positive or A pure deeds system is negative, though The title system is positive, meaning that negative highly developed systems offer a fail‐ the titles are the proof of ownership. No safe system and registration creates the other evidence of title is needed. positive impact of transferring title. The deeds themselves, not their registration, are primary evidence of title. Registration gives a higher degree of evidentiary protection, against unregistered deeds Parcel Identification is achieved in many Initial registration involves establishing identification systems by a text description in the surveyed or (fixed) boundaries, or general deed, often referred to as metes and boundaries, for the parcel. The parcel is bounds, or sometimes with a map geometrically identified with its related sketch. The boundaries and area are not parcels, usually by the reference to, and guaranteed. incorporation in, the cadastral map. The boundaries and area are not guaranteed. Role of the The cadastre identifies the land for The cadastre identifies the land for title cadastre taxation purposes and is not necessarily purposes. Boundaries are reliable and can based on cadastral surveys. be reestablished Administratio Generally, the deeds are copied, and The record is held on a single page or in a n system copies are held in ”land books.” digital file referring to the parcel Actors Lawyers or notaries are usually essential. Often lawyers and surveyors are required. Deeds registrars check and manage filing In the best systems, individuals can do and recording of the deeds in the book their own conveyancing. The land registrars check and record the information in the documents as well as social transitions affecting the land. Agencies Registry offices are typically set up or Registration or land title offices are over seen by local courts typically set up under an administrative arm of government 56
ASPECT DEEDS REGISTRATION TITLE REGISTRATION Registration Involves lodging a copy of the deed in an Involves recording land transactions in the official book or collection. order in which they are lodged at the land Administration requires a complicated title office on a single page, or single system of cross‐referencing of parties’ computer file. This page or file is called names, parcel identifiers, and deed the “title” and registration is simply numbers to retrace the history of the recording the transaction on the title. land. Forgery Forgery brakes the “chain of title” so Forgery by a person seeking registration is that all later deeds are inefficient ineffective. The forger cannot get title. But all other people not party to the forgery can rely on registration of the forget instruments to gain a title for themselves. State There is no guarantee of title by the The title is normally guaranteed by the insurance and registration system state. Hence, the administration system guarantee must be very reliable. Private and Professionals always carry insurance to There is no need for private insurance of professional protect their clients against failure in the title but private cover can sometimes insurance their work. Notaries carry insurance and be offered to protect people against can provide professional guarantees. In restrictions and responsibilities outside other places, notably the Unites states, the title system affecting the land. private insurers sell insurance cover Lawyers carry insurance against losses against failure of the system they or their staff cause Source: Williamson, et al (2009) It should also be noted that it is not necessarily that the title system is more effective and efficient than the deed system as it can be observed that many countries still having the deed system (e.g. Spain, Italy, South Africa, France Netherlands etc) are more developed and successful than those using the title system. The deed system is no longer the traditional deed system but an improved one (Zevenbergen, 1994) with some of the activities in the title system being exhibited in the deed system like guaranteeing of title. Countries with the improved deed systems have also computerised and digitised their records, apportioned unique parcel identifiers and made it possible for checks to be carried out to provide greater security (Griffith‐Charles, 2007). These have made it possible for the property and credit market to be facilitated in order to achieve economic development. Therefore Griffith‐Charles puts it that there is no system that is superior to the other as the worthiness of the system depends on its own structure and the institution and legal structure that support its functioning. Besides, Simpson (Simpson, 1976) urges that the systems of land registration should be weighed based on its merits.
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4.5 Contents of a Real Property Register When building up a real property register, both the technical environment and the content are very important. However, the technical construction and software of LIS or registers in order to facilitate effective information interchange and standardization has overshadowed the content of the registers (Paasch, 2006). Less research has been done on the content of the registers as compared to the technical designs and the kind of software to be used. It should be noted that however good the technical design may be without efficient content, the system is as good as not functioning. This is because the system will not be able to solve the cause of the problem it was designed to solve. Therefore both content and technical designs have to be put into consideration if tangible results are to be achieved. Contents of a real property register will differ from country to country since cadastral systems differ. The content of the real property register will depend on the legislation of each country as each legislation defines items and rights differently. Whereas one right may be registrable in one country, it may not be the case in another. However, if information sharing is to be encouraged across all boards, then standardization is needed in the content of the register as is the case with the technical design of the LIS (Paasch, 2006). Identification of elements that constitute each component of the register will help determine the content of the cadastral information system (Simsion & Witt, 2004). In Table 4‐2 are data elements of three Australian states (New South Wales, Victoria and Western Australia), and two European countries (Netherlands and Switzerland) that were studied. These data sets determined the content of the registers in the studied areas.
Table 4‐2: Comparison of data elements in land administration systems Data Element VIC NSW WA Netherlands Switzerland Land Parcel * * * * * Property * * * * Third Dimension Some Some * * Rights * * * * * Responsibilities Restrictions Some Some Some Some Land Value * * * * * Land Use * * Source: Kalantari, et al (2008) Land parcels in this context means the area occupied by the plot without considering the attachments on it as opposed to property which means land plus the other attachments on it like buildings. Third dimension means properties that can be defined by their heights. They include apartments, condominiums, and flats.
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They are registered separately from the land. Star (*) means, that the particular data element is fully represented in the register while ‘some’ means that a part of that particular element is registered in the register while others are not. Rights in land can be held by individuals, legal entities, groups of individuals or government. According to Kalantari, et al (2008), Rights, Restrictions and Responsibilities (RRR) as shown in Table 4‐2 are important in any cadastral system. Rights are concerned with ownership and security of land tenure. They are a concern of the property register. Responsibilities are concerned with social, ethical commitment or attitude towards environmental sustainability and good husbandry (Enemark, 2009). Restrictions can be private (e.g. servitudes on the servient property) or public (e.g. zoning regulations, land use plans, environmental limitation) laws that allow somebody (could be the land owner or any other person) to do something or refrain from doing something on land or property (Zevenbergen, 2004a) as cited by Lemmen, et al., (2005). Restrictions are a concern of the planning authorities and are normally presented in planning documents like acts and regulation. RRRs can be presented non‐spatially (e.g. rights to sell, rights to lease) or spatially (e.g. right of way) (Kalantari et al., 2008). Cadastral systems everywhere register rights other than restrictions and responsibilities (RRR). Responsibilities are rarely registered as they may not be of any importance. Restrictions will be registered depending on the nature of a cadastral model that exists in a country. Land value information is normally used for revenue collection purposes through taxation. Depending on the cadastre model in existence, it may be registered or not. If the register is not interested in taxation or valuation of properties then it will not be included. From the study above, a conclusion can be made that there are different data elements that can be included in a data model with each of them having a specific function. It is difficult to include all the elements in one model but an examination of all the elements would assist in providing insight knowledge and information for building a required model (Kalantari et al., 2008). But it can be observed from Table 4‐2 that the information about land parcel, rights and land values are some of the information that is never left out. Every country of the case study has them in their registers. The functions played by the real property registers are to provide legal protection for legal actions like purchases and to establish certainty of ownership and rights to land (Johansson, 2002; Quân, 2011). There should be an authority and legislation to guarantee, regulate and make sure the register performs its functions. In most countries, the state guarantees the content of the real property register while in a
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few other countries it is the court. One of the requirements of a good real property register is that it should be publically accessed by everyone since it not only benefits the land owner and the state, but the society at large. It should also be sustainable, simple to understand by everyone, accurate so as to avoid misguidance which could lead to disputes amongst property owners and mistrust of the system by the society, low cost, easy and cheap to maintain, promote fairness and rights recorded should be clarified. The real property register should also be dynamic in the sense that it can easily be updated when changes have been made and easy to trace alterations in information backwards in time on both the property and rights.
4.6 Real Property Registration Systems in Selected Countries The selected countries have been based on the type of registration system. The first two countries which are Sweden and England were selected as having close to title registration system but different in the way the real property register is organised. The third country France was chosen because it has a deed system of property registration. Uganda being the study country, it is also discussed in this section. The selection of these countries discussed in this chapter apart from Uganda, will help in drawing a conclusion on whether or not the land registration system matters when it comes to choosing what should be included in the land registration.
4.6.1 Sweden Real property registration in Sweden can be said to be in between a deed and title system of registration. The Swedish registration system is based on a real property register which is kept and maintained by Lantmäteriet (National Land Survey). The real property register is the one that officially contains information about land and what is found on it. It is a multipurpose register as it informs all sectors that deal with land. It contains information such as ownership, mortgages, addresses, easements, plans and land use regulations, tax assessment information, leasehold rights and many more. This shows that it is a property register and not just a land register. According to Ericsson (1995), Högberg (2006) and Karlsson (2005), the real property register in Sweden constitutes of five parts as explained below: i. A general part (cadastre) This part is also known as the cadastre or real property information. It contains information such as the property’s designation area, parish, location of the property in terms of the index map and coordinates representing the centre of the
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parcel, total area of the property (land area + water area if any), index map of the property and a reference to property formation documents. This part of the register also shows property formation types (subdivision, reallotment, amalgamation, partitioning) which have ever been carried out on the property including the dates in which these actions were performed, plans, regulations and ancient remains that affect the property with their respective dates of approval on the property. Information about units from which the property was subdivided is shown in this register, as well as units later subdivided from the property. This part of the register generally gives a definition of what a cadastre is supposed to be. The general part of the real property register is updated by the cadastral authorities. ii. Registration of ownership (land register part) Information entailed in the land register part constitutes of legal records which includes ownership, encumbrances and other rights. This part of the register deals with securing legal rights which are important in land conveyances and other transactions. The information content here includes ownership rights, leases, mortgages, purchase price and other encumbrances and use rights. This is where titles are registered after transactions. Therefore this is the part that is most important for the property and credit market as it is where evidence of ownership and other rights is kept and can be found. The responsibility of up‐dating this part of the real property register is with the land registration authorities. The land registration authority is subordinated to the National Land Survey. iii. An address part The address part of the real property register contains the address of the property. The address of the property may not necessarily be the same address of the owner. But the owner can use the same postal address as that of the property. Site addresses are usually given to parcels of land or properties and they are the ones used as the property addresses. It is the duty of the municipality body to make sure that addresses are kept up‐to date. iv. A tax assessment/ Taxation information This section includes taxation data which is the tax assessed land and building value. The tax assessment value is the total value of the building and value of the land. The person responsible for paying this tax (who is normally the owner of the property) is also shown under the taxation data.
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v. A building part The building part of the register has information about the building unit(s). It gives information about the nature, type, use, value and situation of the building(s), but not description of the building structure. Each building has a unique identity which is connected to the property identifier. Also a part from the unique identity, the building can be searched through its center coordinates that are geographically defined. This part of the register is interlinked with the property tax assessment register and the building permit process in the municipalities. For this part of the register to be kept up‐to‐date, the authorization of the property tax assessment register is handled by the tax authority while the building permits are handled by the municipality authorities. It can be said that the Swedish real property register is a one stop collection point for all vital data concerning all properties for land administration purposes. The property register provides the information on land needed to attain sustainable development in aspects of economic, social and environmental. With this type of property register it’s easy to achieve efficient land markets through secure legal rights and collection of property tax. Also with this kind of property register, effective land use administration is easily attainable as land use regulation and implementation is possible. The Swedish property register is not static but rather dynamic and this has been achieved through allocating responsibilities of updating the different parts of the property register to different authorities. The authorities are allocated responsibility in such a way that the authority which uses the part of the register most is the one in charge of it. Also the five parts are interlinked so that changes can easily be made from one part of the register to the other where there is similar information. The real property register is available online and its content can be accessed by the public. Carrying out searches in the property register for details about a particular property can be conducted using different criteria. One can search information about the property by inputting coordinates of the location map, by using the property designation and by using the address. This makes the search not only tagged to the property identifier but makes it easy to link properties with other information that talk about it.
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4.6.2 England In England, the registration system is a title system that is a modification of the Torrens title system. The real property register in the English system is one that records ownership of property. Each title has a folio number which is the unique identifier known as the title number. The land registry keeps information about registered property. The register is an up to date record of information regarding title number, physical description of the property, ownership (address and name of owner), property restrictions, date of purchase, mortgage details, purchase price, land tenure, easements and many other information about the registered property. The land registry is in charge of keeping and maintaining the register. According to Larsson (1991) and Vozarikova (2010), the real property register in England has three parts as described below: i. The property part This part gives a description of the registered property, any rights that benefit the registered property such as easements and other subordinate rights. The description of the registered property must refer to the title plan. ii. The proprietorship part This part of the record identifies the owner of the registered property in terms of name and address. It also shows the nature of the land (freehold/absolute, possessory, leasehold or qualified), any restrictions (e.g bankrupt) and notices on the registered land in terms of use or disposal and the price paid for the property. In case the nature of the land is possessed, then the name of the first registered owner of the land is also registered. iii. The charge part This describes the different encumbrances that exist on land such as mortgages and any other rights that adversely affect the registered property. If there are any additional documents containing information about the registered owner, registered charge or the land, they are included here. Registering a property in England generates a title plan for the registered property. The title plan is a map showing the, boundaries and location of the property together with its surrounding area. It should be noted that a title plan can only exist when a property has been registered. The property register is available online through different websites and one of them being European Land Information Service (EULIS) through which searches of information about a property can be got. The online data base is accessible to the 63
public if one needs information concerning ownership, maps, encumbrances and charges regarding any piece of land. Property search can be possible by use of the title number, postcode and address. If you do not have the full address for example you can search using the street, town or postcode.
4.6.3 France Real property registration in France is not uniform for the entire country. The eastern part of France has a different land registration system influenced by the registration system in Netherlands, German, Switzerland and Austria where the registration of transfer of land in the register completes a sale of course with the consent of the transacting party. With the rest of the country, when the transacting parties exchange consent, then the sale is completed and the registration only helps in having the transferred property enforceable to third parties (Glock, 2009). In the Eastern part (Alsace‐Moselle) of the country, the record of property rights and other rights is the land register while in the other parts, registration is via the mortgage registries (land charger register) which is not a land register in the sense that land registration is supposed to occur on the real property register and not on the records that compose it (ibid). The content of the land register and the mortgage registry can be described as follows according to Glock (2009): i. The land register This is made of folders which have the name of the land owner and also contains all the lands or properties belonging to the said owner. The folder has three sections which are: a) “Property” which describes the property that contains the description of the estates. It specifies the union or division of an estate and the existence of or the cancellation of an easement. It also indicates the references to the appendices to the land register, i.e. the titles enabling the rights to be registered; b) restrictions and charges applicable to the right to transfer such as easements, building leases, usufruct; c) mortgage and privileges and their renewal or their exclusion from renewal. ii. Mortgage register Glock (2009) also continues to explain that the mortgage registry registers deeds but differentiates between what must be registered and those that may be registered. Those that must be registered are rights that affect real property and can be mortgaged or not. They include ownership rights, usufruct rights, building leases, easements, occupation rights, bare‐property rights and use rights.
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The French land and mortgage (property) registers can be said to be independent of each other with no interaction and linkage between them. One needs to go to the offices to carry out a search as both of the above registers are not found online except for a cadastre that can be accessed online. The cadastre is the official land registration system in France. The French public land registry maintains the cadastre with the help of the French tax authority. This is because the cadastre was initially meant for taxation purposes and not conveyancing. French land registry plans (cadastre) shows plots of land, their sizes, buildings and the place name of the property to which it belongs although the description of the boundary may not exist or be vague (Murray, 2012). The cadastre is used for taxation purposes as taxes are based on land and not land rights so it cannot be used for conveyancing as it does not have information on rights which is the tradable good when it comes to exchange of land. From all the above countries, it is noted that the registers have similar content. There are details about the property in terms of its location, owner, rights, regulations, mortgages, easements, property formation processes, size of the property, boundaries and many others. The different parts of the registers in all the above countries are also interlinked there by making it easy for changes to be recorded on to the register. The properties in the different registers are well defined and indexed to ease its search and location if any information is needed about a particular property. The registers are very detailed enough that they help facilitate transactions in both the property and credit markets.
4.6.4 Uganda In Uganda less than 20% of the land is registered. There are several property registers depending on the type of the land tenure system. There exists a mailo register for mailo land, a freehold/leasehold register for freehold and leasehold tenure and a customary register for customary land. The content of the property register in Uganda has three parts just like the English system because registration is based on the Torrens’ title registration style. The parts of the land title are; Property (Description of land), Ownership (Description of owner/property) and Incumbrancers (Description of a nature of encumbrances). The content of all the different (mailo, freehold and leasehold) registers are the same however, the identification of properties differ in each of the registers that exists. Below is a brief description of each register.
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i. Mailo register In the mailo register, block and plot numbers are used to identify properties. In the mailo register, titles are kept according to block and plot numbers in a different binder from instruments which when submitted for registration, are assigned instrument numbers (basically in chronological order of submission) (Barata, 2001). This means that the only way a title of mailo land can be found during a search is by quoting the block and plot number while for an instrument it is the instrument number recorded on the title since there is no any form of cross referencing. Whenever a mailo title is produced, two copies are made. The original copy remains at the registry while the duplicate is retained by the owner. The two copies are supposed to be mirrors of each other but that may, in some cases not be the case. Whereas the duplicate has a deed plan, the “white page” does not have. The deed plan of the mailo title has no acreage on it. This leaves room for inaccuracies and disputes because what is on deed plan and the title may not actually reflect the exact measurement on ground. ii. Freehold/Leasehold register In the freehold/leasehold register it is the volume and folio number that identifies properties. Unlike the mailo register which is land based, the leasehold/freehold register is title based with the title being the unit of identification. In the leasehold and freehold registries, the certificate of title and the corresponding instruments are kept together in a folio which is stored in a folio according to the volume and folio number (Barata, 2001). In the freehold/leasehold register, Volume and folio numbers are used to identify land. The volume and folio numbers follow an order in which the certificate is created. The approach of using volume and folio numbers for registration has disadvantages: There is no relationship between the identifier (volume and folio numbers) with the land since the volume and folio numbers are not geographically oriented; The title can be related to land only via a cross referencing that is well maintained and this type of identifier is incompatible with an efficient computerization of records (Greenwood, 1990); This approach of registration has also caused a problem of issuance of two or more titles for the same piece of land accidentally or fraudulently (ibid). Like in the mailo register, it is absolutely difficult to trace a title if one doesn’t have the volume and the folio number. There are possibilities that a plot has more than one folio number if a search for a folio based on an approximate date of registration does not yield any results (Barata, 2001). The leasehold and freehold title are similar except that there is a lease agreement for leasehold. The first page of the leasehold and freehold titles contain a reference
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number to the mother property which originates from the volume/folio numbers of land office file of mother property25, volume number and folio number. The content of the two registers (mailo and freehold/leasehold) contain; deed plan, description of the property, owner and the nature of encumbrance. For the leasehold, there is a lease agreement included. iii. Customary register Unlike the mailo and freehold/leasehold registers which were mainly kept at the ministry headquarters and of late being transferred to zonal offices, customary register and records are housed at the districts with the District Land Boards (DLB). The DLB has the authority and mandate to issue Certificate of Customary Ownership (CCO). The CCO can later be converted to a freehold title which will then be registered in the leasehold/freehold register. According to the baseline evaluation report of 2007 by Geo‐Information Communication Ltd and Faley (2007), there has not been any CCO applied for and issued since the Land Act came into place in 1998. Some of the reasons for this situation could be that the rights holders are ignorant of the whole process, the process of acquiring a CCO is the same as that of a freehold title in terms of procedure and time therefore those who can afford would rather apply for the latter, and then there is no economical, legal or other motivation for the application or a CCO since it is not accepted by any institution as a replacement for a certificate of title. However the exercise of issuing customary certificate had started in northern Uganda (Kidega, 2012) and expected to be rolled out to the other parts of the country but due to lack of funds, the exercise has been halted (Ssekika, 2013). Another reason as to why there are no CCO issued or there is slow application of the CCO is that the content of the CCO book is not well defined making it difficult for the application to be filled in (RLP, 2012).
