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Hoima businesses choking on high rental fees

Business owners in Hoima City are crying foul over the runaway rent prices that are pushing some out.

Hoima which was elevated to a city status in July 2021 has since 2019 been charging an 8 per cent property tax on tenanted commercial buildings.

This is in addition to other taxes such as ground rent, capital gains tax and as well as income tax, collected by Uganda Revenue Authority (URA).

“The multiple taxes on buildings have left landlords with no option but to increase rent to meet this burden,” said Martin Kyasimire, an electronic shop owner along Wright road.

Kyasimire said his landlord has increased annual rent to Shs4m up from Sh3m in two years, with another increment expected in the next six months.

“On top of that we have to pay license fees, electricity and also brave the highest cost of living in this era where there is low purchasing power,” Kyasimire said

A stone throw distance from Kyasimire’s shop, rent has been increased from Shs8m to Shs12m per annum, with the landlord citing a multiplicity of taxes on her commercial building. This was Sh600,000 per annum five years ago.

Businesses particularly those operating in the Central Business District (CBD) are already feeling the pinch and a number of lowly capitalised enterprises risk being pushed out of business.

The Albertine Journal mini-survey estimates that 20 per cent of businesses in Hoima city have dropped out of business with the majority of them citing high rental fees, low sales and over taxation, in the past three years.

Promise Kasibante, who runs a stationery shop along Wright Road shared that those who cannot keep up with the rent fares are pushed to the city peripherals, or forced to vending and hawking their merchandise.

She also attributes the sporadic rent hikes to speculative tenants who promise high payments beyond the required price forcing property owners to increase rent but on the other hand as a ruse to outcompete locals from business.

 “An Indian comes and promises the landlord sh20m up from sh8m per annum on prime areas and he (landlord) is left with no option. He (Indian) fails to sell and abandons the room after one year, but when the precedent of increment has already been set,” Kasibante said.

But a landlord who spoke to The Albertine Journal on condition of anonymity intimated that the high rates are meant to be commensurate with the necessary return on investment, depending on the location.

The high interest rates on loans, increased prices of construction materials, have contributed to the hikes.

To John Kalisa, a real estate dealer, the discovery of oil in the Albertine Graben has resulted in an increase in the urban population, a high demand for accommodation and rentals for business entities, hence increased rental fares.

Kalisa advises fellow business men to alternatives like sub-renting.

He also wants the government to dictate taxes according to the size of the business and also drop unrealistic charges like taxing sign posts on the business house. And always come to the rescue of tenants whenever need arises.

Ismail Kusemererwa, the executive director at Mid-Western Anti-Corruption Coalition (MIRAC) says the pronouncement of Hoima as a city has led to increase in budgeting, resulting in more taxes to meet the budgets.

Kusemererwa on the other hand says this will boost the real estate business, citing new buildings coming up in the city and an increase in brokers because the business is profitable.

Kusemererwa predicts that the trend will most likely continue given the general cost of living in the country.

Asked about the possible measures the government could consider to control rent increment, the executive director, said the government should invest in the housing industry and cheap house financing loans for people who need credit in line of building.

Hoima City Mayor, Brian Kaboyo, told The Albertine Journal by phone on Friday that property tax levied on commercial buildings, is meant to increase revenue generation for improved service delivery in the City.

He, however, says the city leadership is  undertaking a revaluation of all properties to ascertain how much they can collect, adding that they may reduce property tax from 8 per cent to 5 per cent  to ensure compliance.

He says the aforesaid tax is going to be collected not by an auctioneer as it has been in the past starting July this year.

“We benchmarked in Mbarara City who use their staff to collect it and they said it is working efficiently,” he added.

Additional reporting by Robert Atuhairwe

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