Assessment of the use of untitled land (Kibanja) for mortgage acquisition in Uganda; Case study of Central Uganda.

Abstract

One of the most common sources of business and project funding is loans. These are usually mortgage loans from banks and financial institutions. Other sources of loans are the informal sources like money lenders and saving schemes. Property owners with formal land titleshave ease in accessing formal mortgage loans since their interests are registered. However, individuals with equitable interests tend to opt for informal sources of credit financing due to the difficulties they face in securing formal mortgage loans and the high rates of loan application rejections by banks. This is risky to such individuals because the rules on informal loans are not clear and also the private money lenders tend to charge higher interest rates compared to the rates charged on formal mortgages. The loan terms also tend to be unclear which sometimes leads to cheating by the money lenders. There has been an increase in number of land titles registered formally in Central Uganda as a result of the various programs by organizations like BLB that have provided incentives to help individuals in the Central region register their interests. However, the amount of unregistered land titles in Central Uganda still remains massive. This means that a lot of business people still face lots of challenges when trying to access formal mortgage loans. This research project is hence meant to analyze the process of loan acquisition by equitable interest owners so as to point out the challenges faced and the possible recommendations.