RESERVE Bank of Zimbabwe (RBZ) governor Gideon Gono last week read the riot act to real estate agencies and property owners saying the central bank is gravely concerned about their “unscr
upulous increases” in rentals
The move comes barely two weeks after the Bulawayo-based Affirmative Action Group (AAG) told tenants to boycott paying rent to estate agents claiming they were “excessive and increasing monthly”.
However Real Estate Industry of Zimbabwe (REIZ) president Abraham Sadomba in an interview blasted the AAG and accused it of taking the law into its own hands without clearance from the legal authorities.
Sadomba asked the AAG whose mandate they were using to go about telling citizens not to pay rent, a policy enshrined in an Act of Parliament.
He said the AAG should concentrate more on politicising Members of Parliament and government officials than terrorising his members.
In his monetary policy statement review last week however Gono said the law would move in on the property sector because things were now getting out of hand.
“As monetary authorities, we are gravely concerned about the prevalent unscrupulous increases in rentals by real estate agencies and property owners, which are completely unrelated to any changes in economic fundamentals,” Gono said.
Estate agents have been asking government to encourage the pegging of properties in foreign currency to hedge landlords against hyperinflation.
This follows the RBZ’s threats to deal with individuals and agents requesting foreign currency for property purchases and rentals.
Seeff Zimbabwe (Pvt) Ltd managing director Nicholas Masaya has pointed out that pegging in foreign currency ensured that landlords received “value for money” for their properties. He said it was becoming extremely difficult for landlords to strike the right price for their properties because of hyperinflation.
Annually, inflation, which peaked at 622,8% in January this year, fell to 602,5% in February and further decelerated to 583,7% in March. Former RBZ governor Leonard Tsumba, in a letter to estate agents, allowed landlords to peg their properties in foreign currency but to actually charge in Zimbabwe dollars.
When Gono took over as governor he overturned the decision, saying this was illegal and all properties should be pegged and charged for in the local currency only.
Estate agents say the major reason why landlords prefer pegging their properties in foreign currency is because the rates are more stable.
However, while the RBZ has promised to crack down on illegal dealings within the property market houses are still 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 have taken the role of estate agents.
Properties in upmarket suburbs are selling for between US$20 000 and US$100 000.
In Zimbabwe it was legal to peg items in foreign currency but illegal to actually charge customers in hard currency.
“For the main reason that such practices work to defeat our declared fight against inflation, the Reserve Bank, together with other relevant authorities in government will be taking stern measures on agencies and/or individuals who refuse to take heed,” Gono said in his monetary policy statement review.
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 Zimbabwe dollar is the legal tender in the country and, as such, all payments must be made in local currency,” the RBZ said in a written response to businessdigest.
“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.”