Buying a Rental Building: Due Diligence

How do I verify rental income?

An advert that says "making UGX 10M a month" is a claim, not a fact. Verify it in three layers.

1. The tenant schedule. Ask the seller for a signed list of every unit: unit number, tenant name, lease start and end, monthly rent, deposit held, rent paid to date, arrears, service fee and utility arrangement.
2. The paper behind each line. Match each row to a tenancy agreement and a rent receipt. Section 25(3) of the Landlord and Tenant Act, 2022 requires a landlord to keep a record of all receipts for rent, and section 25(1) requires a written receipt for each payment. A seller who cannot show receipts has either poor records or a rent figure that is not real.
3. The money trail. Compare the schedule with twelve months of bank or mobile money statements for the account where rent is paid. Totals should match the schedule within normal arrears. Cash-only rent is possible, but then ask why, and discount accordingly.

Then visit the building more than once, at different hours. Count occupied units from the compound, check each unit's electricity or water meter, and speak to tenants with the seller's permission. A tenant is often the best source on repairs, rent paid and whether anyone has given notice. Our listing yields are the sellers' claims too: for the 14 whole-building listings that state a rent, the gross yield implied was 9.2% to 12.0% on 3 November 2026 (Land & Property listings, Nov 2026). The page on rental blocks and residential buildings for sale shows the arithmetic and a worked example.

What do leases look like under the 2022 Act?

The Landlord and Tenant Act, 2022 (Act 9 of 2022) applies to the letting of residential and business premises (section 1). Several points affect what you are buying:

• A lease does not have to be written. Section 3(1) allows a tenancy agreement to be in writing, by word of mouth, partly both, a data message, or implied from conduct. Where a tenancy is not in writing, section 3(3) and (4) require the landlord to keep a record of the parties, the premises and the rent, and to give the tenant a copy within fourteen days of the tenant taking possession.
• A bigger agreement should be written. Section 4 says a tenancy agreement worth twenty-five currency points or more is not enforceable by action unless it is in writing or a data message, or the other side admits it. Schedule 1 sets a currency point at UGX 20,000, so that is UGX 500,000 as the Act stands, and the Minister may amend it.
• Tenants must be identified. Section 3(5) bars a landlord from entering a tenancy agreement with an individual who does not provide a National ID or other identification, or with a legal person that does not give registration details. Ask to see the identification file.
• Some terms are void. Under section 11, a term that purports to exclude or restrict any provision of the Act is void. Under section 38(4), a notice period shorter than the Act's minimum is void. A lease full of such terms is weaker than it looks.
• Rent in advance and deposits. Section 24 limits advance rent to three months for a tenancy of more than one month unless both sides agree. Section 30(2) caps a security deposit at the lesser of one month's rent or one-twelfth of a year's rent, and section 30(5) requires a written receipt.

Check whether each lease is fixed-term or periodic. A fixed term ends on its date (section 37), and a landlord under a fixed-term tenancy cannot raise rent before the term ends unless the agreement allows it (section 26(3)). A buyer paying for "income growth" should read that carefully.

Do tenants stay after a sale?

Generally, yes, until their tenancy ends in a lawful way. Section 34 says a tenancy shall not be terminated except in accordance with the Act or with the tenancy agreement. Sections 35 to 40 list how a tenancy ends: by agreement, by the tenant vacating with consent, by the fixed term or event ending, by notice, by abandonment, or on the death of a sole tenant. A sale of the building is not on that list, so in our reading the new owner takes the building subject to the existing tenancies. Have your advocate confirm this against each lease.

What this means for you:

• You cannot clear the building on completion. For residential tenancies, section 38(2) sets the minimum notice at seven days for a weekly tenancy, thirty days for a monthly one and sixty days for a year-to-year tenancy.
• If you evict outside the Act, section 45 entitles the tenant to seek relief from a court, or an amount equivalent to three months' rent, and the court may order compensation for damage on top.
• If a tenant is in arrears for more than thirty days, section 29(2) allows the landlord to re-enter and take possession, in the presence of an area local council official and the police. The landlord's right to recover the arrears continues.
• Section 30(6) says the security deposit must be transferred on a change of landlord and the successor landlord must notify the tenant.

If you need the building empty, for example to demolish and redevelop, make vacant possession a condition of the agreement and require the seller to serve lawful notices and pay any compensation. If you want the tenants to stay, tell them in writing who the new landlord is and where to pay.

