This Paper is from Dar es Salaam Merchants Chamber (est, 1942).
TITLE; “The Need to
have Rent Restriction Legislation
After its Repeal in 2005”.
Preamble:
The repeal was wrong and, six
years hence, it is still very much wrong.
The thought itself for repeal was wrong. A repeal of Rent Control was as
unthinkable as it is for Ewura and Sumatra as Regulatory Controls to be
suddenly repealed, while the respective sectors they regulate are not as important and sensitive as the housing
sector which is linked to the constitutional and human rights, social justice
and moral consideration for human beings in millions every minute of their
life.
The Constitution
Our Constitution imposes on
the government a cardinal obligation explicit in expression and imperative for
compliance in no uncertain term in Article 8.1.(b) It says: \”The primary objective of the
Government shall be the welfare of the people\”
Such a government derives its
legitimacy more in a fair and full compliance with this obligation in
letter and spirit. There can never be a substitute for this obligation or a valid
explanation for negligence or failure in meeting it – more so when, as the
Preamble states, the Constitution aims at “building
such a society and ensuring that Tanzania is governed by a Government that
adheres to the principles of democracy and socialism” in which the welfare
of the people features predominantly.
And nothing is more essential to
the welfare of the people, in this world, as decent and affordable housing. This
is because housing is “most
essential\” in the basic necessity of a family life. Shelter gives dignity
to man. Even animals need a den and birds a nest as shelter.
If a single human being is
rendered homeless and forced to live in the street in any country, it is a
shame to the people of that country for letting that to happen or letting the
government to permit it to occur.
Not every family can build itself
a house. In fact, almost all the families in the urban areas need rented
housing in the face of ever widening and deepening poverty which sadly, as it
happens, is the main feature of the people in this country. Denial of access to
affordable housing, as the most basic necessity of life, amounts to suffocating
the life of the people. They would ask: ‘Was
there a life before death’?
Human Rights
And it is for this reason that access
to affordable housing is a human right under the Universal Declaration of
Human Rights, more particularly under Article 25 thereof. The preamble
to the Constitution itself while highlighting the Foundations of the
Constitution also states that the objective is “ensuring that all human rights are preserved and protected”.
As Tanzania subscribes to the
principles of Socialism, it will be interesting to note that Socialist
International Principle 57 includes the
right to decent housing.
Where a government does not
build houses for rentals, which are essential to the welfare of the people, then
it must ensure that there are laws which provide commercial incentives for
rental houses to be built for such returns as are fairly comparable to the reasonable returns in other sectors of
service, so that people have access to affordable housing of various standards
according to their respective ranges of affordability – and thus the
constitutional obligation and the human right continue to be observed.
No tiny class of people because
of their riches or wealth can be allowed by a government to exploit – and
exploit freely – the people’s basic life need of housing where demand exceeds
supply, and to set as a monopoly of the few, a heavy cost for the people
to attain their basic needs in terms of their human right.
Rents Exploitation
It is very sad if housing rents have been left
open for exploitation by the tiny class of landlords. It is even worse if
housing rents were fairly controlled for about 60 years and then
unceremoniously de-controlled when, on the contrary, there have never been
reasons as compelling for even a greater control as now.
It is in this context therefore
that a question arises whether the Head of State who had directed for a repeal
of the Rent Restriction Act, 1984 in the year 2005 be deemed to have delivered
on his oath to uphold and protect the Constitution fully where the welfare of
the people in respect of the aspect of access to affordable housing appears to
have been suddenly de-prioritised
History of Rent Control
Rent Restriction on Premises is
reported to have been first introduced in Tanganyika by the colonial government
in early 1950s. It effectively and fairly protected the tenants from
unreasonable rents in respect of the new buildings which were then of one, two
and three upper floor premises. These new buildings started to spring up in the
place of a large number of old ground floor (single storied) houses which
dotted the urbanized towns like Dar es Salaam.
The old premises which were in
the state of habitable structures mostly had the front portion as shop premises
and the rear as residence. In the case of the centre of Dar es Salaam many of
these old premises were along a number of busy streets like Morogoro Road
(formerly Bagamoyo Road), Indira Gandhi Street (Market Street), Zanaki Street
(Selous Street), Libya Street (Sultan Street), Samora Avenue (Acacia Avenue) to
quote a few as examples.
