Parliament has enacted the Mortgage Refinancing Institutions Act, 2025, setting a minimum capital requirement of Shs 35 billion for businesses to operate in the mortgage refinancing sector.
The new law also imposes a Shs 140 million fine on corporate entities engaging in this business without a valid license.
The legislation was passed following the presentation of the Finance Committee’s report on the Mortgage Refinancing Institutions Bill, 2025, by Chairperson Amos Kankunda during the plenary session on September 4, 2025.
The Committee rejected stakeholder concerns that the proposed UGX 35 billion minimum capital was excessive, arguing it aligns with regional standards: UGX 27.7 billion in Kenya, UGX 24.9 billion in Rwanda, and UGX 41 billion in Tanzania.
Under Clause 14 of the Act, the Ministry of Finance mandates that mortgage refinancing institutions maintain a minimum paid-up capital of 1,750,000 currency points (equivalent to UGX 35 billion), invested in liquid assets approved by the Bank of Uganda.
This capital must remain unimpaired by losses at all times. The Committee recommended retaining this provision, citing its competitiveness within the region, a position Parliament upheld.
The Act also prohibits operating a mortgage refinancing business without a license. Individuals found guilty face a fine of 500 currency points (UGX 10 million), imprisonment for up to seven years, or both.
Corporate entities convicted of operating illegally will be fined 7,000 currency points (UGX 140 million) and barred from obtaining a license under the Act.
To accommodate Islamic finance, Parliament revised Clause 2 to define “Islamic mortgage refinance business” as operations conducted in accordance with Shariah principles, including through an Islamic window. Clause 6 was amended to clarify licensing for such businesses.
Kankunda noted that the original definitions risked undermining fully-fledged Islamic mortgage refinancing institutions, a concern echoed by the Uganda Bankers Association. The revisions aim to ensure robust implementation of Islamic mortgage refinancing.
Additionally, Parliament adopted a proposal by Allan Mayanja (Nakaseke Central) requiring the Ministry of Finance to table regulations to operationalize the Act within six months of presidential assent, as modified by Sarah Opendi (Tororo Woman MP). Opendi emphasized the need for a clear timeline to prevent delays in gazetting the regulations.
Speaker Anita Among commended the Finance Committee for its thorough work without redrafting the Bill excessively, stating, “I thank the Committee for understanding the Bill’s objectives and not altering its intent. You have done an excellent job.”
Finance Minister Henry Musasizi also praised the Committee for its diligence and for fostering an enabling environment to address the novel legislation.
“This is a new area that required careful consideration, and the Committee’s efforts ensured we could move forward effectively,” he said.
The Mortgage Refinancing Institutions Act, 2025, is expected to strengthen Uganda’s housing finance sector by regulating mortgage refinancing businesses and promoting access to affordable home financing, including Shariah-compliant options.