4.7 Modelling the Property Register and Rights. Modelling of property rights has been done by different researchers. Some of the researchers who have developed cadastral models include Paasch (2005a), Oosterom et al (2006) and Zhang et al (2008). All have been aimed at Standardization of the cadastre in order to enable information sharing both at national and international level. The main reason for modelling is to enable easy sharing of land information not only amongst organizations or activities within the
25 e.g. Leasehold Register Volume (LRV 20/5) for leasehold title and Freehold Register Volume (FRV 20/5) for a freehold title. 67
same country but also a cross countries. (Kalantari et al., 2008; Meyer, 2013; Paasch, 2006; Zhang et al., 2008). However, the core data model only acts as a general model from which countries can develop their own models. There are three ways in which man is connected to land (see Figure 4‐2). Land rights manifest themselves in form of ownership or usufruct rights (Agarwal, 1994). Ownership rights can be said to be primary rights while usufruct rights are considered to be secondary rights. Secondary rights are those which are exercised alongside ownership rights. For the first case (Case 1), the subject ‘man’ is directly linked to the object ‘land’. This is a case of no defined rights and regulations governing the use of that land. It is every body’s land since anyone is free to use it in whatever way it pleases them without restrictions or exclusion. In the second case (Case 2), the rights that connect the subject to the object are limited in nature for example mortgages. Man has some rights like access and withdrawal but cannot alienate the land. This also means that the subject might not be the true owner or rightful claimant of the land in question. With an ownership right (Case 3), the rightful owner has the right to access, exclude, transfer and alienate (Schlager & Ostrom, 1992; Snare, 1972).
Case 1 Case 2 Case 3
Subject
Right/ Ownership Right obligation right
Land Land Object Land area area area
Figure 4‐2: Connections between man and land through rights Source: Mattsson (2004a) For the study, the second (Case 2) and last case (Case 3) is where the interest of the research lies. Case 2 and Case 3 will be considered since limited rights and private land ownership interest has been the major important parameter in the traditional land register. Property rights relating to land in Uganda can be identified as below. The models that have been developed have been tested in some countries so as to find ways of improving them. Countries have adopted and implemented different 68
cadastral models that suit their conditions. Some of the countries that have modelled and adopted cadastral models include Denmark, Portugal, Sweden, England, Nepal and Slovenia (Hespanha, Oosterom, Zevenbergen, & Dias, 2004). For the case of Portugal, their main focus was changing from fiscal to legal cadastre when they decided to implement the cadastre model. Kenya is also on its way trying to establish a national cadastral data model for its country with some of the initial stages complete (Osundwa, Nyadimo, & Siriba, 2005). The Swedish model by Paasch (2012) was tested on different countries with different cadastral or registration systems. One of the countries where it has been tested is the Dutch cadastral and registration system. It was found that some rights in the Dutch system were difficult to categorize using Paasch’s model thus there is need to improve on the model (Paasch, 2005b). Paasch’s model categorizes private rights and restrictions into five groups as shown in the Figure 4‐3. They are; common right, real property rights, personal right, lien, and latent right. These rights could be burdens or advantageous to the property. The model also includes public restrictions which could be of an advantage or disadvantage on land or property. Appurtenance, encumbrance, public advantage and public regulation have relationships to the ownership right because they are rules which regulate a property in a limiting or beneficial manner via the ownership right. The relationship that exists between person, ownership right and land is shown and also that exists been ownership right and various rules. The relationship of 1..* (one‐to‐many) in the model below between person and ownership rights means that one or more persons execute ownership rights. There are one or more people who own a piece of land. While a 0..* (zero‐to‐many) relationship between ownership right and land means that land is restricted by none (zero) or many ownership rights.
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Figure 4‐3: The legal cadastral domain model after alterations due to Swedish real property legislation Source: Paasch (2012) This model considers ownership of a property with regards to encumbrance which are burdens and appurtenance which are benefits affecting the property (Lemmen et al., 2005). Based on Paasch (2005b), the classes can be explained as follows: ‐ Common right is a right held by two or more properties in another property. The properties rather than the persons who are owners hold the right. The property where the common right exists is commonly owned by the properties that exercise the right. For example if property A and B have a common right over property C, then when property A changes ownership, the right will still remain in spite of the new owner taking over. And when property C is sold, the rights property A and B have in C continues to exist. Meaning that when the common property is sold, the common right follows it. Example is a right in joint facilities like parking areas which are owned by properties. ‐ Real property right is a right a property has to use another property which may benefit or restrict ownership right and when the property is sold, the right follows the property and not the owner. Example is an easement whereby it is a benefit to the dominant property and a restriction to the servient property. 70
‐ Personal right is a right a person has to limit or expand the ownership right of real property. E.g. lease, profit à prendre. A personal right can be given to a person on a time‐limit basis, for the person’s lifetime or forever. ‐ Latent right is a right that is granted but is awaiting executions because of some unfulfilled conditions. The rights here include expropriation and pre‐emption e.g. in an expropriation situation where the government has given permission for expropriation, but the expropriating party has not fulfilled the procedure by seeking a court decision for taking possession ‐ Lien “is an economical/financial right, which can be executed on real property and thereby regulates the ownership and it is equal to security for payment” (Paasch, 2005a). Example here is a mortgage. The model also consists of public rights which could be advantageous or burdens to properties. The public advantage benefits a real property while a public regulation restricts the property. ‐ Public advantage: these are government regulations that are appurtenance to real properties. “One example is the granting of permission to build a house in restricted areas around a lake or river. Such a dispensation can be seen as an appurtenance to ownership” (Paasch, 2005a). ‐ Public regulation: these are restrictions that are imposed by the public (government organs or representative) on one or more properties. E.g. zoning and planning regulations that are restrictive on what type of houses should be built, colour, height, building materials etc. Paasch’s model is based on legislature of Sweden and it does not contain informal rights meaning that countries with informal rights may not be able to use Paasch’s model. It should also be noted that most of the models developed are purely western or meant for the developed world (Zevenbergen, 2004a). These models do not include informal rights (Lemmen et al., 2005; Paasch, 2005a) yet these types of rights characterize land in most African countries. Cadastral models developed should focus on the users by making the users realize the benefits of the system which can then serve as an incentive for them to make investments (Österberg, 2001). However, countries that need to develop cadastral domain models should base their models on the core model or make modifications to other developed models in order to suit their countries’ needs as cadastral systems differ. Modelling systems of land registration should be based on dynamic rather than static models (Mattsson, 1997; Zevenbergen, 2002, 2004b). When modelling is based on a static model (Figure 4‐4), it fails to explain and bring into understanding for instance, the interaction between systems of land registration and land 71
markets, the reasons for unregistered transactions, and the ’trustworthiness’ of the whole system (Zevenbergen, 2004b).
Figure 4‐4: Static model of system of land registration Source: Henssen (1995), Kaufmann & Steudler (1998), Mattsson(2004a) and Zevenbergen (2004b)26 The owner is the person or individual or legal entity that rightfully holds a claim in land. The right is the claim that the owner holds. It could be a legal right or an encumbrance, and the parcel is the unit of land that the owner holds and has rights in. With this model, the owner, right and parcel of land do not change. However, it should be noted that these three entities are bound to change whether in the short or long run thus the need for dynamism (Figure 4‐5).
Figure 4‐5: Dynamic model of system of land registration (‘Mushroom' encompasses the static model) Source: Zevenbergen (2004b) The dynamic model focuses on what happens in the property register if the owner, right or land changes. The content of the register or system will have to change whenever there is a change of any of the three entities. The Figure 4‐5 shows that in the dynamic model, three functions need to be met and they are adjudication,
26 The figure appears in various forms but the idea is the same. Those are a few authors who have represented the static model in different ways. 72
transfer and subdivision. The ‘mushroom’ which is a static model in this case represents the unregistered land. When land is to be entered in the property register or registration is being introduced on that land for the first time, adjudication needs to be done. Adjudication is the establishment and confirmation of rights and responsibilities in a piece of land. This is normally done once unless there is a land reform where it could be repeated. When rights and responsibilities on a piece of land have been ascertained and registered, then the ‘mushroom’ (which includes owner, right and land) will change continuously from time to time. The change will be caused by a transfer or a property formation processes which includes subdivision, amalgamation, partitioning and reallotment. These changes have to be recorded whenever they occur else, the register is left outdated and loses value (Zevenbergen, 2004b). A transfer of ownership will mean that the owner is going to change but the land remains as it is. So details of the new owner have to be recorded in the property register as soon as the documents presented for change of ownership are thoroughly checked and found to be correct. A subdivision is when a plot of land is physically partitioned on ground. The resultant plots can still remain under the same owner, or he can decide to sell them thereby assuming new owners. The opposite of subdivision is amalgamation. Amalgamation is when two or more plots of land are merged to form one plot. When these two processes which are referred to as property formation in Figure 4‐6 occur, then the changes also need to be registered in order to keep the register up to date. However, Mattsson (1997) adds another process which is alteration of land use as shown in Figure 4‐6. Land use on a piece of land will change according to regulations. These alterations also need to be recorded when they happen. These processes may occur independently or concurrently. For all the functions or processes of land registration to occur and be registered, there is need to have laws to support the system. Laws need to exist and clearly defined to establish guidelines on how each process should be done and also make sure that the processes are done rightfully in a legal manner, otherwise, the whole system of land registration will not work. Authorities imposing these rules and restrictions should be well established in order to make a follow up. With a property registration system well‐functioning, the market system will follow the same trend.
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Figure 4‐6: Three necessary procedures for change in land law Source: Mattsson (1997)
4.8 Concluding Remarks Private ownership rights are recorded along with the restrictions (e.g. mortgage, easements, caveats, etc) on the piece of land. However, the situation is changing as the registers are being designed to also accommodate public interests. Public interests (rights and restrictions) should be included in the real property register for purpose of publicity since they sometimes overlap with private property rights which cause exploitation of public resources (Kaufmann & Steudler, 1998). With both rights registered, security of land tenure, land use, and resource management will be maintained for both private individuals and the country at large (ibid). The real property registers of the above countries can be said to be similar in one way and different in other ways. The similarity is that all these countries have got registers in which rights and charges are registered. The rights registered are of similar nature even the restrictions. Also the properties have a unique identifier which cuts across all land types. The unique identifier is attached to each property regardless of what type of tenure and this identifier is used to link all the various information about the property from all sources of land information. Also, there are various forms of indexing and referencing for each property apart from the Parcel ID. Some forms of indexing include the address of the property and personal numbers of the owners. So this makes searching a property very easy The difference however is in the way the real property register is arranged and kept. The registers could be kept under one custody with different authorities or the custodian in charge of updating the register. Those in charge of the register are
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the ones who are authorized to also carry out changes on the property. So this makes the update exercise easy. From this chapter it will be noted that the type of legal system does not really matter when it comes to having an efficient and effective land registration system. There is a thin line between these systems such that it may be hard for one to classify a real property registration system of totally belonging to a particular legal system. Most of the countries have a hybrid system which has parts of different registration types. It is also observed that the content of the real property register does not matter whether one is using a title or deed system. For a country to develop a good real property register, the issues of the type of registration system should not be dwelled on so much but rather what needs to be registered, why it needs to be registered and in the end what is the intended achievement of the real property register.
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CHAPTER FIVE
5. REAL PROPERTY TRANSACTIONS AND THE CREDIT MARKET IN UGANDA
5.1 Introduction Methods of real property transactions differ from one country to another depending on the regulations of a country. Whereas some countries have well laid out procedures on how to transact on property, for others it is left in the hands of the buyer and seller to sort out. In cases where transactions are left to the buyers and sellers, there will be a high rise in problems caused by unregulated markets like fraud, speculated prices etc. However, when it comes to registration of properties, all countries seem to have a procedure which one has to follow to have their properties registered. Whereas the procedure of real property transactions is not well laid down, procedures for acquiring and registering mortgages is well documented in most, if not all countries. This is because the financial market is related to, and has an impact on all other markets. This chapter therefore provides an analysis of how the property and credit market operates in Uganda.
5.2 Real Property Transactions and Registration in Uganda
5.2.1 Definition of Terms as used in the Property Market i. Land Market Land markets are considered to be exchanges of land rights between individuals or groups for purposes of both rural and urban functions operating within a geographical area (Lwasa, 2006). Although the price factor is necessary in defining the land markets, exchange through gifts and inheritances are strongly prevalent in African cities (Kaggwa, 1994). Therefore for the purpose of this study, the land market will be considered to be the exchange of land or property between two or more people with a monetary consideration attached to it. Sales of property and land have been considered and not any other form of exchanges like gifts and inheritance. ii. Land Transactions A land transaction has been considered to be the process that occurs in the land market. It is the process by which the land is transferred from the seller to the buyer. This includes payment for the land and signing of the sales agreement. 76
iii. Actors in the Property Market Actors are stakeholders who participate directly or indirectly in the property market when it comes to property transactions and land registrations. The stakeholders could be people or institutions who contribute to the operation and running of a property and land market. This includes land based Non‐Government Organizations (NGO), individuals who buy and sell land, real estate agents and government offices who have dealings in land like the Ministry of Lands Housing and Urban Development (MoLHUD). However for the purpose of this research, actors in the land market were limited to individuals buying property while applying for mortgages, real estate agents who sell land and also arrange mortgages for the buyers and MoLHUD.
5.2.2 Description of the Property Market Uganda’s property market can be categorized into formal or informal. Formal property markets are those operating within the government boundaries of land delivery or allocation system, regulations, planning, and land use conditions with laid down procedure and bureaucracy as well as certificates of title. The informal property markets on the other hand refer to markets that operate outside the formal public or state mechanism of land delivery, registration, control and planning regulations by way of a number of channels including purchase (Wamani, 2010). According to Wamani (2010) citing Kironde (1996), informal property transactions are those that; take place within the framework of private agreements between a seller and a buyer; bypass development processes which at times lead to conflicting land use developments; often involve underhand dealings and conflicts; bypass public authorities procedures; transactions that do not involve the survey of land; are not registered which normally poses risks to the buyer. Due to the slow working process of the formal land market, a growing number of land seekers increasingly find the informal sector more responsive to their demands for housing land (Kombe & Kreibich, 2000). People transact informally because high transaction costs are associated with the formal market. Very few buyers acquire land titles for the bought land because they perceive the registration process to be very costly with long delays and bureaucratic tendencies. However, it should be noted that the line between formal and informal may not be evident since there are some characteristics of formal that can be identified in the informal market and the reverse is also true. For this research as stated before, only the formal land market will be considered. Therefore for this particular research a property market or formal property market will be one which involves
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properties that are registered in the property register. In other words the market will deal with properties that have land titles. In Uganda, buying of real property has brought misery to a number of buyers since there is no enforceable, regulated and controlled process or procedure of property purchase by the government or any other controlling authority (Kiwawulo, 2014). Sellers and conmen are using the opportunity to take advantage of ignorant buyers who do not know what it takes to finally own properties. Buyers are left on their own to find ways of not falling into hands of cheats, conmen, liars etc who present themselves inform of the sellers of the property to be bought. Buyers innocently engage in property purchases, to only find out that they cannot occupy or transfer ownership immediately after the transaction is complete (ibid). Buyers have found it difficult to transfer ownership or occupy the newly purchased property because of various reasons among which are: some buyers, after the purchase find that there are settlers on the purchased property of which they cannot evict them since they are protected by the Land Act. If the purchaser wants to occupy the property, then he or she needs to enter into negotiations with the settlers and compensate them in order to leave the property. This brings about additional monetary costs and wastage of time. Even if the land title is genuine, the purchaser may realize that the area of the land bargained for is not what was actually purchased. The area shown on the land title may be actually much bigger than what is on ground. All these and many others is what the buyers have fallen prey to when they do not do their ground work very well to ascertain the ownership and other information about the property. While selling of property is on rampage in almost all parts of Uganda (Deininger & Mpuga, 2003), the price of property is also increasing at a very fast rate. According to Mukwaya (1953), the price of land in the central region in the 1950s was very low that people were charged based on the social relationships they had, such that in case a transaction involved a father and son, the land was offered as a gift. However the situation has changed with people occasionally giving land as a gift. Land is considered to be the most valuable asset an individual holds because of its ever changing and increasing value; secondly it is easily disposed off in terms of sale. Even with transactions amongst close relatives, the seller can only dispose off the land or property to the relative who is capable of providing the asking price (Nkurunziza, 2008).
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5.2.3 Procedures of Real Property Transactions Unlike other countries where there are procedures laid down to follow when buying or selling a property, in Uganda such procedures do not exist (Nkurunziza, 2007). The buyer and seller are left to decide and determine for themselves how to transact or transfer property. The seller is not bounded by any law of how he puts the property or land on sale and how payments are and should be made. On the other side, it is up to the buyer to look for the property and also make sure that the transaction they are about to engage in is not fraudulent. If one needs to purchase real property in Uganda, there are no documented procedures to follow. However, the purchasing party has to have the following in mind so as to make the transaction successful without any form of fraud arising. The procedures explained below are based mainly on Nkurunziza (2007), interviews, questionnaires and other literature. i. Availability of the property The starting point is to have the property or land that you need to purchase to be available. Information about property and land on sale can be easily got from brokers, neighbours, real estate agents, friends, relatives and the LC chairman of the area. From these informants, information such as the price, location, size will be obtained. When a buyer gets to know about the availability of the land, it is their responsibility to request the informant to take them to the identified property to have it inspected and to make sure that it meets the needs of the buyer. If the buyer shows interest in the property, it is up to them to make sure that they get detailed information regarding ownership and encumbrances. It should be noted that there are no government databases showing property or land on sale. However it is becoming more popular for real estate agents to establish data bases for their own use for the properties and land they are selling. Therefore it is up to the buyer to pick out a plot of land, and property brokers or real estate agents to locate an available plot. ii. Title search There is no source of information concerning land that is kept by the government except through the property register. Lately, real estate companies or agents have developed their individual databases of properties but they rarely share their information. Immediately after identifying the property, there is need to conduct a title search in the property register. This search is carried out to ascertain the truth about the existing piece of land. The search will help the buyer get to know the true ownership of the land, size, whether the land is free or has any encumbrances and 79
claims like mortgages, caveats, easements etc. There is a fee attached to the title search which needs to be paid in the bank before a search of the property is made. The search fee is UGX 10,000 (approximately US $4) if one does not need a certified copy of the searched land title. When one needs a certified copy the fee is then doubled to UGX 20,000 (approximately US $8). Regardless of the type of search, a bank charge of UGX 5,000 is paid in the bank. But with the computerization of the property register, potential buyers will be able to search for property online without having to go to the registry. iii. Ascertaining information about the property Apart from the title search, it is the buyer’s responsibility to make sure that he or she exhausts all the avenues to help him or her obtain information about the land because there are such information that the title search or search at the property register cannot show. For example, if there are any conflicts and squatters on the land. For a buyer to get information about the property, the property register is one of the places the buyer is expected to visit in case of registered land. Since the property register is never up to date, buyers are advised to seek other sources in regards to information relating to the properties or land they are transacting on. The additional sources include brokers, relatives, neighbours and LC chair persons of the area. However it should be noted that there are additional costs that come with search of information as the informants need to be given some small. With the property register having missing information on property as they are incomplete and not up‐to‐date, it is the responsibility of the buyer to search for additional information about the land and property from other sources. iv. Negotiating a price Negotiation is normally between the buyer and seller, although in some situations, a seller may appoint an agent or a broker to negotiate on their behalf and the buyer can also delegate negotiations to someone if they feel they are in better position to do it. The price tagged to the property is the asking price and the starting point for the negotiations. Since there is no standard way of determining prices of the property by the seller, room for negotiations have to be created in order to reach a price which both the seller and buyer are willing to accept. However when negotiating prices, different factors are considered: geographical and physical location, plot size, type of land tenure, neighborhood environment, terrain level or quality of infrastructure and social services available (Nkurunziza, 2007). Negotiation of the price should be done together with the form of payment. This helps in the drafting of the sale agreement on which clauses and conditions
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should be included in the agreement. Payment terms could be that the buyer pays the entire amount at once or in installments. If it is in installments then the date of payments of the installments need to be agreed on. Although most sellers prefer to be given cash, others prefer the money to be paid in their bank accounts and payment slips presented as evidence of payment. v. Boundary verification Boundary verification is done by bringing a land surveyor to open boundaries. Boundary verification will help affirm the true location of the boundaries and if the area shown on the land title or claimed by the property owner and his agent is true. This exercise is initiated by the buyer with the consent of the seller. The fees of the land surveyor are solely met by the buyer as she/he is the one interested in confirming the boundaries. vi. Payment and execution of a sale agreement After the price has been agreed upon by both parties and all the other information about the property being okay, a sale agreement which normally contains the terms of the transaction is drafted by either a lawyer, LC chairman or any other person chosen by the transacting parties. After the agreement has been drafted and payments made, the sale agreement is signed by both parties and their witnesses. The witnesses could be friends, relatives, a broker, a lawyer or the LC chairman where the plot is located. It should be pointed out that it is not compulsory to use a lawyer or LC chairman to draft or even witness the agreement as there are no standard requirements or formats for the sales agreement but it is safer to have both if not one of the two for reasons of secure transactions. When the LC chairman is used, one advantage is that it is in away having the transaction registered so as it is known to the area leader who is a custodian of the area. Although the transactions are not registered formally, the act of involving the LC chairman who is the local leader in the area makes the property get registered informally. It makes the transaction known and in case any information is needed about the land, the LC chairman is in position to explain. Also in case of any disputes concerning that particular property then the chairman is in better position to give explanations since he is always a point of reference when there are issues to deal with land in an area. If a lawyer is involved, a fee of one hundred fifty thousand Ugandan shillings ($60) is charged but it could also be 1‐2% of the property value of the sale price.
