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Property – Estate agents seek forex reprieve

Ngoni Chanakira

ESTATE agents are asking government to encourage the pegging of properties in foreign currency to hedge landlords against hyperinflation. This follows Reserve Bank of Zim

babwe (RBZ) threats to deal with individuals and agents requesting foreign currency for property purchases and rentals.

Seeff Zimbabwe (Pvt) Ltd managing director Nicholas Masaya said pegging in foreign currency ensured that landlords received “value for their money” for their properties.

He said it was becoming extremely difficult for landlords to strike the right price for their properties because of spiraling inflation, currently standing at 455,6%.

The figure however, stood at less than 100% in January.

When he presented his 2003 National Budget in parliament the Minister of Finance and Economic Development Herbert Murerwa said inflation would not pass the 96% figure – a statement that proved grossly inaccurate.

Economists speculate inflation will continue soaring to surpass 1 000% by year-end.

Masaya said the major reason why landlords preferred pegging their properties in foreign currency was because the rates were stable.

Houses are now being leased, mainly to diplomats and non-governmental organisations, for sums ranging from US$200 to US$1 000 a month. The amounts are usually paid in two lump sums annually to landlords who desposit the cash in their offshore accounts, or use it to snap up more properties.

Properties in upmarket suburbs are selling for between US$20 000 and US$100 000.

In Zimbabwe it is legal to peg items in foreign currency but illegal to actually charge customers in hard currency.

Accusing commercial banks and individuals of taking advantage of the precarious foreign currency situation by charging exorbitant parallel market amounts, the RBZ has called in law enforcement agents including the ZRP, National Economic Conduct Inspectorate (Neci), and the Zimbabwe Revenue Authority (Zimra) to help nail offenders.

The US dollar is officially pegged at $824 against the Zimbabwe dollar but is fetching as much as $6 000 on the parallel market, while the British pound, which is pegged at $1 300, is going for as much as $9 000.

RBZ acting governor Charles Chikaura recently told businessdigest that requiring payments for rentals, properties or other goods and services in US dollars was illegal.

“The Zimbabwe dollar is the legal tender in the country and, as such, all payments must be made in local currency,” he said. “A dispensation was however, given to hotels and other tourist specialist services to receive payment in foreign currency. This measure became necessary to improve convenience for the country’s visitors, while at the same time encouraging foreign exchange inflows.”

He said the RBZ and law enforcement agents would make a collective effort to curtail the illegal foreign currency deals currently being undertaken by thousands of Zimbabweans.

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