Land lease: What you need to know

Most land leases are vacant, allowing the tenant to construct a temporary or in some arrangements, permanent structure at his own cost. PHOTO | FILE

By Paul Murungi

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Owning land is almost everyone’s dream. The location and size of land is a major factor that determines whether one will buy the land or not.

Today, most people prefer to own land in perpetuity. This is one of the reasons why many people opt for mailo or freehold land instead of getting a lease on land.
A land lease is an agreement that permits the tenant to use a piece of land owned by the landlord in exchange for rent.
Land leasing provides easier access to land use for a variety of purposes, ranging from commercial, residential to agricultural. 
What land leasing means 
 According to Mr Jet Tumwebaze, the managing partner at Kampala Associated Advocates, a leasehold is a form of land tenure involving a land owner granting the right to another person, the exclusive possession of land for a stated time in exchange for a premium (land rent) also paid at a specific time agreed.
The transaction being contractual in nature allows parties to define the terms and conditions of access and usage. 
Acquiring a land lease can be through a government authority or an individual but this also depends on the land tenure being leased. 
The Uganda Land Commission (ULC) and district land boards are principal land controlling authorities responsible for leasing of public land, while individuals are also at will to lease their land as long they possess the requisite documents such as a land title. 
Leases for public land goes for 49 to 99 years while for private land, the initial period for the lease starts at five years. For private land, the first five years are meant to confirm how prepared a lessee is, to use the land. The terms of extension for the lease period largely depends on how the lessee has respected agreement terms. 
 Once a lessee acquires a lease of 49 years or more, they have a choice to sublease the land to a third party for a time period that is less than the 49 years. 
“If a person gets a lease from a controlling authority such as ULC, or district land board, then they have to go through a process to get a title,”  Mr Tumwebaze says. 
He adds that the law permits individuals to convert leasehold title into freehold especially if the lease has been granted by controlling authorities. 
Signing a lease agreement 
A lease agreement is principally used in determining the relationship and providing guidelines between a leaser and lessee whether the land is private or public. 
Mr Tumwebaze says the agreement shows the dos and don’ts on a given  piece of land, provides duration for termination and guides on the renewal processes.  
Whereas most leases are not renewed, he warns that there must be a provision under what terms it can be renewed. 
“Since the relationship is governed by the lease agreement, once expires, then you have no land, you must either reapply if it is a controlling authority with other applicants,” he adds. 
The advantage the lease holder has over other applicants is that they can reapply in advance. 
If you have one or two years running, you should reapply, and confirm that you complied with the terms of a lease.
The rights and obligations of a lessee remain intact if the owner of the land sells it off when the lease agreement is still in operation. However, ownership of land is lost once the term expires.  
What to watch out for? 
One needs to carry out due diligence before engaging in a leasing transaction. People who lease land are sometimes in a hurry because they don’t want to lose out the transaction. 
“When carrying out due diligence, you need to understand whether the authority has the mandate to lease out the land. Sometimes, authorities sometimes gives out land which belong to game reserves,” Mr Tumwebaze says,  “If it’s individual land, carry out a search on the title to confirm whether the name corresponds with the owner of the land.”
Rights of a lessee
Leases have different terms depending on the number of years one will spend on the land and activity to be conducted. 
Before taking on a lease, Mr Tumwebaze advises to find a trusted partner such as a professional lawyer who has the ability to negotiate for the lease, and make sure to include your rights in the lease that will protect you.  Such obligations may include exit clauses, renewal terms, and the kind of business operations. 
The Land Amendment Act, 2010, further shows that in case the person granted the lease dies, his or her successor is registered as the new lessee. 
The bottom line for any lease is that the kind of activity or business to be undertaken on the land must be within the range of years of what the lease holds.