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5.2.4 Procedures of Land Registration After the transaction on the property has been completed, then the new owner can go ahead to have the property registered in their names. The procedures documented are those of having a property registered after a transaction has been made in case the buyer wants to transfer the property into their names. A report on doing business in Uganda stated that it could take on average between 100 and 300 business days to register land and the cost go up to 300,000 (about US$120) to have a land title (World Bank Group, 2014). The cost and time indicated here is what it is actually supposed to be if one decided to get the land title without any third party. With a third party or a broker involved, the cost will go beyond US$ 400. Below is the procedure followed by one who wishes to transfer property to their names and get a land title. Also to it are the costs charged by the MoLHUD. But it should be noted that the actual costs people incur are more than what the ministry charges because of various reasons and one being that most people in Uganda do not know the procedures and how much it costs to get property registered (Global Property Guide, 2014). In turn they entrust land registration to third parties who inflate the price. The procedures and actual costs of land registration are as follows. This write up of the procedures is based on the interviews carried out with the officials in the MoLHUD. i. Possession of duly signed transfer form It is believed that by the time one starts the process of transferring the property, they carried out a search before buying the property. The process of transfer or registration of the property starts as soon as the new owner (buyer/purchaser) has finally settled all the dues of the old owner (seller/vendor) and the sales agreement has been fully signed. The new owner in this case who is the applicant should have a fully completed set of transfer forms which includes a transfer form and two consent forms. He /she should also possess a photocopy of the land title and two passport photos of the seller and buyer. The transfer form is signed by both the vendor and purchaser (applicant) and one witness who is preferably an advocate. There is no cost of obtaining any forms as they are got from the internet on the MoLHUD website or at the MoLHUD itself and DLOs. ii. Stamp duty assessment and payment The above set of documents is then taken to the valuation department at the land office to make an assessment of the value of the property for stamp duty payment. The assessment is done by the valuer at the DLO who acts on behalf of the Chief Government Value (CGV). 82
After the CGV has attached a value to the property, the file containing the documents is then forwarded to Uganda Revenue Authority (URA) for assessment of stamp duty and provision of a stamp duty form. The applicant then waits within a time frame of one to ten working days to pick the forms then with the assessed value at the DLO so as to make payments of stamp duty and registration fees in the bank. Stamp duty is 1% of the assessed value of the government value and it is independent of the purchase price. Registration fee is Ugandan Shillings 10,000 (around US $4) plus a bank charge of US $1. Payment is also made for the seal which is Ugandan shillings 5,000 (around US $2). In case of freehold and leasehold an additional consent fee of Ugandan Shillings 10,000 (around US $4) is paid. It should also be noted that for any assessed value of property exceeding UGX 50,000,000 (approximately US $20,000), URA requires the applicant to get an income tax clearance form and pay 30% of the assessed value on top of the other fees before registration. The above fees are then paid in the bank and receipt is issued to the applicant together with the transfer forms embossed by URA. iii. Submission of documents After payment of the fees and the forms embossed, the applicant then can make a submission of all the documents that they have. But for the leasehold, before submission an applicant needs to get consent from the controlling authority of the leasehold title and then make a submission. Apart from the receipt of payment and embossed transfer form, a set of passport photos and photocopies of ID of the buyer and seller, certificate of title and the duly signed consent forms are the documents submitted. Also photocopies of all these documents are also submitted and it is these that are stamped with the word “Received” and returned to the applicant as evidence that documents were handed in for registration. iv. Processing and collection of the land title The applicant then has to wait for some time which could go to 10days and more. At the registry, the applicant file is forwarded to the registrar who passes the transfer instrument before taking it for typing to the secretary and verification to the commissioner of land registration. After verification then the new title is produced by canceling out the name of the old owner and putting the name of the new owner accompanied with a signature of the commissioner. It is after this that the new owner can then pick the land title. From the procedure above, it can be said that the process of getting a land title and the cost are not much however this is far different from what is on ground. Actually most people do not know the procedures of registering land so they always employ
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someone to help them out. This has led to very high costs and time as the person hired to process the land title charges much and also deals with many clients at a time. So you find that for some people it takes them almost six months to get the property registered as stated by doing business above.
5.3 Mortgage and Credit Markets in Uganda
5.3.1 Definition of terms as applied in the mortgage and credit markets i. Mortgage According to the Mortgage Act (2009) of Uganda, a mortgage includes any charge or lien over land or any estate or interest in land for securing the payment of an existing or future or a contingent debt or other money or money’s worth or the performance of an obligation and includes a second or subsequent mortgage, a third party mortgage and a sub mortgage. For the banks, any loan you get using land as collateral was considered to be a mortgage. It did not matter how and where the borrowed money was going to be used. And this is the context in which a mortgage was perceived. ii. Credit Market Just like the property market, transactions in the credit market involve finances. Here people come to borrow money from financial institutions. In the credit market, the financial institutions in this case, the banks, are at the giving end while the buyers/borrowers are at the receiving end. iii. Actors in the Credit Market There are different individuals and institutions that deal with lending and borrowing money. These are all considered to be actors in the credit market as they participate in either lending or borrowing of money or even do both. For the purpose of this study, actors in the credit market mainly considered were buyers/borrowers, banks and real estate agents.
5.3.2 Arrangement of the Credit Market Financial institutions in Uganda can be categorized into three: formal, informal and semi‐formal. The informal institutions provide services to the low income earners who do not have collateral of high value. These institutions are not regulated by the central Bank of Uganda (BOU). They include relatives and friends, rotating savings and credit associations (ROSCAs), various ‘club’ systems which pool members’ savings for loans, village banks, advances (in cash or in kind), and money lenders (Mpuga, 2004).
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The formal institutions are those that are regulated by the central bank and are mandated to issue cheques, time‐deposit accounts, saving accounts, buy and sell foreign and local currencies, give out loans etc (ibid). This category is composed of banks. Currently only five out of the twenty three banks are competitive in offering mortgage financing in Uganda. They include DFCU bank, Stanbic bank, Standard chartered bank, Housing finance bank, and Barclays bank. The semi‐informal institutions include Micro finance institutions and they are allowed to offer loans to their customers, issue savings and deposit accounts but are not to issue cheques and trade in foreign currency (ibid). Both legal mortgages and equitable mortgages are issued in Uganda and a person can acquire a mortgage two or three times using the same title before discharging the first one. The second borrowing on the same title by the same person before paying off the first mortgage is called a further charge while the third borrowing is called a second charge. A mortgage can also be got with a land title that belongs to another person other than the owner. In that case there should be proof of consent of the legal owner. Mortgages are registered in the property register after they have been given instrument numbers. Banks offer mortgage financing of up to between 70‐ 80% of the value of property pledged as security for the mortgage. This means that the buyer/borrower should have the other 30‐20% or be able to raise it in cash. Mortgage repayment periods differ for the different banks and also depend on the amount of the mortgage that you have been given and the repayment amount of each month. Periods range from as low as three years to a maximum of 20 years. A buyer/borrower can pay off the mortgage loan any time before the end date of the mortgage payment (maturity date).
5.3.3 Procedure of Acquiring and Registering a Mortgage in Uganda The process of acquiring a mortgage that is being described in this section only applies to a formal mortgage procedure and not semi‐formal or informal. This is because for the study, only the formal market was considered. This procedure was based on data collected from interviews with the mortgage officers from the different banks, and questionnaires from the buyers/borrowers. The process of obtaining a mortgage can take up to one month depending on the bank and the nature of client. If the client is a first time buyer/borrower then the process takes longer than if a client is getting a mortgage for the second or more times on the same property from the same bank. This may take as short as three days. Also as long as the client has all the requirements, the process will be shorter. The following are the steps taken for buyers/borrowers to acquire mortgages:
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i. Mortgage application The buyer/borrower has to obtain an application form from the bank, fill it in and return it back to the bank with required documents. The requirements for each mortgage vary across banks but there are some documents that cut across all banks. They include but not limited to; valid identification, passport photographs, certified bank statement for the last 12 months, copy of a land title and the financial card among others. If at all the client wants a mortgage for purpose of buying a new property, then additional requirements are needed of which some are the sales agreement, passports and valid identification of the vendor amongst others. The bank will then scrutinize the paper work submitted by the intended buyer/borrower basing on the amount of the mortgage a client wants, the bank will send its valuers to go and value the property that is intended to be mortgaged. The valuer will come out with a report containing the value of the property of which the bank will then know how much mortgage can be given on that particular property. The fees of the valuer are met by the client and are not standard as they are based on the value of the property. After the above procedures, the bank assesses the application again and thereafter communicates the results of whether the application has been accepted or not to the client. If the bank accepts to offer the client a mortgage, the bank then writes an official letter to the client informing them on how much the bank is willing to give. The client will in turn send a written communication on whether they accept the offer or not. ii. Execution of the mortgage deeds If the communication from the client indicates that they are willing to take up the offer, the bank then goes ahead to prepare a mortgage deed. A mortgage deed is the contract or an agreement drafted by the bank showing the terms and conditions of the mortgage. The mortgage deed is signed between the buyer/borrower and the bank in the presence of a witness. The witness, in most cases, is the responsibility of the bank. The bank normally has a witness who is part of the bank and who signs on all the mortgage deeds. The witness could be an advocate, a manager of the bank or any other person authorized by the law. If the client is applying for the mortgage to buy a property, the bank prepares the mortgage deed like the client is already the proprietor/owner of the property after which a transfer of ownership is effected in the clients name to transfer the mortgage
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iii. Assessment of stamp duty and registration fee After the mortgage deed is dully signed, the documents are taken for assessment of stamp duty and registration fees at URA. Stamp duty is always 0.05% of the mortgage value and the registration fee is UGX 15,000 (approximately US $5). The bank pays these fees and after which the documents are presented for stamping or embossment at URA. iv. Registration of the mortgage After receiving the documents from URA, the bank then takes them for lodgment at the land registry or DLOs to get instrument numbers. The documents lodged include; two copies of the embossed duly signed mortgages deeds, copy of the land title, and two passport photos of the client. These documents should be in both original and photocopy. The set of original is retained at the land registry while the photocopy is stamped with the word “received” and turned back to the bank to show evidence of the lodgment of the mortgage. When the document is lodged, the registrar allocates it an instrument number and forwards it to the secretary for typing who in turn returns it back to the registrar to endorse or have it signed and have the registration of the mortgage complete. v. A ward of the mortgage After the bank gets the land title from the registry which the mortgage already registered on it, the bank then notifies the client who is now the buyer/borrower and releases the loan to where it is required. The mortgage takes effect as soon as it is registered. It is important to note that the costs incurred in securing the mortgage are deducted from the mortgage amount that is given to the client. Therefore, the client will find a loan less by stamp duty amount, registration fee, insurance cover, legal fees and loan arrangement fees. Some banks may require that the client pays these fees before signing the mortgage deed.
5.4 Concluding Remarks This chapter described procedures that are supposed to be followed by actors when registering property in the property market and getting mortgages in the credit market. These are the procedures that are supposed to be followed according to the various laws and regulations of the property and credit market in Uganda. The description of the procedures followed when transacting on or purchasing a property in the property market is not standard as Uganda has no laid down procedures on property transactions, but rather has the procedures for land
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registration. It is up to the transacting parties to decide on how they exchange the property and it is also upon the buyer to take precautions not to be duped. However in the proceeding chapter it will be noticed that what is actually happening and practiced in the property and credit market is quite different from what it is supposed to be.
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CHAPTER SIX
6. PRESENTATION AND INTERPRETATION OF THE STUDY FINDINGS
6.1 Introduction This study had 3 specific objectives; i) To determine information needs of actors in the property and credit market of Uganda, ii) To evaluate the impact of information content of the property register on the property and credit market in Uganda and, iii) To describe a model of a real property register that supports the property and credit markets based on the information needs of the actors in the respective markets. The first two specific objectives are presented and discussed in this chapter while the third specific objective is presented and discussed in the subsequent chapter.
6.2 General Information about the Study Population This section, presents a general background of the study population. It has such general information like, number of banks that were involved in the study, experience of the mortgage officers and any other information that was viewed as important in helping us understand this study in a particular way. Experience, for instance, was important to establish the expert level of the mortgage officers and hence the amount of knowledge and information they provided to this study.
6.2.1 Banks and Mortgage Officers There are over 25 commercial banks in Uganda today with three Microfinance Deposit taking Institutions (MDIs) dealing in credit financing of all ranges and dimensions, but the study identified only five banks: DFCU, HFB, Stanbic, Standard chartered and Barclays. All these had a good representation from their respective mortgage officers. These officers had different designations depending on which bank they worked for but most important to note for this study was their varied experience in the credit market that seemed to have a bearing on the quality and amount of information they offered to this study. The Figure 6‐1 figure below presents these varied levels of experience by the mortgage officers who participated in the study.
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Figure 6‐1: Experience of mortgage officers
As it can be observed, 50% of the officers had experience of up to ten years in the mortgage and credit market, 30% had a lower experience of less than five years while 20% had dealt in the credit market for more than ten years. Since 70% of the officers had a working experience of five years and more, it can be concluded that majority of them had a good experience in the study scope and could be trusted to give valuable responses to inform the study. Figure 6‐2, indicates that mortgages are given on houses and land. A housing mortgage is one that is given for purposes of building a house or purchase of land which has a house built on it. A land mortgage is a mortgage given for purchase of vacant land. While some banks (for instance DFCU) finance housing mortgages only, others (but a few of course) give out only land mortgages. However a good number of banks in the market finance both land and housing mortgages.
While most banks give both housing and land mortgages (71%), there is a big percentage range between those giving housing mortgages (27%) and land mortgages (2%). As the data indicates from the mortgage officers, only 2% of the total mortgage volume accrues to land which shows a 25% difference below the housing mortgages. These percentages represent the number of mortgages granted as land and house mortgages according to the mortgage officers and not percentages of mortgage values on land or houses.
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Figure 6‐2: Type of mortgages When asked to explain the difference, one of the senior mortgage administrators in one of the banks had this to say: “You see houses attract more mortgage customers than land for two reasons; First, houses are an end in themselves that a customer after obtaining a house mortgage has nothing else left except the trouble to raise his monthly installment as required by the mortgagee, which is of course easier when the mortgagor is a salaried worker. For this reason, many people feel more comfortable to lift a heavy luggage and have it to its destination once for all than to have a small baggage pushed on their shoulders forever which is the case with a land mortgage‐ one has to battle with it first and later struggle to put a house on it or fumbles with the two concurrently in which case he suffers a heavier burden which in most case fails to settle. Secondly, house mortgage transactions have proved less tiresome, more secure, and profitable to both parties since they carry with themselves fewer encumbrances as regards to ownership and transaction of rights. There are no much cases of fraud, missing information, unregistered rights and so on when it comes to houses on sale as it is on land these days. Therefore, our customers, in trying to avoid such stress and be more secure, many end up settling for houses. That way, they rest their confidence in the assumption that the mortgagee established already that the land on which the house rests is free from any encumbrances before he went on to construct on it and of course they pay for this confidence. Partly this explains why house mortgages attract more value compared to land.” However, there also existed a different argument on the land and housing mortgage as the manager, Corporate Affairs in a Kampala based DFCU branch puts it:
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“For collateral, what we receive most is instead land not houses as is the case with property financing. This may be because many people own land not houses, there are very few people who have more than one house that they can use it for mortgage, as they can for land. A single person can have over three plots of land in a prime location that he can afford to attract a good mortgage if offered as collateral, after all this person has less to suffer if the bank seized one of them (plots) for loan delinquency or total default. However, because a house is always one to every single loan buyer/borrower, it is not easy for it to be surrendered for collateral, even with the most trustworthy client. It is because many feel insecure for the period their houses are held by the bank as they are either servicing the loan or paying back the principle. It is the fear for that stress that only one mortgage with more than one house will be more willing to offer one as collateral. This is why we have less of them than land titles.” It is clear that for any bank to concentrate on land mortgages alone and neglect housing would fetch it more clients, but would deprive them of high value transactions. Similarly, if a bank gave out only housing mortgages and neglected land mortgages, it would fetch them high value mortgages but not a substantial number of transactions. Thus, no rational bank would concentrate on either of the mortgages in isolation of the other. This actually explains why the biggest numbers of banks deal in both houses and land mortgages at once. Buyers/Borrowers normally have different intentions to apply for a mortgage. The study found out that there were mainly three intentions which included buying land, buying a house and building a house as shown in Figure 6‐3. These all present land titles as proof of ownership thus present land as collateral to the mortgage.
Figure 6‐3: A graph showing the motive for mortgage application
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Applications for mortgages are made and secured on leasehold, freehold and private mailo. Customary land and kibanja are not accepted for mortgages in commercial banks apart from Centenary bank. This goes against the Mortgage Act 2009 of Uganda which mandates that mortgages should be given to individuals on all the land tenure systems. The reasons why customary land and kibanja land holders were not given mortgages was the problem of over lapping rights associated with the kibanja and communal ownership associated with customary land ownership. Owners of this type of land do not actually own complete rights over the land, in fact most of them have only user and occupancy rights. They do not for instance have formal documentation to ascertain ownership of their land, which is a big and prime requirement for a mortgage. The lack of such formal proof of ownership renders them mere occupantants or at worst rent paying tenants on another man’s land. The worst case is the kibanja owners as a senior land officer in the MLHUD explains: “The most complicated case is with the private mailo land that is very common in the Buganda region on which dual ownership is exercised. With this, we have got two persons claiming the ownership of the same piece of land and society accepts it. One person is a registered owner of the land with a title and another is a non registered user of that same land. The problem now is that the user can only occupy the land, cultivate, develop it and transfer these rights to any one but not the land ownership. This alone makes him uneligible for a loan against this land since banks are most interested in full ownership of the property that would enable them dispose it off in case of failure to pay.” This opinion throws light on how difficult it can be for such an occupant to secure a mortgage against it or even for this type of ownership to be transacted for a mortgage anywhere. Where property rights are not registered or recognised formally, lenders are skeptical to invest in such ventures for fear of the risk involved. As a result, banks shun away from such transactions and if they are to engage in them, the mortgage debt is very low and the cost of execution is normally very high on part of the buyer/borrower, just to cater for the risk factor. All this explains why there are no mortgages on such type of land. The number and average value of mortgage that each bank gives per month is shown in Table 6‐1.
