LANDLORDS continue to peg their properties in foreign currency because they need the money for other investments in preparation for retirement, says Estate Agency Council of Zimbabwe presiden
t Abraham Sadomba. Sadomba this week said property was the most important investment for any individual in their lifetime and, as such, they needed to benefit from it.
“Landlords peg their properties in foreign currency simply because this is one of the best ways they can safeguard their investment,” Sadomba said.
“Last year we were given the go-ahead by the former Reserve Bank of Zimbabwe governor (Leonard Tsumba) allowing our members to peg their properties in foreign currency. However he told us that it was illegal to actually charge in foreign currency.”
Sadomba admitted that the rate used was not the stipulated $824 against the United States dollar, but “whatever is agreed between the property owner and the person wanting to rent or buy the property”.
The move comes amid reports that the decision by landlords to continue pegging their properties in foreign currency is one of the several reasons why Zimbabwe’s inflation rate continues to escalate.
Zimbabweans are crying foul saying foreigners are snapping up all properties, especially for rental in Harare’s Avenues area, because they can pay in foreign currency.
Sadomba said: “If individuals feel they are getting a raw deal they can report to the police. Charging in foreign currency is against the Finance Act and it is criminal to do so. I believe our members are following the regulations as given to us by the RBZ governor in his letter to us.”
However, new RBZ boss Gideon Gono in his Monetary Policy Statement said the scramble for property by asset managers, had resulted in asset-driven price inflation arising from the diversion of savings from banks into real estate, foreign currency purchase, equities, vehicles and other forms of consumptive spending.
Gono said this was crowding out credit from real productive activities and causing capacity constraints at the supply level.
Last year landlords began pegging their properties in foreign currency, including for rentals, to hedge against spiralling inflation currently standing at 619,5%.
They said pegging their properties in foreign currency was the safest way to hedge against inflation which economists predict could reach 1 000% soon.