How do I handle arrears?

Arrears are money owed by tenants for rent and charges already due. They are an asset of the seller unless the sale agreement says otherwise, and a buyer who expects to collect them can be disappointed. Decide three things in the agreement:

• Who owns the arrears? The simplest rule is that rent due up to the completion date belongs to the seller, who collects it. The alternative is that the buyer takes them over at a discount.
• How rent is apportioned. Section 23 of the Act says rent accrues from day to day. Rent for the month of completion is split by days between the two of you.
• Who deals with a defaulting tenant. A landlord who wants arrears can apply to a court under section 29(1), and small claims can go through the Judicature (Small Claims Procedure) Rules, 2011 where the amount is within their limit (section 29(4)).

Separately, check what the seller owes. Section 10 of the Act says the landlord is responsible for taxes and rates on the premises. KCCA says property rates fall on the owner, that rented residential property must pay at 6% of rateable value, and that transfers cannot be registered without a certificate of no arrears. Any tax the seller owes on rent, any unpaid utilities in common areas and any contractor's bill should be settled by the seller or deducted from the price. A seller who is an individual should be paying 12% on gross rent above UGX 2,820,000 a year (PwC, last reviewed 22 October 2026), so ask whether they are registered and paying.

What permits and title should the building have?

Run the same checks as for a house, with higher stakes. The detail is in legal checks before buying a house. For a rental building, insist on these:

• Title. A search at the land registry showing the seller as registered owner, with no caveat or mortgage that will not be discharged on completion. If the seller is married and the building is on family land, the Land Act, Chapter 236, section 39 requires the spouse's prior written consent. For a short lease on a leasehold title, ask how many years remain.
• Building permit and approved plan. The Building Control Act, 2013, section 34 makes building without a permit an offence. Check the number of units on the plan against the number on the ground. Extra floors added without approval are a common problem.
• Occupation permit. Section 44 requires one, and section 44(3) makes it an offence to occupy without one. KCCA's FAQ lists the documents for the application: approved drawings, job card, water and electricity bills, a fire certificate and an architect's compliance letter.
• Structural papers for multi-storey buildings. Section 35(3) requires a stamped structural design and a geotechnical report. Section 41 lets a committee order a dilapidated building repaired or demolished.
• Fitness for habitation. Section 6 of the Landlord and Tenant Act implies that residential premises are fit for habitation at the start of a tenancy, and that the landlord keeps the exterior and common areas fit, meaning you inherit repair duty over common areas (section 7).

A block with no occupation permit is a legal risk to every tenant and to you. For commercial buildings, the commercial building due diligence guide adds points on business leases and use.

What should the sale agreement say?

Turn every finding into a clause. Your advocate will draft it, and these are the items to ask for:

Do not pay a deposit to an agent or a seller before the search and the tenant schedule are in your hands. A claim by a seller that "the title is being processed" is a reason to wait.

Where should I go from here?

If you are still choosing the type of income property, compare a block with a larger new project in buying an apartment off plan, where you buy one unit at a time. Check your funding in buying a house with a mortgage, because banks lend on titled property with approved plans and look closely at rental income. Use the house inspection checklist for the physical walk-through. Then browse house listings and the apartment listings for blocks, and book an escorted site visit so the paperwork is checked when you arrive. Our homes and condominiums guide explains the difference between unit titles and a single title held for a whole building.

Listings available now

Live from Land & Property on 4 November 2026. Prices are the sellers' asking prices.

• 2 in 1 houses for sale in Kisaasi at Ugx350m Kisaasi, Kampala · House UGX 350,000,000
• 3+1 Bedroom house in Bwebajja at 520m Entebbe, Wakiso · House UGX 520,000,000
• Residential House in Kira at Ugx170m Kira, Wakiso · House UGX 170,000,000
• Residential House in Kira Mulawa at Ugx350m Kira, Wakiso · House UGX 350,000,000
• Residential House in Nakwero @Ugx480m Gayaza, Wakiso · House UGX 480,000,000
• 4-Bedroom Residential House in Kitikifumba Kira Kira, Wakiso · House UGX 850,000,000

Frequently asked questions

Related guides

• Rental Blocks and Residential Buildings for Sale
• Legal Checks Before Buying a House
• Buying an Apartment Off Plan in Uganda: 12 Checks
• Buying a House With a Mortgage: Step by Step
• House Inspection Checklist Before You Buy
• Commercial Building Due Diligence in Uganda