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Table 6‐1: Commercial banks and the average value of mortgages given
Average value of mortgage given out per month Total Over 500 Between 100‐ Less than 100 million 500 million million ($200,000) ($40,000‐ ($40,000) $200,000) Bank DFCU 2 6 2 12 HFB 2 3 4 9 Stanbic Bank 3 6 9 18 Standard Chartered Bank 2 3 1 6 Barclays Bank 1 1 2 4 Total number of mortgages 10 19 18 49 As the results indicated, the amount and number of mortgage cases given out vary significantly across banks. Some banks give out more number of mortgages than others while others give out more heavy mortgages (those above 500 million/$200,000) than the others. These divergences can be explained by a number of factors; some are of course, beyond the scope of this study but one important factor is the Inter‐linkage and the networking contrivance between banks and real estate agents. Because the mortgage market to some extent largely depends on the availability of the loan fund, many real estate agents forge out either a formal or an informal working relationship with potential banks. In this relationship, the agents recommend their potential clients to the bank they relate with for the mortgage transaction. It follows hence the banks in partnership with strong and famous real estate agents will on average get more mortgage applicants and eventually give out more mortgages than their counterparts who are either in weak partnership (relating with weak and less known real estate agents) or not partnering with any agent at all. From the interviews conducted, one of the managers in real estate said that: “We get into arrangements with various financial institutions that we shall from time to time recommend our clients in need of mortgages to them. We even in some cases work out modalities to ensure that the mortgage process on our property is quicker, soft and cheap for our clients. This is a win‐win strategy for us because it increases our sales volume and also for the bank‐ of course they also are interested in lending.” Another important observation from this is the low and reducing number of high value mortgages. In Table 6‐1, all banks together give out not more than 10 cases of mortgages beyond 500 million ($200,000) per month. The cases however increase as the value reduces, indicating that banks are less willing to spend a huge amount of money on a single mortgage. The underlying factors for this trend are better explained in an interview with the officials in the MoLHUD:
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“Because of poor land information management at the ministry, transactions on land especially in the central region have increasingly become more risky and uncertain, a search alone in the land office is not sufficient to guarantee a prudent and secure traction on any piece of land after all their other overlapping rights on land that constitute serious encumbrances. For this reason alone financial houses are safer when they restrain from funding fat mortgages. The risk is more thinly spread across small mortgages instead.” Such a response is evidence that poor and inadequate information from the land registry inhibits the growth and development of the credit and property market in Uganda.
6.2.2 Real Estate Agents There are many individuals, organizations and institutions that are engaging in selling property. There are different categories of real estate agents; in the lead were the real estate developers and brokers who ventured mainly in land and house transactions. These, according to this study vary in category, capacity and in the clientele base they seek to serve. At the top of the pyramid lie the most established and fully registered real estate companies that own enough capacity to buy land, develop it and sell out to clients of different categories. These include but are not limited to those that were included in this study. This was the study’s target group of real estate agents. The other category includes the brokers with established offices in nearly every town and suburb of the main city. They do not own property in their domain, perhaps due to large capital requirements but have established contacts and connections that help bring the seller and the buyer together for the transaction. Their reward is commission which is always an agreed percentage of the property value. At the bottom of the pyramid are the houses and land hawkers. These do not have offices, location and address. Instead, they are ever on the move to identify small pieces of land for sell or buy. They always deal with the poor and the low income earners who are always missed out on the main stream brokerage. There are various real estate agents but those that participated in the study were five and these dominate the property market in Uganda. They include National Housing and Construction Company (NHCC), Akright Projects Limited, Jomayi Property Consultants, Canaansites Limited Uganda and Eastland agency.
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6.2.3 Buyers/Borrowers Buyers/Borrowers are the individuals who buy property in the property market and then acquire mortgages from the financial institutions. Buyers/Borrowers are potential clients in both the property and credit market. This is because in the property market they buy property while in the credit market they borrow money from the financial institutions which are banks. They are called buyers/borrowers in the credit market and buyers in the property market. In the property market, the buyers/borrowers could transact business with the property owners who could be individuals or real estate agents. When they transact with individuals, it is upon the buyers/borrowers to make an arrangement while if they buy properties from real estate agents, the mortgage is normally arranged by the real estate agents. Obtaining the mortgage arranged by the real estate agent is in most cases easier and takes a shorter period of time than that arranged entirely by the buyer/borrower. This is because the real estate agents have entered into contracts with the banks to provide their prospective clients funding which is not with other land sellers.
6.3 Information Needs of the Actors in the Property and Credit Market As explained in chapter 2, the information needs for the actors were got using questionnaires. The study discovered that all actors in the property and credit market (whether bank, buyer/borrower or property agent), seek different types of information from the property register at different stages of their transactions. In the working of the credit and property markets, information is integral. Knowledge about the property that is about to be sold or mortgaged is one of the determinants of the success of transaction. Therefore parties labour as much as possible to gather adequate and relevant information about the property. Banks need information to seek clarity and authenticity of the property being presented by for the mortgage, in the same way any potential buyer/borrower needs to know more about the property they intend to buy and the real estate agents need to know information on the property they are transacting in to be sure that it is genuine. The major actors included financial institution, buyers/borrowers and real estate agents. The requirements for each of these actors are presented in each of the sections below.
6.3.1 Information Needs for Financial Institutions A total of 49 mortgage officers in 5 financial institutions responded to the questionnaires and 5 head of mortgage sections were interviewed from each back on what type of information they required from the property register. The 96
responses were summarized in Table 6‐2. From Table 6‐2, the general information needed from the property register is information about; the rightful owner, estimated value of the property, Physical location, size of the property, Number of previous and current mortgages placed on the property, any encumbrances, occupancy rights, transaction history on the property (if there were previous failed attempts and engagements of the property in the mortgage or market). As the results indicate, the need to establish the true ownership, the size of the land, the location of the property and encumbrances are on top of the search list for financial institution. Table 6‐2: Information needed from the property register by the banks Needed information about the property from the property register by banks Rightful ownership Estimated value of the property Physical location and size of the property Number of previous and current mortgages placed on the property. Such any encumbrances as caveat emptor Developments on land Dual ownership and user rights for instance occupants and squatters Official easements and such rights that may affect the transact‐ability of the property. Transaction history on the property (if there were previous failed attempts and engagements of the property in the mortgage or market. Furthermore, the mortgage officers were asked to weigh on the type of information sought after listed in if they agreed or disagreed with it. From the results in Table 6‐3 it is shown that the nature of the information required by the actors is wide and all is sought after at one point. The respondents strongly agreed that the information below is needed as suggested by the range of the percentage response which was between 49% to 94%. Mortgage officers strongly agree that the type of information listed in Table 6‐3 is what they need to know from the property register if they are to give mortgages to a buyer/borrower. Information about size of land, location, easements, past transactions on the land, developments on the land, ownership, type of tenure, estimated value and encumbrances were most needed by the mortgage officers. This is because this is the kind of information the bank needs to have in order to assess whether one is to be granted a mortgage or not and even these affect the value of the mortgage to be given either in the upward or downward direction. Although information about land use planning and restrictions was needed, it was not as strongly needed as the other information. The information in Table 6‐2 and Table 6‐3 is in agreement with each other meaning that this is the information about a property that is needed in the banks in order for the mortgage system to work smoothly.
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Table 6‐3: Evaluation of the information needed by the mortgage officers from the property register Mortgage officers Nature of information Strongly Disagree Not sure Agree Strongly disagree agree N27 %28 N % N % N % N % Size of the land 0 0 0 0 0 0 3 6 46 94 Map and Location 0 0 1 2 0 0 3 6 45 92 Single ownership 0 0 0 0 0 0 15 30 34 70 Joint ownership 0 0 3 6 1 2 16 33 29 59 Apartment ownership 0 0 4 8 4 8 11 22 30 62 Condominium 1 2 5 10 6 12 13 27 24 49 Easements 0 0 0 0 0 0 7 14 42 86 Mortgages 2 4 5 10 6 12 8 16 28 58 Usufruct rights 2 4 0 0 3 6 11 22 33 68 Land use planning and 2 4 7 14 4 8 12 25 24 49 restrictions Customary rights 0 0 4 8 4 8 9 18 32 66 Nature of tenure 1 2 2 4 3 6 15 30 28 58 Occupancy rights 1 2 2 4 3 6 15 30 28 58 Number of transfers 1 2 1 2 1 2 7 14 39 80 Estimated value 1 2 2 4 2 4 12 24 32 66 Caveats and injunctions 0 0 6 12 1 2 11 22 31 64 Number of titles 0 0 6 12 1 2 11 22 31 64 presently issued Developments on land 0 0 0 0 0 0 3 6 46 94 Squatters and tenants 1 2 4 8 1 2 14 29 29 59
6.3.2 Information Needs for Buyers/Borrowers Buyers/Borrowers require certain information about the property they desire to purchase. This is because they do not want to lose opportunities to secure mortgages but also not to deal with fraudulent transactions. The type of information needed by the buyer/borrowers about the property before they can buy and arrange mortgages for the transaction are listed in Table 6‐4. Like for financial institutions, buyers/borrowers’ major information needs revolves around establishing the true ownership, location, size, value, encumbrances and property user rights. Buyers/borrowers strongly believe that all this information is important and needs to be in place if any mortgage arrangement is to be successful.
27 N means frequency of responses. 28 % is the percentage representing the frequency. 98
Table 6‐4: Information needed from the property register by the buyers/borrowers
Needed information about the property from the property register by buyers/borrowers About details of ownership of the property About the location of the property About rights of occupancy on the property About the size of the property About previous mortgage records on the property About easements on the property About the nature of the tenure on the property About court injunctions and caveats on the property About the estimated value of the property About any other parties/persons who has claims over the land Furthermore, the buyers/borrowers were asked if they agreed or disagreed that the information in Table 6‐5 is important or not.
Table 6‐5: Evaluation of the information needed by buyers/borrowers from the property register Buyers/Borrowers Nature of information Strongly Disagree Not Agree Strongly disagree sure agree N % N % N % N % N % Size of the land 0 0 0 0 0 0 8 7 104 93 Map and Location 0 0 0 0 0 0 12 11 100 89 Single ownership 0 0 0 0 0 0 14 12 98 88
Joint ownership 0 0 0 0 4 4 18 16 90 80 Apartment ownership 0 0 8 7 0 0 37 33 67 60 Condominium 10 9 0 0 0 0 26 23 76 68 Easements 0 0 0 0 0 0 42 37 70 63 Mortgages 0 0 0 0 0 0 33 29 79 71 Usufruct rights 0 0 0 0 0 0 45 40 67 60 Land use planning and 0 0 0 0 0 0 29 26 83 74 restrictions Customary rights 0 0 3 3 3 3 39 34 67 60 Nature of tenure 0 0 0 0 0 0 28 25 84 75 Occupancy rights 0 0 5 4 0 0 17 16 90 80 Number of transfers 3 3 0 0 0 0 11 9 98 88 Estimated value 0 0 0 0 0 0 25 22 87 78 Caveats and injunctions 0 0 0 0 1 1 22 20 89 79 Number of titles 0 0 2 2 1 1 27 24 82 73 presently issued Developments on land 0 0 0 0 0 0 11 10 101 90 Squatters and tenants 0 0 0 0 0 0 22 20 90 80 From the results in Table 6‐5, it is shown that the nature of the information in that table is needed as suggested by the range of the percentage response which was from 60% to 93%. The buyers/borrowers strongly agree that all the type of information listed in Table 6‐5 is what they want to know about properties in the register.
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6.3.3 Information Needs for Real Estate Agents The amount of information needed by these agents when engaging in the property market will always depend on the position and side of the market they fall on during a transaction. That is; whether they are buyers or sellers. As sellers, real estate agents require less information search than when they are the potential buyers. Remember they are already the owners of the property being offered for cash or mortgage and as such they know almost everything about this property (they gathered information on this property at the time they purchased this property) and influenced their decision to buy the property. So at this level the trouble to know about the property rests heavily on the prospective buyer. On the other hand when real estate agents are in the market as buyers, the information needs to facilitate the transaction change significantly and as they need to know every detail about the property they are about to acquire. It is the fear to lose the investment that increases the motivation to gather enough information. Therefore at this point the search for information is more rigorous and aggressive methods are always employed for purposes of closing all chances of error. The information needed by the real estate agents includes: Rightful ownership, administration and power to transfer the property; availability of the property in terms of physical location, shape and accessibility; other interested parties on the property if any, e.g tenants, occupants and other interest bearing elements; amount of the property in terms of size as this is vital to compare the amount in the title with the one physically on ground; other transactions on the property if any, which may be current or previously done e.g mortgages; legality of the property to be transacted on. This is needed to establish if the possible transaction does not contravene any laws and this is common with deceased’s property. There are also other factors needed to be known when looking at legality of the property which are to find out if the transaction is considered a moral issue by the society, say buying and sealing off a public water body found in the property, removing of burial sites etc are very critical issue to consider. Other information needed by the real estate agents includes: type of land tenure because it gives the bundle of rights entailed in the property; type of restrictions on the property that might have been issued on it by any competent authority. Court orders and caveat emptor are the most commonly feared and cared about. The type of information needed by the real estate agents from the property register is summerised in Table 6‐6.
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Table 6‐6: Type of information needed by the real estate agents from the property register Type of information needed by the real estate agents from the property register Rightful ownership, administration and power to transfer the property. Physical location Other interests e.g occupancy rights Size of the land Previous transactions on the property if any Restrictions and regulations Type of land tenure Encumbrances and caveats Value of the property Developments on the land From the findings in section 6.3, it can be concluded that all the actors in both the property and credit markets seek the same information about the property. They have the same type of information they seek to get from the property register if their transactions are to be a success. The information sought by all actors can be summarized in Table 6‐7.
Table 6‐7: Information needed from the property register by both actors in the property and credit market in Uganda Different actors in the property and credit market Nature of Information Banks Buyers/Borrowers Real Estate Agents Rightful ownership Estimated value Map and location Size of land Transaction history Developments on land Nature of tenure Encumbrances Land use planning and regulations It is observed from Table 6‐7 that the information needed by the banks, buyers/borrowers and real estate agents is the same. This means that regardless of whether one is transacting in the property or credit market, the type of information that should be available in the property register about a property should be able to define the property all dimensions of rights, ownership and the land itself as this is what is needed by every actor.
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6.4 Impact of the Information Content of the Current Property Register to the Property and Credit Markets in Uganda 6.4.1 Adequacy of Information provided by the Property Register With actors seeking similar information, if their transactions are to be carried out successfully, there should be a provider of such information. The only official place to search for information about a property is the property register. But how much of the information sought after by the actors can the current property register provide. Table 6‐8 and Table 6‐9 show the information that the property register is able to provide to the financial institutions and buyers/borrowers respectively. Table 6‐8: Information provided by the property register according to the mortgage officers. Mortgage officers Type of information Yes No N % N % Details of ownership 49 100 0 0 Location 49 100 0 0 Rights of occupancy 0 0 49 100 Size 49 100 0 0 Previous mortgage records 49 100 0 0 Easements on the property 0 0 49 100 Nature of the tenure 49 100 0 0 Court injunctions and caveats 49 100 0 0 Estimated value 0 0 49 100 Other parties with claims over the property 14 29 35 71 Regulations and restrictions 0 0 49 100 Developments on land 0 0 49 100
Table 6‐9: Information provided by the property register according to the buyers/borrowers. Buyers/Borrowers Type of information Yes No N % N % Details of ownership 112 100 0 0 Location 112 100 0 0 Rights of occupancy 10 9 102 91 Size 105 94 7 6 Previous mortgage records 97 87 15 13 Easements on the property 0 0 112 100 Nature of the tenure 112 100 0 0 Court injunctions and caveats 112 100 0 0 Estimated value 0 0 112 100 Other parties with claims over the Property 22 20 90 80 Regulations and restrictions 0 0 112 100 Developments on land 0 0 112 100 All the respondents in the market agree that all the formation items presented in Table 6‐3 and Table 6‐5 are important factors of the property and credit market.
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What is unfortunate however is that only some of this information is provided by the register. It is observed from Table 6‐8 and Table 6‐9 that apart from ownership, size, location and nature of the tenure, the register only adds record of previous mortgages and caveats leaving out many other yet important details about the property as shown in Table 6‐3 and Table 6‐5. Details of the property in terms of location, ownership, size, tenure and caveats can be obtained and are provided for by the property register. This is shown by the 100% response rate provided by both the buyers/borrowers and mortgage officers showing that yes from the property register one can get information about location, ownership, size, tenure and caveats. However information about easements, developments on land, right of occupancy, estimated value, public regulations and advantages are not obtainable in the real property register. This is shown by a 0% response rate from both the mortgage officers and buyers/borrowers in Table 6‐8 and Table 6‐9 respectively. This means that the real property register cannot meet all the needs of the actors in the property and credit markets in Uganda regarding information provision about the properties transacted on. Like a sales manager in one of the real estate companies said: “it is also very important to find out if the property you are about to transact on has other user rights such as easements, usufruct and occupancy rights because these of late have become a crucial determinant of how far you can use your property, with the amended land laws buyers are reluctant to engage in any transactions on an encumbered land. Clients therefore of late go extra miles to establish such overlapping rights and how they can affect their ownership rights if they ever make a decision to buy. At the extreme one would prefer to buy the land free of any of such impediments.” Such a statement is a signal of how actors would need an elaborate, accurate and up to date real property register to furnish the market with such vital information if they (markets) are to be complete. However there are types of information were the rate of responses from the mortgage officers and the buyers/borrowers differs. These includes rights of occupancy, size, previous mortgage records and other parties with claims over the property. Though there is a divergence in the rate of response from the mortgage officers and buyers/borrowers, the general response tends to agree with each other. For example 100% of the mortgage officers say that information on rights of occupancy is not provided in the property register. While 91% of the buyers/borrowers agree with the mortgage officers, 9% say information on occupancy rights is provided by the property register. Also 100% of the mortgage
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officers say that there are records of previous mortgages while 87 % of the buyers/borrowers agree with the mortgage officers and the 13% do not agree.
6.4.2 Gaps in the Property Register Since the register can’t provide all the information needed on a property, actors have instead resorted to sourcing this information from elsewhere to complement the one got from the register. All the actors in the property and credit market admitted that they get information from multiple sources including the property register as shown in Table 6‐10. Table 6‐10: Sources of information about property Mortgage Buyers/ officers Borrowers N % N % Sources of Through application for a 15 31 43 38 information search in the property register Through direct contact with 9 18 15 13 land officer Through a renown legal 7 14 16 14 practitioner Through neighbours 6 12 10 9 Through previous owner of 1 2 4 4 the land Through real estate agents 3 6 5 5 Through L.C chairman 8 16 19 17 Total 49 100 112 100
From Table 6‐10, it is clear that apart from the property register, there are other sources of information people employ to ascertain the truthfulness of the property and check for other details about it before they can make decisions of purchase. Among these alternative sources, the LCs (mortgage officers is at 16% while buyers/borrowers is at 17%) and neighbors (mortgage officers is at 12% while buyers/borrowers is at 9%) play a significant role in establishing other user rights that may pertain to the property. So as a land officer of the KCCA said, they should not be ignored because; “They are engines of social capital that help provide that other part of the story on the property that cannot be captured in the current property register, neighbors know who else has a user right on the property apart from the official owner, they are aware of the unofficial easements through the property to the community water body, grazing yard etc. the L.Cs are the local courts that have either witnessed quarrels, misunderstandings or settled past wrangles on the property. So for any focused buyer it would be naive to depend on the search results alone to complete a land transaction.”
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It should be noted that the land officers and legal practitioners all get the information about property from the property register. This shows that even with the missing information from the register, most of the actors will at all times contact the register then supplement with the other sources to get the missing information. Table 6‐11 shows how much information financial institutions and buyers/borrowers can obtain from the property register compared to other sources. It is shown that whereas all the information that is needed to be able to transact in both the property market and credit market can be obtained from the other sources, the property register can only provide some information (details of the owner, location, size, previous mortgage records, nature of tenure and caveats) and leave out others (rights of occupancy, easements, estimated value, developments on the land, usufruct rights, restrictions and regulations).
Table 6‐11: Distinguishing information obtained from the property register and other sources as presented by the mortgage officers and buyers/borrowers Mortgage officers Buyers/Borrowers Type of Information Property Other Property Other register sources register sources Details of ownership Location Rights of occupancy Size Previous mortgage records Easements on the property Nature of the tenure Court injunctions and caveats Estimated value Other parties with claims over the Property Regulations and restrictions Developments on land Getting information from the property register alone is not enough to warrant a transaction, such information has got to be backed up by many other procedures and processes as the Manager, Quality Assurance in Stanbic bank explains: “As things are now, it would even be very risky for us to entirely rely on information from the register to grant a mortgage to any applicant. It can no longer be trusted as we have numerous cases of forgery of search results issued to favor an applicant, rampant cases of dual issuance of land titles and certificates on the same piece of land. It is all this that force us to take extra efforts to carefully establish the authenticity of the information obtained and in the process, we try to back it put with other sources such as; L.Cs, neighbours and physical visits to the ground. All this delay the process for a mortgage.”
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Moreover there is no guarantee that every applicant will succeed as long as he waited for the required time.