Despite the Rents Restriction,
buildings continued to be built and let because the law provided for a fair
return from investment like all the subsequent ‘replacement laws’ did. It was
Rent Restriction Act of 1962 and then replaced by one of 1984 and the chain
then ended with the repeal of the one of 1984 in 2005.
In early 1950s the population in
the case of Dar es Salaam is said to have been less than 400,000 and the
shortage of housing was small, and yet a Rents-Control was put in place for
fairness to both the landlord and the tenant.
Repealed Rent Restriction Act, 1984
In the case of the Rent
Restriction Act of 1984 which was repealed in 2005, the landlord was allowed a
generous annual return of 14% in respect of residential premises, that is,
recoverable in a cycle of every 7 years, and 18% for commercial premises in a
cycle of every five and a half years. Such returns were slightly higher than
the average returns derived from other business or commercial investments and
capital rolling.
It was an offense for a landlord
to demand and accept rent in advance of more than two months. There was a
provision for fine or imprisonment on conviction of the offense. (Sec 21)
Rent Control More Needed than Ever Before
Never has in the history of
Tanzania the size of the ‘urban population of tenants’ (comprised in families)
been so large as now believed to be at 14 million, and the housing shortage .as large as now at
3 million units aggravated by annual increase of 200,000 units in demand, and
the rents been so high as now at about 35/40% of income and the advance payment
demanded as long as 12 months now from the monthly wage earners and daily
income earners like those engaged in daily labour or hawking or other forms of self-employment,
– as a condition for grant of tenancy.
The 14 million needing rented
housing is a very large segment of our population – as large as the entire
population of Tunisia and Libya combined.
Taking Dar es Salaam alone as
one example, there are said to be about 115 squatter or slum areas, otherwise known
as Informal Urban Settlements, which house some 500,000 families (some 3
million persons) mostly of low income range.
They represent some 70 percent of the City population of over 4 million.
The letting is mostly of single
room (with or without electricity) with shared (or common) toilet, and the
monthly rent (without electricity) averages at Shs.25,000 and this amount exceeds the entire original cost of
construction of the room if – like many others – constructed some 50 years ago.
This average rent represents about 40% of the statutory minimum wage of
T.Shs.65,000/- or 30% of T..Shs. 80,000/-
The monthly rents therefore charged
and collected in the country for old premises following the repeal of the Rent
Restriction in 2005 have been exorbitantly increased periodically reaching the
amounts which are now more than even the original costs incurred for the
construction.
Kenya Has Kept Rent Control
Kenya is said to still have
Rents Restriction Act operating as Chapter 296 and it is an offense to collect
rents in advance of more than two months. (Sec 10). Kenya is a Partner State in
the East African Community which is seen a spring board for a federation with
Tanzania among other countries in the region. Is there a difference in the
definition of “welfare of the people”?
Housing Rent & Inflation
The exorbitant rents charged for
the shopping and other commercial premises, become part of the business
overhead and passed over onto the consumers. The enrichment of the small class
of landlords is therefore has the ramification of escalating the cost of living
when a great majority of the people are already agonized by the high cost of
living which is disproportionate to their income level or spending power.
The National Bureau of
Statistics does not appear to have reported that it has taken into account the
ever rising rents of premises when it declared the recent figure of inflation
at 19.80 percent, the highest ever in Tanzania. The figure of inflation, if
computed with present rates of rents, would be startling.
The reported experience has
shown that each time National Housing Corporation increases its rents, “hundreds” of the private landlords
also follow suit taking the NHC move as the tacit approval of the government
for the rents increase spree by all landlords. The victims are in “millions”.
Presently, NHC is increasing its
rents even furthermore, by about 200% for residential premises and more than
300% for commercial premises with annual increase of 15% – and payable
quarterly in advance – for its units. The NHC units are old – built more than
50 – 60 years ago – earlier than the Acquisition year of 1971.
Consequently, the aggregate
amounts of excess rents transferred from the tenants, who are mostly poor, into
the pockets of the other private landlords, who have already recovered their
original investments many times over, are much more than the amount gained by
NHC.
In contrast, the World Bank in its report called for
strategic structures which transfer cash from the rich to the poor, as it warned
that poverty was getting widely spread in Tanzania. (Daily News, Oct., 19,
2011)
“Market Rental” Does Not Exist
NHC claims that it is chasing ‘market
rental’ based on the examples of the high rents the rich or those in
desperation, can and do pay, or the rents charged for the new buildings with
modern facilities when it is a fact that no ‘market rents’ can exist (a) when
housing is a basic necessity of life equally for the poor and the rich, (b)
when the housing shortage keeps worsening as demand keeps exceeding supply and
(c) when tenants’ self-eviction, in large numbers, for failure to pay rent, does
take place to save one’s pride after having lived in a neighbourhood for a
number of years.
