THE country’s real estate sector has been given a tongue-lashing by Reserve Bank of Zimbabwe governor Gideon Gono who has promised to revamp the sector to stop rampant pr
In his second quarter to June 30 monetary policy review statement, Gono accused landlords and estate agents of rampant profiteering.
“As monetary authorities we continue to note very disturbing practices by the real estate sector,” he said on Tuesday.
“Such practices include fuelling of property price increases through quoting of prices in foreign exchange notwithstanding the prohibition of this under the current exchange control regulations.”
He said it also included wanton hiking of rentals without reference to any macroeconomic fundamentals and hiding under their intermediary roles between landlords who act on their advice and tenants who bear the brunt of this advice.
He said it also included externalising foreign exchange through abuse of the auction system and trading on the parallel market.
“To put a stop to these underhand practices, the Reserve Bank, in close cooperation with the relevant bodies, is introducing a comprehensive framework to track sources and applications of funds in the buying and selling of residential, commercial and industrial properties, with effect from August 1,” Gono said.
He said consistent with the existing exchange control regulations the RBZ would introduce more stringent measures in the property sector.
The move comes amid reports that some landlords and their tenants are violeting RBZ regulations not to charge rent in foreign currency.
Former RBZ governor Leonard Tsumba had allowed landlords to peg their properties in foreign currency but to actually charge tenants in Zimbabwe dollars.
Zimbabweans living abroad have snapped up properties countrywide using foreign currency earned over there, which is then sold on the parallel market.
This week Gono said he had introduced a new scheme to help the Zimbabweans in the disapora to invest in the property market using formal channels.
He said he had come up with a “Homelink housing scheme”, following in the footsteps of his Homelink monetary programme that has met with mixed reaction countrywide.
“Where non-resident Zimbabweans or foreign investors are bringing in their foreign exchange into the country where those funds will be free funds and hence not subject to any government 25% foreign exchange surrender requirements,” Gono said. “In other words, the funds will be convertible 100% at the diaspora rate or auction rate, which ever is higher. Where former residents have sold their property and wish to remit proceeds abroad there are formal channels for doing so through the formal banking system.”
He said the real estate sector was, therefore, called upon to play a positive role in the turnaround programme by working within the accommodative regulatory framework.
“Under the enhanced productive sector support the Reserve Bank would direct more resources towards the construction industry to revive economic activity in the real sector.”
The property industry has come under fire especially from medium income Zimbabweans who say foreigners are snapping up all houses and then charging their tenants in foreign currency.
Harare’s Avenues area is now resident to thousands of foreigners who sub-let their flats, disregarding Rent Board regulations.
Real Estate Industry of Zimbabwe (REIZ) president Abraham Sadomba said he would give a comprehensive report on the situation next week.
“I cannot comment right now,” he told businessdigest in an interview. “Wait until next week and you will get our reaction.”
Sadomba has also been very vocal about rampant corruption in the industry.
Two months ago he clashed with the Affirmative Action Group (AAG’s) Bulawayo branch after it decided to picket about willy-nilly rent increases.
The AAG said rentals should be increased twice a year, while the REIZ says they should be reviewed quarterly.