6.4.3 Effects of the content of the Property Register on the Property and Credit Market From the study, it was established that the property register as of current has insufficient information, poor kept records, missing items and unnecessary delays in service delivery. As an officer in KCCA notes in an interview below: “The register misses out on the major information of its current contents. The new developments in the market systems are not depicted and as a result it narrows its importance in the modern market systems. While in the modern society market patterns and trends include sales of more less physical commodities such as; apartments, condominiums, the register has not changed to reflect such changes.” The Figure 6‐4 below shows what the mortgage officers think about the amount of information the register provides to their respective banks for purposes of facilitating the mortgage market.
Figure 6‐4: Amount of information shown in the register according to mortgage officers.
It is indicated that most of them (61%) do not feel that the information obtained from the property register is adequate enough to facilitate any mortgage transaction. They believe the market needs much more information than the register can provide. Moreover the information from the register is shallow and incomplete as a senior credit administrator in Housing Finance Bank puts it: “In more realistic terms the register does not provide information on mortgage transactions that involve houses. The information it contains is about land, yet a big deal of mortgages is houses. We therefore find the register not very helpful in that regard. Other sources of information have got to be consulted to gather the require information about the property. By the way, even where land is involved the register does not provide enough information for a conclusive decision and I believe no sincere business
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oriented financial house can solely rely on this type of information alone to take a decision with any serious financial implications like a mortgage.” This opinion seemed to be in agreement with many other experts that were key informants in this study. In their opinion most of the credit officers agreed that the register is not complete and equipped with the necessary information to help facilitate the credit and property markets in Uganda. There is a bulk of information needed on property that the current register does not have or has it in piece meal that it can’t be sufficient basis for any transaction. The absence of such information undermines the working of the property and credit market as a credit manager in one of the banks puts it. “When we can’t find quality and timely information needed to deal with a particular transaction at hand simply because either this information is lacking in the property register or the one gathered is deemed insufficient to warrant the feasibility of the transaction, we are hugely blown off. In many cases such a transaction would be dropped on that basis alone although efforts by the responsible parties may be made to look for additional information to fill the inherent gaps, but such information may not in most sincere cases be efficient to constitute a good supplement‐ it’s usually defeated on basis of credibility, formality since most of the alternative information sources are informal and crude.” This argument raises two significant issues that make the situation even more complicated; First, the property register is the only credible source of information to feed these markets but unfortunately, it has limited capacity to perform its function. Secondly, the alternative sources to the property register suffer credibility issues that cannot entirely substitute the register. In fact they are only supplementary in nature. This supplementary role however demands that the register must have provided a reasonable piece of information that form a reasonable ground for a transaction so that what is missing are satisfactory pieces of information but where the register lacks on this, the other sources are rendered null. As the Figure 6‐5 shows, these sources have other numerous challenges that do not permit them to serve a good substitution to the property register.
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Figure 6‐5: Other challenges faced in obtaining information from other sources than the register Thus it must be stressed here that despite its weaknesses, the register still serves as the only formal and official source of information to the property and credit market. In fact one of the officials in the Ministry of Lands was quoted saying that: “The challenges of the current register are of course numerous and while we appreciate that some are internal to our system, others are external and extraneous in setting. We must realize for instance that the economy of Uganda is growing and is a take off stage. Markets have sprung out, and grown nearly for every good and service of which the property and credit markets are not exception but rather they are at shake out stage. So the demand is very high that supply of property can no longer keep pace with the demand. Such a market, with huge sums of operating capital looks on to the property register for information, approvals, sanctions and dismissals. While our internal organs and set up have not changed for a long time, markets change and so do the trends in these markets as well. Information needs do not only change but also increase such that even the available small amount of information cannot be given to those in need of it in time and desirable formats. So it is not lack of information always instead it’s the demand‐ supply mismatch.” This would also imply that the register is not without any meaningful information to the market but rather has less than what the market requires, either, due to high demand or changing trends in the market that the register has not kept pace with. This same argument seems to be supported by many other respondents who never seemed to rule out the fact that the register has some good information to offer the market. For instance, in most of the interviews conducted, real estate
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developers almost unanimously agreed that they entirely rely on the register for such information like size, location among others. There was also an agreement on the truthfulness and credibility of the information provided in the register. In fact what came out more explicitly is that despite its inherent weaknesses, the register is still largely regarded as the sole supplier of official information about the property market and even when a transaction requires additional information to be performed, such information supplements the official block from the property register. This places the register at the very center of the credit and property market in Uganda. Thus the effect of the register on the working of the property and credit markets can be classified as being both positive and negative in nature. Many real estate managers agreed that the absence of a comprehensive, regularly updated and accessible property register is to blame for the faulty working of the mortgage market and their entire real estate business. The absence of information has disadvantaged the property market and deprived many actors of lucrative business. Real estate managers said that when they lack good demonstrable information to convince their clients on the authenticity of the property they are about to deal in, then no business can exist between them and such doubting clients. Delayed business transactions due to untimely information delivery from the land office is another challenge that was echoed by the real estate agents. They realize that the real estate business is a time conscious market and should be completed timely as it involves huge capital requirements. The success of any particular transaction will depend on how quick one would bring the necessary information required to convince a client. Once this information fails to reach on time, customers shift their money quickly to other business ventures to avoid loss and reduce the risk associated with a high liquidity preference. The lack of timely sufficient information has further resulted into increased fake information and a growing informal land and property market where some clients decide to rely on informal rumors to base their transaction. This has led to the development of counterfeit information from unscrupulous market speculators, all leading to increased risk of doing business. Like a senior bank manager says: “No mortgage shall then be sold in such an environment simply because mortgage financing involves banking and for us (the bank), we work with certainty and coherence, until we are sure that the risk factor is less than 10% we can’t issue any transaction.” Therefore this statement indicates that in the property market with a poor information management system, both the mortgagees and mortgagors are 109
affected. While all other transactions can forge their way into the markets of course, with high risks and serious financial implication, mortgages will not. They will simply fail and die naturally. Thus, for an economy desirous to improve and promote the mortgage market, the information management and delivery systems have got to be improved. Different banks have different mortgage requirements, some are internal to the bank while others cut across all banks. Although in this study the focus was put on the general mortgage requirements that were found common and applicable to all financial institutions, it is important to note that the requirements specific to individual banks are the fundamental determinants of the period it takes an individual buyer/borrower to obtain a loan from that bank. Figure 6‐6 shows the variations in time that it will take an individual mortgage applicant to obtain a mortgage from a respective bank. As indicated majority of the applicants have to wait for over three weeks before a mortgage can be granted to them. Besides there is also a good number that has got to pursue the mortgage for a month and above, a period that is too long for any competitive market.
Figure 6‐6: Period taken to obtain a mortgage The factors behind this delay are numerous and one of them is because of information problems. Actors in the market need to have good knowledge about the property they are about to transact in and this is done by gathering information about the owners of the property, size, and other related information as clearly indicated in section 6.3. The delay is compounded by the source of such information as a sales agent in one of the real estate companies asserts:
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“We must acknowledge that mortgage process in Uganda takes longer than elsewhere in the region because here we still use the most primitive and rudimentary way of storing information. The method and procedures alone for obtaining such information are very poor and disappointing. Because of this, we are left with no many options but to delay in our deliverables. The register has got to be put to modern standards that are acceptable so that we can obtain this piece of information by ourselves on the internet as for instance what the URA has done with tax payment and motor vehicle registration.” Therefore, it is the reliance on the register for information that is partly to blame for this delay in mortgage acquisition. Figure 6‐7 shows that almost only half of applicants succeed in acquiring a mortgage from these banks. The remaining half get disqualified for reasons established in Table 6‐12. The drop down of applicants by nearly half for every week is a big constrain to the credit and property markets for a country like Uganda that needs fast growing markets especially at its current take off stage of development. This high market failure is a clear indication of a will‐to but no ability‐ to grow market which is a basic characteristic of undeveloped countries typical of the sub Saharan Africa.
Figure 6‐7: A graph showing the average number of successful mortgage in all banks per month According to the buyers/borrowers who have ever failed to get a mortgage in Table 6‐12, lack of a land title (30%), incorrect information about the property (20%), there being squatters (14%) and other ownership claims (13%) account for the biggest percentage on why they failed to get mortgages. Therefore it is lack of quality information that is partly to blame for locking many potential buyers/borrowers out of the mortgage market. User rights are also a factor to consider if we are to truthfully evaluate the problem. Many people either because 111
of the nature of the land tenure or the process required, have no registered land rights. For instance, bibanja squatters on private mailo land have substantive user rights bundle on land that does exist side by side with ownership rights. Unfortunately these rights are not registered in the current property register and as a result many of these applicants are locked out.
Table 6‐12: Showing the reasons buyers/borrowers have ever failed to secure a mortgage. Responses N % Reasons for failure Lack of land title 21 30% to obtain a Incorrect information about the 14 20% mortgage property Missing information about the 2 2%
property in the property register There were squatters on the land 10 14% Another person/people were 9 13% claiming ownership on the land Failure to register the land 7 10% Lost interest in the mortgage 8 11% Total 71 100%
There was also a percentage (11%) of people who lost interest in pursuing the mortgage. There could have been various reasons for this action amongst which could have been; the procedure was long, they got alternative sources of income or they were not interested any more in carrying out the activities that necessitated them to get the mortgage. According to the mortgage officers, as shown in Table 6‐13; lack of security, incorrect information about the property, missing information about the property in the property register and encumbrance on the property to be mortgaged are the most significant reasons why buyers/borrowers have failed to obtain mortgage loans in Table 6‐12. This is in agreement with what the buyers/borrowers give as failures for them at one point to obtain mortgages.
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Table 6‐13: Showing reasons by mortgage officers for failure of buyers/borrowers to obtain mortgages. Reason for failure to obtain Most Significant Less Not mortgages significant significant significant N % N % N % N % Lack of security 27 55 19 39 2 4 1 2 Incorrect information about the 37 76 12 24 0 0 0 0 property Missing information about the 24 49 14 29 7 14 4 8 property in the property register Encumbrance on the property to 24 49 18 37 3 6 4 8 be mortgaged Failure to authenticate proper 17 35 15 31 10 20 7 14 ownership of the property Withdraw of interest by the 0 0 5 10 27 55 17 35 applicant Cases of inability to repay by the 17 35 18 37 9 18 5 10 prospective applicant The most reason there was failure to obtain mortgages was lack of security or land title and incorect information about the properties. This were the reasons that both the buyers/borrowers and the mortgage officers considered as the ones highly facilitating failures to obtain mortgages. This was because most people in uganda do not have land titles yet they are considered as security while picking a mortgage. Also at the property register there was information missing and uncorrect about some properties as the registers were out of date. This also confirms the finding that the register was shallow and inadequate to meet the information needs of the property and credit market. Loss of interest in the mortgage and inability to pay the mortgage were the least reason that were given for failure to obtain the mortgage. This is because by the time one applies for the mortgage they have evaluated that the mortgage is needed inorder to accomplish what they want. Unless someone gets the money somewhere or their plan changes it is very hard for one to withdraw. But it is also a process to withdraw from getting a mortgage and it comes with some costs. Inability to pay is minimal because already the security is available and can be used to meet the mortgage. But even then people would not want to lose their properties because they are of hign value than the mortgage so they endeavour to pay the mortgage so that they get to retain their properties. Missing information about the property and encumbrances were part of the reasons why there was failure to obtain mortgages. This comes back to the issue of the property register lacking some information that is needed in the running of the property and credit markets.
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CHAPTER SEVEN
7. MODEL TO SUPPORT THE PROPERTY AND CREDIT MARKET IN UGANDA
7.1 Information Content of the Proposed Model The information content of the property register depended on the information needs of the actors in the property and credit market in Uganda which are based on the findings from the empirical investigations. The proposed model can be based on any system but in this case it will be based in the title system which is used in Uganda. Whatever is in the register should be reflected on the land title held by the owner of the property. The information content of the model will be divided into three being the rights system, the nature of the owners and the property or land. These can be explained as below.
7.1.1 Property Owner It can be said that the owner plays a very important role when it comes to matters of security of the property. The real owner of the property needs to be known and so registered in the property register. It is important that the correct name of the owner and a point of contact which is usually the address are registered. These normally identify the owner more so the names. In case of any communication, it then becomes easy to let the owner know. But majority of Ugandans do not have mail boxes meaning no box numbers as addresses. Also properties have no addresses as identifiers so it becomes difficult to send communication through mails. But with the advancement in technology, an alternative can be improvised which could be email addresses or mobile telephones. Email addresses would also be reachable for people in the urban centre and not rural areas as internet is not affordable to all. This leaves the alternative of the mobile phone lines being the most convenient and appropriate. In the near future personal ID numbers should be used as they are also unique to all individuals. Also the history of previous owners should be indicated in the property register to make it easy for the viewers of the register to trace the previous owner of the property and be able to confirm if there were no fraudulent transactions at one point. This saves one a lot of time and search fees. This also helps the person buying and giving credit to the property an assurance that the property was not fraudulently acquired.
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The owner could also be one or a group of natural persons, government/state or a legal entity. The state can be an ordinary land owner but has different people to take care of the property. It then becomes easy to trade on state land. It could be that the property is owned solely, co‐owned or a group tenure like customary land. In whatever case, the owners need to be registered in their capacities. This will help the different actors in the market know which kind of owners they are dealing with and what procedures are to be followed. For example, if the register indicates that the property is owned by two people, then those buying the property or giving mortgages have to know that both owners have to agree or consent to the transactions else no transactions goes on. A part from the name being an identifier of the owner, there could also be alternative unique identifiers used to identify land owners. This is because names are not unique to an owner in the sense that many people always have the same names and also names change any time. However, in most cases the date of birth and home town have to be added (Zevenbergen, 2002). For the Swedish, a personal number which consist of the date of birth and an additional four digits is used to identify owners as everyone has their own unique personal number. 7.1.2 Property Rights and Restrictions The real property rights used into the model were the ones that actors in the property and credit markets needed to know about when transacting in the property and credit markets. They are explained as below. i. Real property ownership rights Property has to belong to someone. That someone may be for example a natural person(s), legal person, business entity or the state. According to Van der Molen (2002), Ownership is to be seen in a broad sense: as land tenure, that is the mode in which rights to land are held, based on statutory law, common law, and customary traditions. The concept of ownership cuts across all land holdings regardless of whether it is a group or an individual. Ownership rights are those that are exercised by the owners of the property who could be one person or more. The rights could also be exercised on private property (owned by individuals or business entities) or public property (owned by the state or public authority). In Uganda, ownership rights of property are exercised through the four land tenure systems which are freehold, leasehold, customary and mailo. However, it should be noted that in the proposed model, mailo, freehold and customary rights will be considered as ownership or primary rights while leasehold is a secondary right. This is because leasehold is an encumbrance on mailo, freehold and customary.
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Therefore all these rights need to be included in the property register as they are very important in both the property and credit market. Transactors in both markets need to know what rights the owner of the property has. The credit institutions need to know what rights the owner of the property has to be able to see if they are capable of being given the mortgage and if they possibly can pay back until its redemption. On the other hand, buyers of properties need to know what range of rights they are bargaining for and will be entitled to if they finally become the new owners of the property. This also helps the parties bargain for the amount of the mortgage that is given and the exchange price when buying or selling. Therefore, this makes it important to have a representation of ownership rights in the register. ii. Appurtenances and Encumbrances According to Friedman, et al. (1997), appurtenance is a right that benefits a property but it is not on that property and yet considered part of that property. An example can be an easement where the particular registered property is the dominant property as opposed to being the servient property as it is when it is an encumbrance. Therefore, appurtenance is an advantage while an encumbrance is a burden. Both need to be registered and are of different categories as explained below. - Lease rights When a lease takes place, that means that there are two rights holders; the owner with the full ownership rights, then the person who has been granted the lease has lease rights or what is being called the lessee’s rights. The lessee cannot sell, mortgage or even give the property for inheritance. Lease rights are considered encumbrances because it becomes hard to freely transact on the property. - Mortgages Mortgages can be categorized as security interests or rights. Security interests need to be registered because they are usually long term in nature and they are an indication of a third party legal interest in the property. The operators in both the credit and property market need to know what burdens are onto a property and the third parties involved because these often impose negative impacts on the transactions to be made in both markets. Also for the purpose of ensuring that the mortgages are repaid and any other obligations attached to the property are met. - Easements Easements are examples of servitude. Just like the security interests, servitudes are encumbrances on the property. Servitudes affect the use and physical condition of the property on which they are located as opposed to security interests which affect the title to the property. These rights need to be clearly identified by 116
registering them in the property register. Easements also need to be registered to ensure protection else they may be considered as overriding interests (affect the property but are not registered) on the property. These rights also have a negative impact on the servient property when it comes to both the property and credit market. The property with these rights would fetch less than the same property which does not have servitudes on them both in the property and credit markets. Easements can also be appurtenance. It is best to register easements in both the dominant and servient property. - Occupancy rights Occupancy rights when registered help notify the actors in the market of other party interests in the land. People who hold these occupancy rights also transact in the property and credit markets so they need to be known. Where property rights are not registered or recognised formally, lenders are skeptical to invest in such ventures for fear of the risk involved. As a result, banks shun away from such transactions and if they are to engage in them, the cost of execution is normally very high on the part of the buyer/borrower, just to cater for the risk factor. All this explains why there are not so many mortgages on such types of land as customary land and kibanga holdings. It also takes the buyers of real property and mortgage offers a lot more effort in paper work and time to confirm these rights. Whereas if these were registered then it would take a much shorter time and most probably more people in this category of land holding would get to transact in the two markets. - Usufruct rights Usufruct rights are rights a person has to use, gain profit from, manage and enjoy another person’s property for a limited period of time but exclude others from using the property. The person with the usufruct rights in Uganda has no right to lease the property without consent of the owner, can not sell, transferor even mortgage. The person holding the usufruct right (usufructuary) is entitled to pay the costs that are associated with the right. Usufruct rights need to be registered in order to help inform the parties that need to transact on the property that the rights exist. - Caveat This is an injunction put on a property to prevent its use. A property cannot be transacted upon when it has a caveat on it. The injunction normally prohibits any parties from transacting on the property until the issue of contention is resolved. The caveat should be registered to create awareness of its existence to any interested party. Also it could be able to inform the financial institutions that the 117
property cannot be issued a mortgage. But if caveats are not registered fraudulent transactions can take place making other parties lose out on huge sums of money. iii. Public restrictions and regulations Public restrictions are imposed on real property by the government. This helps in controlling how the land should be used. They also help in conserving the environment and impose proper development patterns. Some examples of public restrictions are zoning regulations, development plans and rights, subdivision regulations, building codes, nature reserves among other. These are very important as they guide the land owners and users on what is expected on how to use the real property. These restrictions may affect a property positively or negatively. The positive regulations or public advantage are those government rights which benefit a property while the negative or public regulations are those that create burdens on a property. The property rights system can then be categorized as follows in Table 7‐1 Table 7‐1: Property rights system in Uganda Type of right Customary Freehold Mailo Ownership right Lease Mortgage Easements Usufruct rights Occupancy rights Caveat Public restrictions and regulations It should be noted that a property may have none, one or more rights and restrictions inform of usufructs, encumbrances, caveat, easements, lease, ownership and occupancy. All these rights can co‐exist with each other on one property. This is illustrated more in Figure 7‐4. Apart from only registering the above rights which are the nature of interests, it is important to also show some additional information that would help clarify on the different registered rights and charges. This includes the duration of the right if it is a lease, effective date of the interest, historical information about any interests (show any previous encumbrances, occupancy etc), priority of rights, and any other information that is helpful.