There are also reported examples
of those who are unable to pay high rents or in advance move to their villages
as an alternative to moving into the street, after having lived in the urban
areas for decades. The secondary education of the children ceases. The victims
of this situation include the widows with orphans and single mothers with
children abandoned by their respective fathers.
As for the premises in the new
high rise buildings which are rented at high rents by the corporate-tenants or
the corporate officials, are mostly charged to the business expense accounts
and paid from the business profits. Any linkage of these rents to the purported
“market rents” for old buildings is wrong and mis-leading.
Rent Control Common Worldwide
Rents control is not a new thing
around the world. The Tenants’ rights
are no different from the Consumers’ Rights in principle. Rent Control exists
in a number of countries. A number of USA cities with large tenant population
like New York City, San Francisco, Los Angeles, Washington D.C. and Oakland
also have Rent Control “in full or partial”. The laws may vary from one country
to another and one jurisdiction to another within some countries depending upon
the respective local conditions.
Affordable decent housing is
considered a constitutional, human,
social and moral right, the violation of which can disrupt families, dislocate
social attachment of the accustomed neighbourhood,
affect physical and mental health of tenants, and pose threat to local peace and order.
New Constitution.
The experience teaches that
there is now the need for “the right to decent and affordable housing” to be
included among the other rights which are presently set out in Chapter One – Part Three of the Constitution – now that the
people are to become engaged in the process of adopting a new constitution.
Excerpts
It will not be out of place to
quote some “excerpts” of the views expressed in recent days on this simmering
issue of social justice in the context of housing:
·
“According to
him (Hon. January Makamba, M.P.) there has been little control of the rental
housing business especially in urban areas where about 60 percent of urban
residents reside in rental houses while 40 percent of their income is spent on
accommodation”. “He said the law should,
among other things, forbid landlords from claiming for yearly rental fees yet
employees are paid salaries monthly ….” (Reporter, Daily News 30 Jan., 2012)
·
The Guardian
Editorial: “We must take measures to address plight of tenants” “The Rent Restriction Act was enacted in
1950s to safeguard the welfare of tenants. Among other things, the law barred
landlords from demanding advance rent payments. However, in 2005, this law was
repealed for reasons best known to those who engineered its deletion” (Guardian,
January 6, 2012)
·
All of the
five people the Business Times reporter spoke to lamented the absence of Rent
Control and favoured a rent control (Business Times Feb 10 – 16).
·
“The housing
sector is chaotic and full of sharks demanding hefty house rent and selling
houses at hiked prices which can only be afforded by a few upper class people
and foreigners” charged an Ilala flat tenant. From a report on NHC tenants’
meeting. (Daily News Dec 20, 2011)
·
“I was
embarrassed by how landlords mistreat their tenants simply because there is no
authority to protect tenants as there is with other bodies like EWURA and
SUMATRA” said by a Mwanza tenant to a reporter of the Express (26 Jan 01 Feb,
2012)
·
“The current
wave of eviction threats, arbitrary rent increases and frenzied development of
joint venture apartments which are often off the limits of the majority poor
because of their foreign currency hiked rent, does not serve this country’s
best interests” (Daily News editorial, Dec 27, 2011)
·
“Among the
causes for the rise in the cost of living:
Rents Increases. Dossier on Poverty
in Tanzania: Widening and Deepening. Dated
May 2011 by Dar es Salaam Merchants Chamber)
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A \”Must Read\” Paper Presented by Dar es Salaam Merchants Chamber (Est 1942). At a Seminar Organised by LAND RIGHTS RESEARCH & RESOURCES INSTITUTE ( HAKIARDHI ) ON “The Need to Have Rent Restriction Legislation Back After its Repeal in 2005” at Dar es Salaam on 15 February, 2012 “DMC” PAPER in English was Delivered Mostly in Kiswahili by Mohamed Khalfan on behalf of Dar es Salaam Merchants Chamber (DMC- est.1942) At the Seminar of HAKIARDHI (Land Rights, Research & Resources Institute), Dar es Salaam – 15 February, 2012 On
Dated Feb, 15, 2012