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Introduction:

Purchasing land is a significant investment, and in many cases, the costs involved can be quite expensive. However, with careful planning, a strong commitment to saving, and creative strategies, it is possible to acquire land even with limited financial resources. In this blog, we will delve into the reasons why buying land can be expensive and explore unique approaches to save for land purchases. Additionally, we will share a compelling real-life example of an individual who successfully bought land while saving just UGX Ugx 6m in a year.

I. Understanding the High Costs of Buying Land:

1. Supply and Demand Dynamics: a. Rapid urbanization and population growth increase the demand for land, driving up prices. b. Limited availability of prime locations with desirable features adds to the cost. c. Land scarcity in urban areas leads to inflated prices due to competition.
2. Government Regulations and Taxes: a. Land registration fees, stamp duty, and other legal expenses contribute to the overall cost. b. Taxes such as capital gains tax can significantly impact the purchase price.
3. Infrastructure Development: a. The presence of well-developed infrastructure, such as roads, electricity, and water supply, raises land prices. b. The cost of developing infrastructure in previously undeveloped areas can be passed on to buyers.

II. The Importance of Saving:

1. Establishing Financial Goals: a. Setting clear goals helps prioritize saving for land acquisition. b. Creating a budget and tracking expenses enable effective financial management.
2. Cultivating a Saving Mindset: a. Adopting a frugal lifestyle and minimizing unnecessary expenses can generate substantial savings. b. Implementing small lifestyle changes, such as reducing dining out or using public transportation, can accumulate savings over time.
3. Exploring Savings Instruments: a. Utilizing savings accounts, fixed deposits, or investment options can provide higher returns and accelerate the saving process. b. Consulting with financial advisors can help identify the most suitable saving instruments.

III. Creative Strategies to Buy Land with Limited Income:

1. Joint Ownership and Partnerships: a. Collaborating with family members or trusted friends to pool resources and collectively purchase land. b. Sharing expenses such as down payments, legal fees, and development costs.
2. Land Cooperatives: a. Joining land cooperatives or community-based savings groups to collectively save and invest in land. b. These groups offer shared ownership and opportunities for acquiring land at more affordable prices.
3. Rent-to-Own Programs: a. Engaging in rent-to-own agreements where a portion of the monthly rent contributes toward eventual land ownership. b. This approach allows individuals to accumulate equity while living on the property.

IV. Inspiring Example:
Yasin Bakaluba Sekimwanyi, the proprietor of Bakulaba Properties says everyone with a source of income has the ability to own land and build a home. 

For example, he says, many diasporans earn less than 2,000 pounds a month, and yet they have bills to clear. So, it is hard to save for a house above sh50m back home. 

In the same way, corporates and low-income earners in the formal and informal sectors dream of owning homes, but achieving this dream becomes difficult owing to their tight budgets. 

Bakaluba is of the view that in looking for where to build, people should look beyond Kampala and Wakiso district suburbs that are already congested. 

“Find cheap land in what seem like far off places now. Before you know it, they will also be urbanised,” he says.

Speaking out of experience, Bakaluba recalls buying his first plot in Kulambiro, an outskirt of Kampala in 2003 at sh6m. He was working in the UK as a security guard. 

“I intentionally lived below my means while in London and managed to save sh6m in two years. I came back home and bought land,” he recollects. 

After getting his land title, Bakaluba started developing his 50X100 plot. He put up six two-room rental units each fetching sh100,000 a month. 

“I built in stages and completed them in about 18 months. Materials and labour were not as expensive as they are today,” he says.

Bakaluba also opened an account where tenants deposited rent. 

The following year, he withdrew sh7.2m and topped up his savings and bought another plot in Kisaasi, another suburb at sh12m. 

He put up eight rental units each fetching sh100,000, from which he collected sh800,000 per month. He topped it up and bought another plot in the same neighbourhood and has never looked back.

“My father inspired me greatly. I grew up seeing him buy land and develop it slowly. He was never in a rush,” he says.

By the time Bakaluba returned to settle in Uganda after 19 years, he had accumulated several properties. Today, he has dipped his toes into the real estate industry as a developer of commercial and residential properties.

“Keep buying and keeping. With time, you can sell one piece and develop the other. However, remember to ward off grabbers,” he advised. 

He gave an example of a lady who has been in London for over 40 years. She bought a plot of land at sh5m along Entebbe Road in the 1990s. Recently, she sold it at sh1b for a petrol station development. 

“This lady had failed to save and build a decent house in Uganda. With the money she got, she bought apartments,” he said adding, “You will never go wrong with cheap land.”   

In the same way, Micheal Mugabi, the managing director of Housing Finance Bank (HFB) says, despite the effects of COVID-19, they have continued to enable Ugandans to own homes and properties.

“We had to find a way to absorb the COVID-19 shock. We give mortgages and small loans to people to build slowly,” he says.  

He adds that they also solved the problem Ugandans have with collateral. 

Anthony Kituka, the managing director, of Equity Bank notes that there is also a huge demand for housing in all the different spectrums; high, medium and low. Even in the oil cities such as Hoima and Buliisa. 

There are investment opportunities in simple things like motels along the roads and shopping stations. 

“Banks have come on board. Use them to benefit from those investment opportunities,” he advised.

Conclusion: While the cost of buying land can be daunting, it is not an insurmountable challenge. By understanding the reasons behind high land prices, adopting a dedicated saving mindset, and exploring innovative strategies, individuals can achieve their dream of land ownership. The inspiring example of Jane, who successfully acquired land on a modest income, serves as a testament to the possibilities that exist with determination and strategic planning. Remember, with careful financial management and perseverance, the goal of becoming a landowner can be within reach.