7.1.3 The Parcel The parcel of land is very important as it consists of the land and developments on it. It is the item on which decisions are made concerning the transactions. Registering the land is very important because whereas the others change every 118
now and then, land rarely changes unless alterations which could be inform of subdivisions, amalgamation, and reallotment are made on the land which only comes once in a while. The current details of the property that the property register has are size of the parcel and location. But these seem not to be enough according to data obtained from the field. Actors in the two markets need additional information of the transactions history, developments, value and location, not forgetting the above rights. However it should be noted that determining values of a property involves costs which are both monetary and non‐monetary so it should be the purchase price instead. After all even if the values of the properties are indicated, they may not help much as the banks normally employ their own valuer to redo the valuations. Also depending on what one intends to use the valuation figure for, the figure will be different. For example the value of the property for sales purposes will be different for credit purposes. So it makes it double work to determine these values. The history of property formation measures such as subdivisions, amalgamation etc is also important for the actors in both the property and credit market. This helps on saving time and costs of searching information on a property and also eliminating fraudulent acts. Also, another important detail that was stressed during data collection was developments on the land. There is need for the register to include developments that are existent on the land if at all the parcel of land is not bare. This then makes the register move from being a ‘land register’ to a property register. The property as opposed to the ‘land register’ is what is needed if the operations of the property and credit market are to improve in Uganda. Apart from the parcel identifier, type of tenure, graphical representation of the relative parcel locations, property address, meters and bounds can also be tried when describing customary land, boundary co‐ordinates, centroid, and land use among others.
7.1.4 Conceptual Models of the Real Property Register in Uganda The relationship between the land, owner and the right of each individual land type in Uganda can be presented in the conceptual model of the property register in Figure 7‐1, Figure 7‐2 and Figure 7‐3. These figures show the representation of different individual rights of mailo, customary and freehold respectively in the proposed real property register. The conceptual models below describe classes and relationships that exist between the owner (s) of the land, their rights and the land itself. One or many land owners (1..*) have one or many rights (1..*) and one or 119
many rights (1..*) are executed in a particular piece of land (1). All the different figures representing conceptual models are based on Paasch (2012).
Lease Mortgage Easements Occupancy Usufruct Caveat
Appurtenance PublicAdvantage
0..* 0..* 1 1
MailoRight
Owner RealPropertyOwnershipRight Parcel
1..* 1..* 1..* 1
1..* 1..* 0..* 0..*
Encumbrance PublicRegulation
Lease Mortgage Easements Occupancy Usufruct Caveat
Figure 7‐1: Conceptual model showing presentation of mailo rights
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Lease Mortgage Easements Occupancy Usufruct Caveat
Appurtenance PublicAdvantage
0..* 0..* 1 1
CustomaryRight
Owner RealPropertyOwnershipRight Parcel
1..* 1..* 1..* 1
1..* 1..* 0..* 0..*
Encumbrance PublicRegulation
Lease Mortgage Easements Occupancy Usufruct Caveat
Figure 7‐2: Conceptual model showing land rights on customary rights
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Lease Mortgage Easements Occupancy Usufruct Caveat
Appurtenance PublicAdvantage
0..* 0..* 1 1
FreeholdRight
Owner RealPropertyOwnershipRight Parcel
1..* 1..* 1..* 1
1..* 1..* 0..* 0..*
Encumbrance PublicRegulation
Lease Mortgage Easements Occupancy Usufruct Caveat
Figure 7‐3: Conceptual model for freehold rights It can be seen that these primary rights have the same secondary rights in form of encumbrances and appurtenance affecting them. This therefore signals that all these rights can be combined into and also form one property register as demonstrated in Figure 7‐4.
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Lease Mortgage Easements Occupancy Usufruct Caveat
Appurtenance PublicaAdvantatge
0..* 0..* 1..* 1..*
Owner RealPropertyOwnershipRight Parcel
1..* 1..* 1..* 1
1..* 1..*
0..* 0..*
Encumbrances PublicRegulation
Lease Mortgage Easements Occupancy Usufruct Caveat
Figure 7‐4: A conceptual model for a property register Based on Paasch (2012)
The model above shows the proposed modelling of real property rights in the real property register to support the property and credit market in Uganda. In the model above, mailo rights, customary and freehold could be registered under ownership rights. The ownership rights can then be specified in the rights category indicating their different legal content there by there is no need to change the underlying legal system regarding different land tenures. It should be noted that the above model is static and does not contain any attributes that define the characteristics of the classes. This is because the task to establish the static model of the register or a cadastre in UML is already a challenging task in itself and therefore taking on the task of keeping the system up to date with changes in society would even be more challenging (Van der Molen, 2002). However the model must be made dynamic so changes will be registered otherwise the register will not reflect the real situation. This is discussed below.
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7.2 Dynamic Register To keep the register dynamic, changes should be tagged at the point of entry which could be at the registrar’s office if that is where changes are initiated from. Whoever is entering changes in the register should be notified if they are different from the person (office) initiating the change. To maintain a dynamic property register, the register should allow constant changes to be made to it and at the same time keep the old records which have been changed. Changes in the property register are mostly effected to a larger extent when there is a transfer, subdivision, amalgamation and to a smaller extent when there happens to be a change in the land use but also related to changes in appurtenances and encumbrances. When any of these operations take place, then the registers need to be updated else the change will not be reflected. Below is a description of how the register can be kept dynamic in case of transfers and property formation activities. Basing on Mattsson (2004b), the Figures Figure 7‐5, Figure 7‐6, Figure 7‐7, and Figure 7‐8 explain what happens in the different dynamic aspects of the property register. The figures below are important examples of changes in the rights but it is not complete. This is something that must be investigated more in detail when a register is actually created. It shall be noticed that the dynamic questions related to the property register are very complicated, so here are only examples highlighted in the text. If a property register shall be created then every aspect of rights, encumbrances and restrictions must be treated in relation to legislation. Probably a lot in the legislation must also be changed when you develop a register. In the future when the rights are investigated more in the details to create a dynamic register, it must also be decided who shall be responsible for what in the transfer and cadstral procedures. The assumption made in the figures is that there are no restrictions on the properties such as servitudes, zoning regulations, land use plans, environmental limitation etc. However, in the text encumbrances and restrictions are dealt with.
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7.2.1 Transfer When a property is transferred, the subject related to the owner (S) change while the bundles in the ownership right (R) and the object for the land (O) will remain the same.
Transfer Original Original property property
Before transfer After transfer
S S1
R R
O O
Figure 7‐5: In case of transfer
From Figure 7‐5, when a transfer is made, the owner changes from the old owner
(S) to the new owner (S1) but the rights (R) and land (O) remain the same. The bundle of ownership rights is the same for everyone who holds it as long as they are the owners of the property. The property in which they exercise the rights is also the same as long as the size and location of the land have not changed. So as regards a transfer, the change in the ownership details needs to be changed and continuously updated when a transfer is made. When a property has a lease and a transfer takes place, the lease can still continue with the new owner unless the new owner decides to cancel out the lease. But also the cancellation should come with a period of notice like 3 months to help the leaseholder prepare to vacate the property. A property with a mortgage can be transferred in form of sale and part or the entire sale amount is used to settle the mortgage. When a property is being sold and the purchase amount equals to the mortgage amount on the property, then the money is used to settle the mortgage and the property is transferred. When the purchase amount is way above the mortgage then the mortgage is settled and the remaining amount goes to the transferor. And when the purchase amount is lower than the mortgage, the property still remains encumbered with the mortgage.
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When a transfer takes place, the easement remains on the servient29 property. When it is the servient property that is transferred, the easement remains on the property and that also applies when the transferred property is a dominant30. When the property transferred is the dominant property then the appurtenant easement right is still applicable to the property and the new owner will enjoy it. If a property is encumbered by occupancy rights and any usufruct rights or even easements it can always be transferred. When a property is transferred, the usufruct rights remain on the property and are in full force against the person the property has been transferred to. For the caveat, it needs to be removed before the property is transferred. But the transferee should be aware and knowledgeable of the different encumbrances and appurtenances on the property that is being transferred to them.
7.2.2 Subdivision When a subdivision occurs, the owner of the property remains the same but the land will change boundaries thereby changing areas.
Subdivide Original New New property Property A Property B
Before subdivision After subdivision
S S S
R RA + RB
O OA OB Figure 7‐6: The case of a subdivision
When a subdivision is made, a property will be split into two or more properties as shown in Figure 7‐6. The original property will turn into different properties A (OA) and B (OB) thereby changing the boundaries while the owner (S) will remain the same. The rights (R) will actually be divided in different ownership rights RA and RB.
29 Servient property is the property which has the easement on it. 30 Dominant property is the property that enjoys the easement. The property which has the appurtenant easement right. 126
In Figure 7‐6; i) The rights are different and that is especially clear if you put in appurtenances and encumbrances of which property A and B shall be affected, ii) you can create a servitude between property A and B then the rights are at once different. In that case when a subdivision happens, the changes in the register should reflect that a plot has been generated from the parent plot. In case the property has a lease on it, it can still be subdivided. Also one of the subdivided parcel can be limited by the lease and new terms of the agreement for the lease are developed or the old ones amended. So in this case one of the subdivided property is registered with a leasehold interest while the other is registered without any leasehold. But it can also be that both of the properties are encumbered by the lease. When a property has a mortgage, it will affect both A and B. The property can as well be subdivided but with the consent of the creditors/banks who offered the mortgage. In case one of the properties after subdivision can service the mortgage then the banks should allow for a subdivision to take place. Therefore the property which is capable of servicing the mortgage can then be registered with the mortgage on it while the other property is registered free of a mortgage. The other option as mentioned is that both the properties that have been obtained from the subdivision can be encumbered by the mortgage if that is what is needed for the mortgage to be serviced. But all these properties should be entered in the register with their status. For easements, subdivision is also possible. When a property is subdivided and it has an easement, the old easement can either be cancelled and a new one formed or the old one can still hold and there is room for amending it. If it is the dominant property that is divided then the new properties from the dominant property can still enjoy the rights of the appurtenant easement or it can be in favour of one of them. If both remain dominant properties, the servient property may be overburdened by more than one property instead of the previous one property. So if the dominant owner subdivides their property then it must be decided if all the new properties have the same right to use the easement on the servient property or if only one of them. If the servient property is subdivided then the easement right can apply to both new properties or there could be restricted to a particular property. Therefore the new property unit where the easement is not, then ceases to be encumbered. A property with occupancy and usufruct rights can also be subdivided but the owner of the property needs to inform the holders of these rights so that they are aware of the subdivision. When doing the subdivision, the occupants and usufruct
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holders are left on the properties. For the case of the caveat it becomes hard to subdivide the land unless the caveat has been disposed off the property.
7.2.3 Amalgamation
Amalgamation Property Property New A B property
Before amalgamation After amalgamation S SA SA A
R RA + RB A+B
O O A B OA+B Figure 7‐7: The case of amalgamation
Amalgamation is the combining of two or more properties into one. When amalgamation happens, the rights, area and boundaries of a parcel changes but the owner of the land remains the same. Initially there are two properties A and B of areas OA and OB owned by the same owner SA with rights RA and RB in properties A and B respectively as demonstrated in Figure 7‐7. When amalgamation takes place, the two properties are merged into one. This change needs to be reflected in the register as the status of property and rights have changed. The area of the merged property is a total of OA and OB which is OA+B and the right is RA+B from RA and RB. A property with a lease may be amalgamated with one with or without a lease or both with different leaseholds. Depending on the lease agreement. It will affect the whole new property or any part of it. This means that then you have one big new property with a lease on it the entire or part of the property. When one property with a mortgage is merged with another property, the resultant new property is completely encumbered with the mortgage. This means that the newly formed property then has the burden of the mortgage. If each property is mortgaged separately, then it is not possible to fulfill the amalgamations. But it could be possible if there could be a decision on security priority after mortgage holders sign agreements. The mortgage holders and the creditors decide which mortgage should be paid first.
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If the property with the easement (servient property) is amalgamated with the property enjoying the easement/appurtenance rights or the dominant property, the easement then ceases to exist because this property is now one and owned by the same person. Amalgamating properties which have occupancy rights with those with or without occupancy right is possible since the assumption made in Figure 7‐7 is that the properties being amalgamated belong to the same owner. When amalgamated, the occupants remain in a part of the property where they were before amalgamation or they are compensated and they leave the property. Therefore the new property is registered with the occupancy rights or none if they are compensated. Usufruct rights can be accommodated when merging properties there by the registering the merged property with usufruct rights.
7.2.4 Reallotment Reallotment is when a piece of one parcel is joined to the neigbouring plot there by reducing the area of one parcel and increasing the area of the other parcel. This process is not available in Uganda but it could be a possibility to develop this formation type instead of using subdivision plus amalgamation.
Reallotment Property A Property Property Property B B A
X X Before reallotment After Reallotment
S SA A SB SB
RA‐X + RB+X RA + RB
O O RB+X A B OA‐X Figure 7‐8: The case of reallotment
In reallotment the boundaries of both parcels and rights change but the owners do not change. According to Figure 7‐8 originally Property A includes area X and when reallotment has been done, the area of property A (OA) reduces by amount X (OA‐X) and the area of property A which was originally OB increases with amount X making the new area OB+X. But the owners of the different plots SA and SB do not change while rights change from RA and RB to RA‐X and RB+X respectively. The rights change atleast in the sense that the rights cover partly a new area. But encumbrances and 129
appurtenances can also change. In the property register what is reflected is the change in the rights boundaries of the parcel and the area while the details of the owners remain the same for both parcels. If the property that is being reduced has a lease on it, the reallotment can still take place but the leaseholder should be compensated for the loss of value that he will incur after the other area is transferred. If the property area being cut off has occupancy and usufruct rights then the holders of these rights should be compensated or they still remain with their rights but transferred to the other property. Reallotment on properties with a mortgage can be done and is possible if the creditors allow. The creditors and the owners will decide how best the mortgage should be serviced after reallotment. If the remaining part after reallotment can service the mortgage then the mortgage is only registered on that particular property, otherwise advanced treatment must be introduced in the legislation. This is not handled here but must be invested carefully if reallotment is introduced in Uganda. An easement may be cancelled or amended when reallotment takes place. When reallotment takes place on the property with an easement, the area where the easement was before reallotment takes place remains with the easement after reallotment. But the area of the easement can be changed through an agreement between the involved parties. Reallotment can instead be done in another way. There will be a subdivision on property A and after which there will be amalgamation of property B and the piece subdivided off property A. In this case the discussions on subdivision and amalgamation will apply for encumbrances and appurtenances. However, this process of subdivision then amalgamation is not good from the registration point of view. This is because the procedure becomes costly in terms of cost and time.
7.3 Concluding remarks Therefore it can be said that if the property register is to be kept dynamic and contain leases, there should be coordination between the different offices and persons that are involved in activities of transfer, subdivision, amalgamation and reallotment concerning properties else the register will remain static with no changes being updated in the property register. There should be mechanisms put in place to make sure that all property records are kept up to date and that the mechanisms used to handle such records meet the needs of the users (Dale, Mahoney, & McLaren, 2006). A good register should be able to allow change but
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also keep historical happenings on the property to allow the possibility to trace backwards in the system for transactions, rights and property formation. Also the real property register could be linked to other registers that are kept with other organizations rather than MoLHUD for example, the planning authority so that when there is a change on a particular property then it is communicated or reflected to the property register. Procedures that automatically detect and record any changes on information about land like values, use rights, ownership, etc could be adopted (ibid). The real property register needs to be designed in such a way that it accommodates most if not all the information needed on properties by the different actors in the property and credit market. This will help reduce or even eliminate problems such as costly transaction cost, land speculation, high interest rates, insecure rights and many more that arise due to information inefficiency. This register then need to be made dynamic by updating them whenever there are changes in any property formation process else the register remains obsolete there by hindering the operations of both the property and credit market in Uganda. However implementation will come with some challenges like change in the law, sensitization of people, training more human resource, provision of more funds amongst others. These can be overcome as time goes it.
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CHAPTER EIGHT
8. CONCLUSIONS AND RECOMMENDATIONS
8.1 Introduction One of the reasons for undertaking the study was to develop a model of a property register for the property and credit markets in Uganda in order to improve on the efficiency and effectiveness of the operations of these two markets. These two markets are proving to move hand in hand as it is becoming a common practice for people to acquire property or land using mortgages or loans. The different actors who accrue to both the property and credit markets were identified and from those, a particular category was chosen to be included in the study. This included banks, real estate agents, buyers/borrowers and MoLHUD. A number of methods to carry out the research were employed which included interviews, observation of the on‐going LIS project, literature review and questionnaires. This chapter gives conclusions, recommendations and personal thoughts of the study based on the data gathered and interaction of the researcher and different professions and experts in the field of study. This chapter also points out on how different the study is from other studies carried out so far and its contribution. Lastly, recommendations for further studies are given.
8.2 Summary of Findings This study aimed at developing a property register to facilitate the operations of the property and credit markets in Uganda. Its specific objectives were; to establish information needs of actors in the property and credit markets, and to establish the effect of the information content of the current property register on the activities of the property and credit markets in Uganda. The main types and sources of data to this study were primary in nature; data was collected directly from the respondents who included buyers/borrowers, mortgage officers from various banks and real estate agents of selected companies by use of structured questionnaires and interview guides (APPENDIX II and APPENDIX III respectively). Also observations and field visits were done at the property register and the zonal land offices where the National Land Information System is ongoing. The findings of the study indicate that the property and credit markets in Uganda are small, fast growing, highly priced and capitalistic in setting with the invisible forces of demand and supply influencing market decisions. The study also found
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out that there are different actors in these markets, each with unique but interrelated activities and interests. It was discovered that information is an important determinant of these markets and all actors seek different information about the property at different times. The main source to this information is the register which is the official custody of all information regarding land in Uganda. However the real property register was found unable to provide the markets with information sufficiently due to its current challenges hence actors look out for other alternative sources to settle their information needs. These are less formal sources but cheap and quick. The inability of the register to play its cardinal role of keeping and providing information to these market actors renders the market incomplete, asymmetric and largely segmented. The absence of timely, dependable and accurate information increases speculation, magnifies the risk factor and leads to increased operational costs. Banks hike their interest rates on mortgages just to take care of the high risk factor involved.
8.3 Conclusion
8.3.1 Specific Objective 1 “To determine information needs of actors in the property and credit market of Uganda.” The findings about this objective was reached by use of questionnaires to the buyers/borrowers, interviews to the officials in MoLHUD, real estate agents and banks and by reviewing available documents and records. Whereas there are many stakeholders and participants in the property and credit markets, the study included more closely three who cut across these two markets and these were buyers/borrowers in the credit market who are buyers in the property market, the banks who offer mortgages in the credit market to the buyers in the property market and finally real estate agents who help connect the buyers/borrowers in the property market with the banks in the financial market. There was also MoLHUD which was involved in regulation matters and policy formation. The nature of information sought after in the property register as shown in section 6.3 is diverse with each category of actors seeking different elements at a time. However the most interesting thing is that the information needed by the three identified as actors is the same although at different times. While the buyers and real estate need the information when exchanging the property, the banks will need the information when granting mortgages. The information needed by actors in both the land and credit market can be categorized into three as follows:
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i. Ownership All actors in the property and credit market are interested in knowing information about ownership of the property. The owner may be a natural person or a legal entity. Either way knowing the ownership is very vital when operating in both the credit and property market. The right ownership of the property needs to be known because transactions are always made with the consent of the true owner. In the property market, both the buyer and real estate agent are interested in knowing the owner of the property because this is the person they buy the property from before they can own it and later resale it to other parties. Secondly it is the true owner of the property who signs on transfer forms, consent and mutation forms in case one wants to transfer ownership. When it comes to the credit market, the banks need to know whom they are going to give the mortgage and besides the owner needs to sign on some papers giving consent of their properties to be mortgaged. The owners are a source of vital information concerning the property both to the buyers and credit providers of the property. Moreover a transaction carried out on a property without the owner’s knowledge and consent both in the property and credit market are considered void. The actors mainly wanted to know the following; name of the owner; nature of ownership, that is to say if the owner is a natural person, legal entity; the nature and status of occupancy; is the owner an individual, clan, group etc. This information need is across all the actors in both the property and credit market. ii. Rights and Restrictions Rights connect parties/owners using the land and thus they need to be known. Rights will define what each party in the land is entitled to do. The owner of the land has the greatest bundles of rights as compared to the other parties in the land. Knowing what rights each party has in the land will be helpful to the buyers of real property and the givers of mortgages. If one has partial rights like only right to use, then they cannot sell a property or even acquire a mortgage on that property. One should have the right to transfer and also mortgage that property to be able to participate in the property and credit market respectively. The owner of the property has full bundles of rights over a property which includes among others; exclusion, alienation and use while others have a few rights over that same property. While the owner has the full bundles of rights, other users can also do what the land owner does with consent and delegation. Restrictions on the other hand help to guide what the land is used for. Which activities can be carried out on land and which cannot, which property can be transacted on and which cannot be transacted on. For instance it is good for a property buyer to know that what development restrictions pertain to a particular 134
piece of land and so should the banks. This will guide the banks on whether to give a loan or not or even on the amount to give. This also informs the buyers of property on what to expect in terms of what development to put up and also how much the bank can give them. Since different types of developments attract different sums of mortgage. The study established that actors need the following information; ownership rights (customary, freehold, and mailo). How the land is held in order to know the bundle of rights that exist in each tenure, if a piece of land has occupancy rights, easements, mortgages, lease, usufruct rights, caveats, land use planning and restrictions iii. Land/Property Just like the case with details of the owner of property, rights and restrictions, actors need information about the property itself. The property is the subject matter in both markets so knowing about it is inevitable. The property is what is being exchanged in the property market and it’s what is being mortgaged in the credit market. Actors need to know if what they have is worth it and in that case they need to know the following information about the property. they need to know the size of land, location of the property, the estimated value, what type of developments for example buildings are on land and there should be a map of the location and land. Unfortunately some of such vital information about ownership, rights/restrictions and land is hard to gather as it is not readily available and accessible. Individuals and institutions mainly look up to the property registers to provide them with the information pertaining to the property. However, the study discovered that not all information needed in market can be found in the real property register. Infact only a small piece of such information is available. For instance developments on land need to be known by those engaged in both purchase and house mortgages and yet such information is not available in the property register. So even if a lot of things should be clarified in the register, other sources of information have normally to be sought for in order to fill the information gap created by the property register. Table 6‐10 outlines these alternative sources of information; they include even the most informal sources such as neighbors and local councils. This is a signal of how desperate actors can be in the search for information, just to have the market operate. It saddens, but true to note that many people (buyers, sellers and credit institutions) find these alternative sources more effective, cheap, and adequate compared to the property register. There is proven less financial and time costs involved in digging information from these sources compared to buying it from the real property register.
