Tanzania: Rent Hike Fear Grips Tenants As TRA Plans House Checks

Cloud of fear and anxiety has gripped tenants of the rented houses over possible rise in rent as Tanzania Revenue Authority (TRA) moves to enforce compliance to rental tax among the landlords.

The authority last week announced that it would embark on house-to-house verification of rental contracts and fees as basis for establishing and collecting the appropriate tax revenues.

TRA Spokesperson Richard Kayombo asked landlords and tenants to be honest in stating the correct rental costs as a basis for determining the tax revenues, warning that any fraudulent acts will amount in stern legal measures accompanied by heavy fines.

The taxman's new move has sparked fears among the tenants, with the Tanzania Tenants' Association (TTA) raising concern that the landlords would take advantage of the absence of real estate regulator to increase the fees as they would cite rising operational costs.

"It is obvious that the tenants will bear the burden of tax on rental fees," Secretary General of the TTA, Mr Ferdinand Swai, said. With the current free market economy, it was difficult to control rental fees because the rented houses are numerous, Mr Swai said yesterday in an interview with the 'Daily News'.

"Landlords would raise rental fee -- and if the tenants would protest, they would be ordered to vacate the house," he pointed out. Mr Swai called on the government to speed up the preparations to introduce the body that would regulate house rent.

He noted that the issue of better housing was among crucial needs should the Fifth Phase Government want to achieve its mission to improve the lives of Tanzanians. But the TRA Director of Taxpayer Services and Education, Mr Richard Kayombo, said the rental tax was not new since it is contained in the Income Tax of 2004 - "only that landlords were not complying to the law".

The law requires that the landlord pays 10 per cent of the rental fee they have collected.

Regarding the issue of rising rental fees, Mr Kayombo said, fortunately, the country does not have regulation on rental houses. "Thus, it would be a matter of demand and supply, whereby for the landlord who would charge more they would make themselves lose the market", he quipped.

The Director of Housing at the Ministry of Lands, Housing and Human Settlements Development, Mr Michael Mwalukasa, told the 'Daily News' that rent hikes were a discussable matter between the tenants and the landlords through their associations. Shedding light on the progress in the process to introduce the real estate regulatory authority, Mr Mwalukasa said the ministry is currently in the initial steps to prepare a bill that could lead to the establishment of the regulator.

However, he noted that the issue of rent would be determined by the market, considering the location and specifications of the particular houses.

He said once the Parliament enacts the Bill into law, the regulator would be introduced, who would set a system that would provide a roadmap to the TRA on rental costs for houses according to their locations, thus enabling it to collect the revenues fairly.

Source: Tanzania Daily News.