New Regulations On Mortgaging Land

This finance briefing provides an update on our brief notes of January 2018 and March 2018 that focused on the amendments to the Land Act, 1999 (the Land Act) which were introduced in the Written Laws (Miscellaneous Amendments) (No. 5) Bill, 2017 and the Written Laws (Miscellaneous Amendments) (No. 1) Act, 2018 (the Act).

In addition to the above, this article provides a review of the additional provisions and amendments introduced by the Land (Procedure For Mortgage of Land) Regulations, 2019 (the Regulations).

These are some of the additions and amendments that have been made in the Regulations:

No. RELEVANT POSITION INTERPRETATION 1. Undeveloped and underdeveloped land (regulation 4 of the Regulations) As noted in the previous updaters, the new defintion section (section 120B(3) of the Act) provided clarity on questions surrounding the meaning of "local bank" and "local financial institution".

Regulation 4 of the Regulations has now further clarified and provided context in respect of what land shall be considered "undeveloped" and "underdevleoped".

"Underdeveloped" land means land which is not developed in accordance with the conditions of relevant rights of occupancy. It includes "inadequately developed" land which is defined under Regulation 4(2) of the Regulations.

Whereas "undeveloped land" means land which is vacant, without unexhausted improvement in, on, under or over such land or without any change of substantial nature in the use of such land.

The above clarification is in relation to section 120A (2) of the Act which essentially provides that where part or the whole of the mortgaged land is undeveloped or underdeveloped, the money obtained from the local or foreign bank or local or foreign financial institution shall be utilised to develop part or whole of such mortgaged land.

2. Declaration that money shall be invested in Tanzania (regulation 5 of the Regulations) Continuting the theme of investment in Tanzania, Regulation 5 supplements the Act, confirming that any person intending to obtain a loan from a local or foreign bank or local or foreign financial institution, where said loan is secured by a right of occupany, a lease of right of occupancy or a derivative right, must submit a declaration to the Commissioner for Lands (the Commissioner) stating that the mortgage money shall be invested in Tanzania.

   The declaration must contain, among other things, a description of the mortgaged property, a statement on the purpose of...