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8.3.2 Specific Objective 2 “To evaluate the impact of information content of the property register on the property and credit market in Uganda.”
Questionnaires to the mortgage officers and buyers/borrowers, interviews to the head of mortgages in banks, officials at MoLHUD and real estate agents, field visits to the land zonal offices, observations of the land registers, reviewing of available document and records were the data collection methods used to attain this particular objective. From the findings of this study as detailed already in the previous chapter, it was established that the current property register has something to offer but not sufficient for the property and the credit market in Uganda. The contents of the current register were comprehensively examined and it was discovered that they are: inadequate, inaccurate, obsolete, poorly kept, missing and sometimes forged. All these were blows to the growth and development of the property and mortgage markets which entirely relies on information to operate smoothly. The challenges of the current register as presented in section 6.4, cannot permit the register to perform its cardinal role of furnishing markets with the needed information to operate. The register was found to be missing out on major contents about the property in Uganda. As presented in section 6.4, the register dwells mainly on such land specifications as size, location, ownership, etc and neglects other important attributes such as current developments on the property and value. The absence of such vital features renders the register helpless in the mortgage market where a considerable percentage of transactions are done in regard to the developments on the land. This further reduces the register from property to only a land register, since it is silent on what developments and some rights are on and in the land. Besides, the contents it keeps on land are not sufficient that actors have to supplement it from other sources if the markets are to operate. Due to these inhibitors, the property and credit markets have largely remained asymmetric, segmented and incomplete with much of their operations conducted informally and crudely due to lack of formal information sources to inform the markets. Information about property is obtained from other sources such as L.C, brokers, neighbours etc other than the property register. As a result, information gambling and speculation have increased, which increases the risk and cost of operation, banks retaliate by increasing the interest rate on mortgages just to cover the high risks involved. This has over time increased the cost of obtaining a mortgage in Uganda. High mortgage rates shun away many potential clients, hence reducing the market base. 136
Forgery and unnecessary delays in the provision of the required information by the register are to blame for rampant land purchase wrangles evident in the current property market. It’s not obvious that payment for a real property search in the register will bring you the needed results on time, instead one has got to wait a little longer and may at worst fail to obtain results on the property on grounds that a file or white pages of the requested property is either misplaced or missing completely. Even when results are to be provided, it takes too long and may in most cases arrive when there are already other factors that have overtaken its importance for instance, change of mind of the prospective buyer, death of the party, purchase by other people who may conceive the risk of relying on other informal but quick and cheaper sources of information. To avert all these frustrations, buyers many times decide to engage in informal and crude transactions, as long as they can have the slightest level of trust that the property may not be encumbered. This however has resulted into many cases of wrangles as fraudsters have evaded and exploited this level of trust by amateur and inexperienced buyers. It has become so costly to transact on properties because of the various costs involved in order to make sure the transaction that is being carried out is not a fraudulent one. Search and brokerage fees have to be paid by financial institutions and potential buyers of property in order to make sure they are making transactions with the right people and on the right property. As a result the borrowing/lending rates are high. These fees makes transactions very expensive while the entire process becomes long and time wasting. As earlier established in the study, information is an important driving factor in the property and credit market. As of course it is in any other market condition where the forces of demand and supply are left to act freely in determining how much is to be bought and sold. Therefore in examining the extent to which the property register supports the activities in the property and credit market together with assessing its overall effect on both markets, any meaningful judgment would be based on how adequate, timely, reliable and valid is the information it provides to run the markets. This in effect would help determine the extent to which these markets depend on the property register for their operation. The state and information content of real property register have affected the property and credit market in Uganda. With only 20% of land in Uganda being registered, Uganda is still facing the problems above. Meaning that it could even be more problematic on the 80% of the land which is unregistered. However one solution to the status of such a register to revamp the image of the current register by developing a model that can reflect a true picture of rights (both ownership and user rights) on a property.
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As much as the findings in this objective are known by the various individuals from which the data was collected, there seem to be little or no well documented records about the challenges and the impact of information content of the property register on the property and credit market in Uganda. Therefore unless one transacts in the property and credit market, one may never be knowledgeable about the impact of the content of the property register on the property and credit market.
8.3.3 Specific Objective 3 ”To describe a model of a real property register that supports the property and credit markets based on the information needs of the actors in the respective markets.” The information content of the model developed in the thesis was based on the information obtained during data collection from the banks, real estate agents and the buyers/borrowers of mortgages. The information in the model was mainly about the rights on land, the land itself and the owners of the property. The information was obtained from a combination of all methods used in specific objective one and two. It is from the findings of objective one and two that the content of the proposed model of the property register was developed. The rights were categorized between the ownership and other rights. The ownership right is a primary right while the other rights are secondary rights. The primary rights which are mailo, freehold and customary should be registered under ownership. Although currently in Uganda a lease is a kind of an ownership right, in the proposed model the lease was created as an encumbrance right. This is because a lease is given on ownership rights which could be on state or private property there by making it a secondary right and it is also an encumbrance on the properties on which it is granted. Occupancy rights were also included and encumbrances as secondary rights. The occupancy rights need to be registered and known to provide a basis for the actors in both markets to make decisions on whether to purchase the property or award mortgages at how much. Encumbrances need to be registered and known, else they will be considered to be overriding interests in land and this may have an implication of having to settle disputes arising out of these most especially when property changes hand. When it came to the land, apart from what the current register offers, the purchase price, developments on the land should also be considered. For the owner it was basically the name, address and nature of ownership. The dynamic aspect of property register is very important. Changes should be easily made but they should 138
also be easily traced backwards in the property register. The system should be able to accept change and trace changes backwards on all transactions, rights and property formation procedures. Else the register will always be obsolete and not reflecting the current situation.
8.4 Research Contributions At the end of the study, the following outcomes were evident: Actors common to both the property and credit market were identified, information requirements of the various actors in the property and credit market were found out and compiled , gaps in the content of the current register which hinders property and credit market activities were identified, a conceptual and theoretical framework for a model to represent property rights in the property register for facilitating the property and credit market was developed and finally recommendations were made. The outcomes and recommendations have contributed in the following aspects.
8.4.1 Provision of Knowledge The research findings and results have added onto knowledge that already exists in the academia and other sectors about the property registers, property market and credit market in Uganda. Since there is no much research that has been done in this area in Uganda, this will act as a starting point for stakeholders in the academia and other institutions to improve on the conditions in the property market, credit market and more so the property register to enable sustainable development. Also the recommendations for further studies will ignite the amount of studies in the area there by adding knowledge about the studied components. The recommendation of further studies has pointed out which areas need to be dealt with if the goal of sustainable development via land markets needs to be developed. The research also in its findings and analysis has pointed out the problems faced in the system and challenges in the property and credit market. It also points out the impacts of such a system in place. This knowledge will help enlighten buyers/borrowers and all actors in the property and credit market on why the transaction are the way they are and what they have to do to make the condition better. This can also be a motivational factor for people to have properties registered as they know that these findings apply to them also as long as they own land.
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8.4.2 Policy Perspective The findings and recommendations of this research will guide policy makers and implementers in the field of land administration. The policy makers will get to know what is happening against what is in the law or what it is supposed to be. This will guide the policy makers when making a policy to look at the gaps and make sure they are addressed fully to meet the needs of all stake holders and sustainable development. Now that a computerized LIS is in place, this research should be informative to help improve on it.
8.4.3 Other Contributions The National Development Plan (NDP) (2010/11 – 2014/15) has a vision of transforming the country from a peasant to modern based one. One of the strategic objectives of the NDP is to promote science, technology, innovation and ICT to enhance competitiveness. The research study therefore is in line with the above objective number five of NDP since it is promoting innovations in the land sector which will enhance part of the business environment in Uganda. The study is aligned with goal 8 of the Millennium Development Goals (MDGs) which is about global partnership for development. Information in the property register will easily be shared across countries if it’s well modelled as one of the reasons of modelling property rights is to have a standard way of representing property rights in a cadastral system which will enable easy information sharing between different countries. With property modelling, it will encourage investors from other parts of the world to come and invest since they are assured of secure property rights which enable them get mortgages. Chapter three of the NLP of Uganda has policy statements on; promoting efficient, effective and equitable land markets on all land tenure regimes, creating an enabling atmosphere for attracting investments to achieve sustainable and equitable development. One of the strategies the government points out is to make sure that there is an operational land market that is based on an efficient property register system that guarantees titles, provides accurate information, and is open to public scrutiny. This research has gone a long way in promoting that since it put emphasis on property rights modelling will help provide accurate information in the property register.
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8.5 Recommendations The following are some personal thoughts about the real property register in general. These will help in making the current register in Uganda more reliable and efficient not only to the property and credit market but to all sectors and individuals that deal with property.
8.5.1 Integrated Real Property Register Uganda needs to integrate the three registers into one. Having three registers culminates into problems of having difficulties to coordinate all the three registers as they are held under different bodies. It is possible to design a property register which enables one to have all the land tenure systems embedded in it. This reduces on the coordination problems and also saves time and costs in terms of searching for information about properties. This type of a register turns out to be a one shopping center for all land information.
8.5.2 Real Property Register as opposed to Land Register The register should move away from being just a land register to a real property register. It should describe a property in terms of the land, what is on the land, rights for and against the property, the address of the property, a digital index map, official and private rights affecting the property, mass assesses tax value, purchase price, land use plans and regulations, encumbrances, owner and address of the owner among others. This will go a long way in making the property register a multipurpose one other than one that only performs a function of providing basic secure tenure. The system of land registration operated in context of a property register allows for all information concerning land to be accessed at a single point. Besides, this is where every country is moving towards into achieving efficiency and effectiveness in the property and credit market.
8.5.3 Incentives for Land Registration Ways or incentives to have people register their land should be created. Less than 20% of land in Uganda is registered with majority of people not seeing reasons as to why they should have their properties registered. This means that wealth will rotate within a few hands leaving majority with no potential to unlock their wealth in land. This in turn will hinder economic development of a country unless incentives are offered. The incentives should be in the form that entices people to register their land by getting the benefits of having registered land or getting benefits at the time of registering. Incentives could be offered in terms of reducing
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the time and procedures it takes to register land and the other way should be that the costs are well laid down and made known to the public.
8.5.4 Dynamism The property register should be able to accommodate change that takes place on different properties during the different property formation processes of transfer subdivisions, amalgamation and reallotment or transfer of ownership/limited rights.
8.6 Recommendations for Further Studies The model is only a proposal and is incomplete. The model presented in the study is a generalized conceptual model based mainly on property rights system in Uganda. In its current form, it is static with a lot of missing information and may contain some errors. This then calls for more work to be done on the model. The model should also be dynamic as highlighted in chapter 7 so that changes can also be recorded else problems of having outdated information will still persist thus not achieving an efficient and effective market system. However this is a good starting point for the property and credit market in Uganda to initiate further studies and developments on the mode. It should also be noted that this research was mainly inclined on the property rights as opposed to the other contents of the property register. The research and generally the model concentrated on the most important aspect on property rights. However, there is a need to do more research and design a model to dwell on other aspects of the register. It is therefore needful to say that other contents of the register should be considered for example the issues of the owner and property identification, cross referencing and many others and especially how to handle all these in a dynamic register. Further research into factors that will help the property and credit market operate smoothly should be looked at. This research only considered content of the register but there other factors that impact negatively on the credit and property market causing some of the problems identified above. It should also be remembered that this is only one portion of the solutions to problems in the property and credit market in Uganda. Lastly, there should be a study tasked with dealing with all existing informal rights. How should these informal rights be treated? Should they be legalised and registered or should they be treated in some other ways? In conclusion, a good property register and registration system is a prerequisite for an effective and efficient property and credit market. A well designed register and land registration system should support land taxation and protect all kinds of 142
property rights and inform other parties about the availability of rights on a particular property, this facilitates transactions in both the property and credit market. However, the land registration should be in position to change with the changes made on land, rights and the owner else it turns out to be obsolete quite soon.
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Rugadya, M. (1999). Land Reform: The Ugandan Experience Paper presented at the Land Use and Villagisation Workshop, Hotel De Mille Collines, Kigali. Sanya, S. (2013, September 05, 2013). Uganda lending rates highest in East Africa. The New Vision. Retrieved from http://www.newvision.co.ug/news/646915‐ uganda‐lending‐rates‐highest‐in‐east‐africa.html Schlager, E., & Ostrom, E. (1992). Property Rights Regimes and Natural Resources: A conceptual Analysis. Journal of Land Economics, 68(3), pp 249‐262. Simpson, S. R. (1976). Land Law and Registration: Cambridge University Press. Simsion, G., & Witt, G. (2004). Data Modelling Essentials, Third Edition (3rd edition ed.): Elservier Inc. Snare, F. (1972). The Concept of Property. American Philosophical Quarterly, 9(2), pp 200‐206. Ssekika, E. (2013). No money to implement Land Act, says minister. The Observer. Retrieved from http://observer.ug/index.php?option=com_content&view=article&id=2832 6:no‐money‐to‐implement‐land‐act‐says‐ minister&catid=57:feature&Itemid=69 Swedesurvey. (1996) A Base for a Land Information System in Uganda. Project Report, Kampala. Tashakkori, A., & Teddlie, C. (1998) Mixed Methodology: Combining Qualitative and Quantitave Approaches. Applied Social Research Method Series (pp. 200): Sage Publications, Inc. Tefera, T., & Holden, S. (2008). Property right and land management in Eastern and Southern Africa. Retrieved from http://www.justnsustshelter.org/index.php?option=com_docman&task=cat _view&gid=13 Troutt, E. S. (1994) Rural African Land Markets and Access to Agricultural Land : The Central Region of Uganda. Research paper / Access to Land and Other Natural Resources in Uganda: Research and Policy Development Project, no. 8: Makerere Institute of Social Research; Land Tenure Center, College of Agricultural and Life Sciences, University of Wisconsin‐Madison. Twaroch, C., & Muggenhuber, G. ( 1997). Evolution of Land Registration and Cadastre—Case study: Austria. Paper presented at the The Joint European Conference on Geographical Information., Vienna. Ubink, J. M. (2008). In the Land of the Chiefs: Customary Law, Land Conflicts, and the Role of the State in Peri‐Urban Ghana. Amsterdam, NLD: Amsterdam University Press. UNECA. (2003). Land Tenure Systems and Sustainable Development in Southern Africa (S. A. Office, Trans.). South African Office, Lusaka Zambia. Also available at http://www.uneca.org/publications/. UNECE. (1996). Land Administration Guidelines with Special Reference to Countries in Transition. New York and Geneva: United Nations. UNHABITAT. (2005). Home Ownership through Mortgage Financing: United Nations Human Settlements Programme. www.unhabitat.org.
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USAID. (2013). Securing Land Tenure and Resource Righta. Environmental and Global Climate Change. Retrieved 30th‐ May, 2013 from http://www.usaid.gov/what‐we‐do/environment‐and‐global‐climate‐ change/securing‐land‐tenure‐and‐resource‐rights Van der Molen, P. (2001). Cadastres revisited: The promise land of land administration: Inaugral address by Paul Van der Molen, ITC, April 26, 2001. Enschede: Enschede, ITC, 2001. Van der molen, P. (2002). The dynamic aspect of land administration: an often‐ forgotten component in system design. Journal of Computers, Environment and Urban Systems, 26 (5), pp. 361–381. Vozarikova, M. (2010). Land Registration in England and Slovakia ‐ Comparative study. University of Birmingham. Wamani, B. (2010). The Impact of Informal Settlements on the Land Markets in Nakawa Division, Kampala: A case of Mutungo Parish. Wasswa‐Matovu, J. (2010). The Effects of Transaction Costs on Community Forest Management in Uganda. Addis Ababa, Ethiopia: Organisation for Social Science Research in Eastern and Southern Africa (OSSREA). Were, E. (2011, 16th‐22nd May). Banks cash in on rising demand in the real estate sector. The East African. Retrieved from http://in2eastafrica.net/%E2%80%98move‐to‐raise‐interest‐rates‐will‐hit‐ mortgage‐sector%E2%80%99/ West, H. W. (1965). The Mailo system in Buganda: A preliminary case study in African land tenure. Entebbe: Printed by the Government Printer. West, H. W. (1972). Land Policy in Buganda: Cambridge University Press. Wiebe, K. D., & Meinzen‐Dick, R. (1998). Property Rights as Policy Tools for Sustainable Development Land Use Policy, Vol. 15(3), pp. 203‐215. Williamson, I., Enemark, S., Wallace, J., & Rajabifard, A. (2009). Land Administration for Sustainable Development. Redlands, California: ESRI Press Academic. World Bank Group. (2014) Doing Business: Registering Property Rights in Uganda. The world bank. Yudelman, M. (1964). Africans on the Land : Economic Problems of African Agricultural Development in Southern, Central and East Africa, with special reference to Southern Rhodesia Harvard University Press. Zevenbergen, J. (1994). Characteristics of Improved Registration of Deeds. Paper presented at the FIG XX Congress, Commission 7, Paper PP725, Melbourne. Zevenbergen, J. (1998). Is Title Registration Really the Panacea for Defective Land Administration in Developing Countries? . Paper presented at the The International conference on Land Tenure in the Developing World, University of Cape Town, South Africa. Zevenbergen, J. (2002). Systems of Land Registration: Aspects and Effects. Delft, The Netherlands: NCG, Nederlandse Commissie voor Geodesie, Netherlands Geodetic Commission. Zevenbergen, J. (2004a, 9th‐10th December). Expanding the Legal/Administrative Package of the Cadastral Domain Model – from Grey to Yellow? Paper
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presented at the Joint ‘FIG Commission 7’ and ‘COST Action G9’ Workshop on Standardization in the Cadastral Domain Bamberg, Germany. Zevenbergen, J. (2004b). A Systems Approach to Land Registration and Cadastre. Nordic Journal of Surveying and Real Estate Research, 1(1), pg 11‐24. Zhang, W., Du, Q., Zhao, Z., Guo, Y., & Wang, H. (2008, 7th ‐11th, July). A Modular Standard for the Chinese Cadastral Domain. Paper presented at the Geoscience and Remote Sensing Symposium, 2008. IGARSS 2008. IEEE International, Boston, MA, USA.
http://www.ugandaspatialsolutions.com/maps/jps/uganda_2010.gif accessed on April 24, 2013 http://www.doingbusiness.org/data/exploreeconomies/uganda/registering‐ property/ accessed on September 6, 2015
Acts, Policies, Regulations and other laws 1. National Development Plan (NDP), 2010/11 – 2014/15 2. Uganda National Land Policy (NLP), 2013 3. Uganda’s Vision 2040 4. Land Act of Uganda 1998 5. Constitution of Uganda, 1995 6. Land Reform Degree, 1975 7. Land Sector Strategic Plan (LSSP), 2001‐2011 8. Mortgage Act, 2010 9. Millennium Development Goals (MDGs)
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APPENDIX I COVER LETTER FOR QUESTIONNAIRES
COLLEGE OF ENGINEERING, DESIGN, ART AND TECHNOLOGY (CEDAT)
DEPARTMENT OF GEOMATICS AND LAND MANAGEMENT SCHOOL OF BUILT ENVIRONMENT PROGRAM: Doctor of Philosophy (PhD) Dear Respondent, RE: REQUEST FOR INFORMATION FOR INFORMATION This research questionnaire is seeking information to help develop a model for a property register to support the property and credit market in Uganda. A good and efficient land market is one of the tools the government can use to achieve sustainable development. To achieve this, the government has to ensure that the Land Information System which could be held either in manual or computerized form meets the needs of the government and the people at large.
