Much needed changes in the Real Estate sector and Laws in Tanzania.

The Government of Tanzania through the efforts of President John Pombe Magufuli and that of Hon. William Lukuvi, the minister of lands housing and human settlement development has brought about a renewed hope in the restructuring of our real estate sector. We have over the years witnessed pro-active legislative/regulatory changes that rapidly transformed.

Ever since the enactment of the Land laws of 1999 and their revised editions of 2002 there have been a quench for reforms/changes to the laws. These changes are not only limited to the existing plethora of lands laws prevalent in the country but also arise from the shift in fiscal policies by the Government. These changes shall have a cascading effect on the Tanzanian real estate market and if they should transform the existing real estate regime which Tanzanians were previously familiar with. This article discusses and summarizes some of the pivotal legislations/regulatory changes which need to be address or have been addressed so as to cater as seeds for such transformation:

TRERA – The Tanzania government is on the verge of enacting the Real Estate Regulatory authority bill and real estate agency bill. These two promises to give rise to a new era in the Tanzanian real estate sector – an era of regulation, transparency, structure and security. These two  an unprecedented law seeks to transform the real estate market by ensuring that the terms and conditions of the agreement between the builder and buyer are enforced resulting in effective regulation of this previously unregulated sector by setting up of monitoring regulatory authorities and appellate tribunals in each of the States. The laws also aim to regulate and monitor the working of real estate agents/brokers throughout the country. This authority needs to start operations as soon as possible and help curb the excising real estate bubble. The laws such as the unit titles act which came into plan in 2008 still doesn’t have regulations to allow the formation of associations for units which were subdivided under the Land Act of 1999 This if promulgated it will help a lot of unit owners.

Taxing System – There is a need for a new unified tax regime. The system should aim to change the existing complex tax regime which included taxes such as VAT, duties etc. which often lead to ambiguity and lack of transparency for the developers and end-users. Developers shall benefit from the increased margins available to them and thesystem should be able to help them reorganize their supply chain for projects in a more efficient manner. The Unified tax system if in place shall help the end user by simplifying the taxes payable during the purchase or construction of their unit/immovable property.

FDI – The Government of Tanzania has done a lot to make sure that FDI is attracted starting with cutting down corruption, collecting more taxes and making our ports more efficient. However more needs to be done to relax certain stringent norms which were prevalent earlier which has made Foreign Direct Investment (FDI) investment into real estate projects a more attractive and lucrative option.

Real Estate Investment Trusts– This shall be put so as to open up a platform that will allow all kinds of investors including those with smaller pockets to make secure and lucrative investments into the Tanzanian real estate market. This would pool the money from several investors across the country into a single trust for investment into profitable real estate ventures. The trust can distribute 90% of the income among its investors in the form of dividends. The trust is supposed to provide diversified and safe investment opportunities with risk mitigation and under a professional management to ensure the maximum return on investments.

Digitization of land records – A mechanism should be in place whereby all the land records from municipals to the ministry are in a digital format. Searches applications etc should all be done online so as to facilitate easy transaction and reduce about corruption. IT will allow work and titles to be processed faster and add about efficient to the process and service. The system would easier the management of land records, minimize scope of land/property disputes, enhance transparency in the land records maintenance system, and facilitate the establishment of definitive title for immovable properties across Tanzania. This mammoth task can be monitored closely by the one Centre in the ministry. The major components of the program would be the computerization of land records such as mutations, registrations, digitization of maps etc. The program would allow Tanzanians to access land records comprehensively via the internet and shall be able to verify/establish definitive title of various immovable properties.

Digitisation of building approvals – The implementation of “single-window clearances systems” and digitization of “online approval for sanction of building plans” could also play a vital role in streamlining development of real estate projects in Tanzania. Municipals, authorities and development agencies of the government should simplify the method of obtaining approval of building plans which is very complex and tedious of process. When one is applying for a building permit they could lodge the documents online, have on site inspections done within a week and have the plans approved by a grant of building permit all this through a simplified single window clearance systems for development of plots falling within let’s say one municipality.

Tanzania need these changes for the real estate sector to bloom.