Tanzania: New Rules Linked to Land, Loans Released

By Faustine Kapama

THE Ministry of Lands, Housing and Human Settlements Development, has issued new rules and regulations, restricting persons obtaining loans from banks or financial institutions using Tanzania's

land to use the mortgaged money to invest in the country and not otherwise.

The regulations follow amendment of the Land Act by Parliament having passing the Written Laws (Miscellaneous Amendments) No. 1 of 2018, amending certain written laws.

The Act amended Section 45 and 120 of the Land Act, 1999 and introduced new sections 120A, 120B, 120C, 120D and 120E.

Under the Land (Procedure for Mortgage of Land) Regulations, which came into force on April 26, 2019, any person who intends to obtain a loan by a right of occupancy or a lease of right of occupancy or derivative right must submit a declaration stating that the mortgage money shall be invested in Tanzania.

In the declaration to be submitted to the Land Commissioner, according to the rules, the mortgagee must contain description of the mortgaged property, name and address of the mortgagor and that of the mortgagee, statement of the purpose of the loan and the place where the money will be utilized.

Furthermore, the Regulations require the mortgagee to submit to the Registrar of Titles some documents, including certificate of occupancy, leasehold title or derivative right, mortgage instruments, valuation report, a copy of the decla-ration to the Commissioner and any other relevant documents.

In pinning down more loan applicants, the Rules are requiring the mortgagor within six months after the registration of a mortgage of undeveloped land to submit to the Commissioner a report stating the matter in which the money secured from the mortgage is utilized to develop the mortgaged land.

"Where the mortgage money is released by installments, a mortgagor shall be required to submit a further report within six months after receiving each installment," reads part of the new Regulations. Such report shall contain description of the mortgaged property and name of mortgagor and mortgagee.

Furthermore, the mortgag ee shall include in the report the statement of the purpose of the loan, amount of the money obtained from the mortgage, number of installments received, if any and the amount of money utilized to develop the mortgaged property and balance of money obtained.

"The Commissioner, where he considers that the report submitted contains false information as to the actual amount of the mortgage money spent, may instruct a government valuer to establish the correct amount spent," it is also stated in the Regulations.

A warning is issued under the new Regulations that any person who makes false declaration or submits a report containing false information, commits an offence and upon conviction was liable to a fine not exceeding 1m/- or to imprisonment for a term not exceeding two years or both fine and imprisonment.