Various studies have shown that the Land Information System in Uganda still experiences lots of problems. These problems have affected the property and credit market and yet these markets when efficiently managed lead to sustainable development. The Government of Uganda attempted to solve the various problems at the Land Registry that affect the property and credit market but some problems still persist. One approach the government has not yet considered is the content of the property registers. This research therefore aims at taking the dimension of investigating the content of the register.
The research will establish the gaps in the information provided by the property register to the property and credit market regarding property rights. Afterwards a model will be developed on how to model property rights to enable smooth operation of the property and credit market. Your response will help us understand the study in its totally and find the information useful in developing this model. The information provided will be treated with the confidentiality it deserves and shall not, in any way, be directly linked to you or the organization you work for. It is hoped that a summary of the findings from this research shall be availed to you if you so wish to have a copy. I thank you for accepting to participate in this study by answering the questions. Yours sincerely,
Lillian Mono Wabineno Cell Phone: 0772303396
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APPENDIX II QUESTIONNAIRES
APPENDIX A: QUESTIONNAIRE FOR MORTGAGE BUYERS/BORROWERS
COLLEGE OF ENGINEERING, DESIGN, ART AND TECHNOLOGY (CEDAT)
DEPARTMENT OF SURVEYING AND LAND MANAGEMENT SCHOOL OF BUILT ENVIRONMENT
Developing a model for a property register to support the property and credit market in Uganda
MORTGAGE BUYER/BORROWER’S FEEDBACK FORM
APRIL 2013
Turn over
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SECTION A.
BACKGROUND INFORMATION.
Please fill in the blank or tick(√) in the box.
1. Name of the bank………………………………………………………………….. 2. How many times have you applied for a mortgage?………………………………………… 3. What were the reasons for applying for the mortgage? a) To buy land b) To buy a house c) To build a house d) If other reason, please specify …………………………………………………………. 4. On what type of land have you ever got a mortgage? a) Freehold b) Leasehold c) Mailo d) Customary e) Kibanja f) Others, please specify …………………………………………………………. 5. What is the average value of mortgage you have obtained?...... 6. How long did it take you to obtain this mortgage? a) Over 4 weeks b) Between 3 weeks‐ 4 weeks c) Between 2 weeks ‐3weeks d) Between 1 week‐2weeks e) Less than 1 week 7. Have you ever failed to secure a mortgage before? a) Yes b) No If Yes in question 7, in the table below choose the reasons for your failure. S/N Reasons Yes 1 Lack of a land title 2 Uncorrect information about the property 3 Forged documents 4 Missing information about the property in the register 5 There were squatters on the land 6 Another person/ people were claiming ownership on the land 7 Failure to register the mortgage 8 Others, please specify
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SECTION B.
EVALUATION OF THE CONTENTS OF THE PROPERTY REGISTER IN RELATION TO THE INFORMATION NEEDS IN THE CREDIT AND PROPERTY MARKET.
The purpose of this section is to evaluate the contents of the current property register to determine the adequacy of the information it provides to support mortgage financing. Please use your experience and knowledge in obtaining mortgages to answer correctly.
I. MORTGAGE MARKET 8. Before making an application or acquiring a mortgage, is there need for you to obtain some information about the land or property?. a) Yes b) No 9. If Yes, where do you obtain the information from? (Please tick all that is applicable) a) Through application for a search at the property register or land office b) Through a direct contact with land offer c) Through a renown legal practitioner d) Through neighbours e) Through the previous owner of the land or property f) Through real estate agents g) Through LC chairman h) Through the brokers i) Others (specify)…………………………………………………………………………………………………………… 10. Which type of information do you get from the property register or land office concerning the property you want to obtain a mortgage for? ( Please tick YES for all the information you seek from the property register or land office otherwise tick NO and only answer this question if you ticked option a) and b) in question 9 otherwise move to the next question) S/N NATURE OF INFORMATION Yes No 1 Details of ownership 2 Location 3 Rights of occupancy 4 Size 5 Previous mortgage records 6 Easements on the property 7 Nature of the tenure 8 Court injunctions and caveats 9 Estimated value 10 Other parties with claims over the property 11 Regulations and restrictions 12 Development on land 13 Others please Specify
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11. Which type of information do you get from the other sources other than the property register or land office concerning the property you want to obtain a mortgage for? ( Please tick YES for all the information you seek from the register or land office otherwise tick NO) S/N NATURE OF INFORMATION Yes No 1 Details of ownership 2 Location 3 Rights of occupancy 4 Size 5 Previous mortgage records 6 Easements on the property 7 Nature of the tenure 8 Court injunctions and caveats 9 Estimated value 10 Other parties with claims over the property 11 Regulations and restrictions 12 Development on land 13 Others please Specify
12. How long does it normally take you to obtain all the information you need about the land or property you want to mortgage from the land office or property register? a) Less than 5 working days b) Between 5‐10 working days c) Over 10 working days. How do you relate the period it takes to obtain this kind of information from the property register? a) Too long b) Moderate c) Short enough 13. How long does it normally take you to obtain the information from other sources other than the property register or land office about the land or property you want to mortgage a) Less than 5 working days b) Between 5‐10 working days c) Over 10 working days. 14. How do you consider the amount of information the property register provides for mortgage financing? a) Inadequate and shallow b) Adequate and acceptable If (a) what specific information is missing in the property register that you would like to be added to the property register to facilitate better mortgage financing. …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… ……………… II. CREDIT AND PROPERTY MARKET
15. In the table below please use the five rating scale to rank the challenges that limits your access to the information in the property register. Rating scale: 5=Most significant 4=Significant 3=Not sure 2=Less significant 1=Not significant
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S/n The challenge 5 4 3 2 1 1 Documents are in bad conditions as they are exposed to wear and tear; 2 The documents are outdated and some are missing 3 Lack of knowledge on how and where to get the information 4 The documents are prone to forgery. 5 The registers are incomplete and information provided is insufficient 6 There is too much back door corruption and bribery; 7 There is too much bureaucracy involved in obtaining information from the register 8 The process of obtaining information takes long and is discouragingly too slow 9 There is no attention to details and records are always with errors 16. Please you use the rating scale below to evaluate the information content in the current property register. Rating Scale: 1 = Poor Level; 2 = Fair Level; 3 = Good Level; 4 = Very Good Level.
1 (poor level) 2 (fair level) 3 (good level) 4 (very good level) The register is There is some Formal documentation The contents formally exist silent, no content elementary of the content is and regularly updated is developed and content but not available and accessible whenever there are changes. information about explicit and but not always updated the register pronounces itself it is non existing clear enough to every time there is a on the content, information or can’t be back up a legal change in the property can easily be accessed and accessed. claim. register. reference can be made to it any time Register content Evaluation score Sheet
Evaluation criteria S/No Register contents 1 2 3 4 (poor (fair (good (very good level) level) level) level) 1 Size of the land 2 Map and Location 3 Single ownership 4 Joint ownership 5 Apartment ownership 6 Condominium 7 Easements 8 Mortgages 9 Usufruct rights 10 Land use planning and restrictions 11 Customary rights 12 Nature of tenure 13 Occupancy rights 14 Number of transfers 15 Estimated value 16 Caveats and injunctions 17 Number of titles presently issued 18 Developments on land 161
17. The following contents of the property register are useful in improving the performance of the property and credit market. Please use the five rating scale below to express your opinion on each of them. Rating Scale: 5‐Strongly Agree; 4‐Agree; 3‐Not sure; 2‐Disagree; 1‐Strongly Disagree
S/No. 5 4 3 2 1 1 Size of the land 2 Map and Location 3 Single ownership 4 Joint ownership 5 Apartment ownership 6 Condominium 7 Easements 8 Mortgages 9 Usufruct rights 10 Land use planning and restrictions 11 Customary rights 12 Nature of tenure 13 Occupancy rights 14 Number of transfers 15 Estimated value 16 Caveats and injunctions 17 Number of titles presently issued 18 Developments on land
THANK YOU
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APPENDIX B: QUESTIONNAIRE FOR MORTGAGE OFFICERS
SECTION A. BACKGROUND INFORMATION. Please fill in the blank or tick(√) in the box as shown. 1. Name of the bank………………………………………………………………….. 2. What is your functional title a) Mortgage administrator b) Commercial loan’s officer c) Mortgage financing officer d) Loan’s officer e) Others.(Please specify)……………………………………………………………….. 3. How long in years have you been in the above position? a) Over 10 years b) Between 5 ‐10 years c) Less than 5 years. 4. What type of mortgage do you give? a) Housing mortgage b) Land mortgage c) Both 5. On which type of land do you grant mortgages a) Freehold b) Leasehold c) Private Mailo d) Customary e) Kibanja f) Others, please specify …………………………………………………………. 6. What is the average value of mortgage you give out permonth? a) Over 500 millions b) Between 100‐500 millions c) Less than 100 millions. 7. What is the average number of mortgage applicants you receive in a month? a) More than 50 b) Between 10 – 50 c) Less than 10 8. Do all these applicants qualify for the mortgage? a) Yes b) No if NO proceed to next question and if yes skip to section B 9. Of all these applicants, how many succeed in obtaining the mortgage? a) All of them b) Nearly half of them c) Less than half of them. 10. In the table below state the reasons as to why people fail to succeed in getting mortgages and use a five rating scale to assess the reasons you have stated in the table. Rating scale: 5=Most significant 4=Significant 3=Not sure 2=Less significant 1=Not significant
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S/N Reasons for failure to succeed in mortgage 5 4 3 2 1 applications 1 2 3 4 5 6 7 8 9 10 SECTION B. EVALUATION OF THE CONTENTS OF THE PROPERTY REGISTER IN RELATION TO THE INFORMATION NEEDS IN THE CREDIT AND PROPERTY MARKET. The purpose of this section is to evaluate the contents of the current property register to determine the adequacy of the information it provides to support mortgage financing. Please use your experience and knowledge in mortgage financing to answer correctly.
11. Before giving a mortgage, is there any information you need to know about the land or property going to be used as security for the mortgage? Yes No If NO, proceed to question 14 and if YES please the following questions to the end b. Where do you obtain the information from? (Please tick all that is applicable) j) Through application for a search at the property register or land office k) Through a direct contact with land offer l) Through a renown legal practitioner m) Through neighbours n) Through the previous owner of the land or property o) Through real estate agents p) Through LC chairman q) Through the brokers r) Others (specify)………………………………………………………………………………………………… c. State the information needed about the property or land going to be mortgaged S/N Need information about the land or S/N Needed information about land or property property 1. 11 2. 12 3. 13 4. 14 5. 15 6. 16 7. 17 8 18 9 19 10 20 164
d. Using the serial numbers (S/N) from question c above, please state which information is about the land or property is obtained from the property register and which is got from other sources Property register……………………………………………………………………………. Other sources……………………………………………………………………………. e. How long does it normally take you to obtain information from the property register information? a) Less than 5 working days b) Between 5‐10 working days c) Over 10 working days. f. How do you relate the period it takes to obtain this kind of information? a) Too long b) Moderate c) Short enough g. How do you consider the amount of information the property register provides for mortgage financing? a) Inadequate and shallow b) Adequate and acceptable h. If a) in the above question (g), what specific information would you like to be added to the property register to facilitate better mortgage financing. …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… ……...... 12. In the table below please use the five rating scale to rank the challenges that limits your access to the information in the property register. Rating scale: 5=Most significant 4=Significant 3=Not sure 2=Less significant 1=Not significant S/n The challenge 5 4 3 2 1 1 Documents are in bad conditions as they are exposed to wear and tear; 2 The strong rooms in which the land records are stored are in bad condition. 3 The documents are outdated and some are missing; 4 The documents are prone to forgery. 5 The registers are incomplete and information provided is insufficient 6 There is too much back door corruption and bribery; 7 There is too much bureaucracy involved in obtaining information from the register 8 The process of obtaining information takes long and is discouragingly too slow 9 There is no attention to details and records are always with errors 10 Others, please specify
13. Please you use the rating scale below to evaluate the information content in the current property register. Rating Scale: 1 = Poor Level; 2 = Fair Level; 3 = Good Level; 4 = Very Good Level.
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1 (poor level) 2 (fair level) 3 (good level) 4 (very good level) The register is There is some Formal documentation The contents formally exist and silent, no content elementary of the content is regularly updated whenever is developed and content but not available and there are changes. the register information explicit and accessible but not pronounces itself on the about it is non clear enough to always updated every content, information can easily existing or can’t back up a legal time there is a change be accessed and reference can be accessed. claim. in the property be made to it any time register.
Register content Evaluation score Sheet
Evaluation criteria S/No Register contents 1 2 3 4 (poor (fair (good (very good level) level) level) level 1 Size of the land 2 Map and Location 3 Single ownership 4 Joint ownership 5 Apartment ownership 6 Condominium 7 Easements 8 Mortgages 9 Usufruct rights Land use planning and 10 restrictions 11 Customary rights 12 Nature of tenure 13 Occupancy rights 14 Number of transfers 15 Estimated value 16 Caveats and injunctions 17 Number of titles presently issued 18 Developments on land
14. The following contents of the property register are useful in improving the performance of the property and credit market. Please use the five rating scale below to express your opinion on each of them. Rating Scale: 5‐Strongly Agree; 4‐Agree; 3‐Not sure; 2‐Disagree; 1‐Strongly Disagree
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S/No. 5 4 3 2 1 1 Size of the land 2 Map and Location 3 Single ownership 4 Joint ownership 5 Apartment ownership 6 Condominium 7 Easements 8 Mortgages 9 Usufruct rights Land use planning and 10 restrictions 11 Customary rights 12 Nature of tenure 13 Occupancy rights 14 Number of transfers 15 Estimated value 16 Caveats and injunctions 17 Number of titles presently issued 18 Developments on land 15. What would you like to have in place or recommend to the property register or ministry of lands to help aid the smooth operation of mortgage markets or financing in Uganda …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ………… 16. What challenges have you encountered in the business of mortgage financing …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… ………… 17. Do you desire a copy of the findings from this study? (Please tick) a) Yes b) No
THANK YOU
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APPENDIX III INTERVIEW GUIDES
Appendix A: INTERVIEW GUIDE FOR REAL ESTATE DEVELOPMENT AGENTS
1. How long have you been in the real estate business? 2. What do you actually do in the real estate business? I.e. do you buy, sell, act as agents etc please specify 3. What types of properties do you transact on? Is it houses, land etc? 4. Do you give out mortgages or help clients get mortgages? 5. What are the requirements for a successful mortgage application in your estate? 6. What information do you need inorder to finally have a property transacted on or transferred from one hand to another? 7. What information do you need to know about a property inorder for a full mortgage to be secured? 8. How and where do you always obtain this information or any information pertaining to the land or properties who want to transact on regardless of whether you are buying selling or being an agent? 9. What form of information do require from the real property register for when i) transacting on land or property ii) arranging mortgages for your clients? 10. Does the property register provide all the information that you need regarding property and mortgage transactions? 11. What kind of information do you think is lacking in the current real property register regarding land and mortgage transactions? 12. Which additional sources of information do you use when you need to get information pertaining a given property? 13. What is the procedure of obtaining information regarding properties to ensure that transactrions are made and mortgages obtained without any complaints of fraud arising after the property has been transferred or mortgages obtained? 14. How long does it take you to obtain this kind of information from the property register? And other sources 15. Regarding property rights, are they fully represented in the property register? (I.e. leasehold, freehold , occupancy rights, customary, usufruct, mortgages, right of way, easements etc) 16. Which rights are represented and which are not represented? 17. How important is this information to your business? 18. Is the information in the property register about property rights adequate enough to enable easy transaction of property? 19. What kind of information regarding property rights should be included in the property register? 20. Is the information obtained at the property register always correct, accurate and up to‐ date? 21. Have you ever failed to buy or sell property/land or obtain a mortgage because of lack of some information or incorrect information? If yes, what information was lacking 22. Describe the procedure/the process used in transacting property 23. What other challenges are faced regarding obtaining information about properties other than the content of the register or those mentioned above? 24. What gaps have been created in the running of your business due to lack of information regarding property rights? 25. What challenges does your business face because of inadequate information in the property register? 26. How can the property register be improved to facilitate your business better? More so regarding property rights
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Appendix B: INTERVIEW GUIDE FOR OFFICIALS IN THE LAND MINISTRY AND LAND OFFICES
1. For how long have you been in the land registry? 2. Which type of register exists in Uganda i.e is it a land register or property register? 3. What are the contents of the current register? 4. What information do the different actors (banks, real estate agents and buyers/borrowers) always seek to find out with the property register? Please specify for each player 5. Does the current property register adequately provide the information that is always sought for? 6. What information gaps are exist with the current property register regarding property transactions and the mortgage market? 7. Which types of rights related to ownership rights of land are recognized in Uganda? 8. Are property rights well defined in the property register? What types of property rights are included in the register? (I.e leasehold, freehold , occupancy rights, customary, usufruct, mortgages, right of way, easements, caveat etc) 9. What kind of information is registered regarding a) Land b) Owner of the land c) Property rights 10. What additional kind of information regarding property rights should be included in the property register? 11. What challenges are faced regarding having registrable rights on land or property registered? 12. Is the information regarding property rights in the current property register sufficient enough to satisfy and enable a smooth running of the property and credit market? 13. Which gaps have been created in the property and credit market due to lack of information regarding property rights in the property register? 14. How do you think these gaps affect the property and credit markets? 15. Which information other than property rights should be added to the current property register to meet the needs of property and credit markets? 16. What information regarding encumbrances is registered? 17. Is there any type of encumbrance that is important but not registered? Which one is it and why is it not registered 18. Is the information about the encumbrances sufficient enough for participants in the property and credit market to be able to transact smoothly? 19. How long does it take to provide information about properties to the public? 20. How does this delay affect the property and credit market? 21. How do you get information on a property that needs to be registered? 22. Who has the mandate to change the information in the property register 23. What are the requirements and procedures needed for an individual to have their properties registered in case of i. Transfer of ownership due to transactions ii. Mortgage 24. What are the procedures of having property registered? 25. How does the public access information on land? 26. What challenges are faced regarding information management on properties? 27. How can the above challenges be minimized? 28. What should be done to improve information delivery in the property register in order to help the property and credit market in Uganda run smoothly?
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Appendix C: INTERVIEW GUIDE FOR HEAD OF MORTGAGE SCETIONS IN THE BANK
1. For how long have you been handling mortgages? 2. Which type of mortgages do you offer? 3. Which land tenure systems do you give mortgages and why? 4. Which land tenure systems do you not consider for mortgages and why? 5. Would you offer mortgages to any land tenure system that you do not consider now if they fulfilled all the requirements for getting a mortgage? E.g customary 6. What is the maximum and minimum mortgage amount your bank ever gives? 7. At what interest rate is the mortgage? 8. What are the requirements for a successful mortgage? 9. What are the procedures for obtaining a mortgage? 10. What information is required about the property going to be mortgaged? 11. Where do you get the information about the property to be mortgaged? 12. Which type of information about the property to be mortgaged do you get from a) The property register? b) Other sources 13. How long do you take to get information from the property register? 14. How would you rate the property register inform of providing information to the mortgage market 15. Does the state of the property register contribute to the interest rates? Why? 16. What challenges have you meet with the current property register 17. What challenges are faced in the mortgage market generally 18. What recommendation would you give concerning the property register to help improve the mortgage market
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