Property owners charge rentals in forex

Kudzai Kuwaza

PROPERTY owners are now demanding rentals in foreign currency as the local unit continues to rapidly lose value against the US dollar, businessdigest has learnt.

The trend of charging goods and services in US dollars has been prevalent since the monetary authorities pronounced the separation of forex and Real-Time Gross Settlement (RTGS) accounts in October last year.

This resulted in the skyrocketing of prices of basic commodities with the RTGS and bond note balances rapidly declining in value to the greenback. This is despite insistence by the government that bond note is trading at par with the greenback.

Many businesses are pegging prices of goods and services in US dollars.

Real Estate Institute of Zimbabwe president Mike Juru said the levying of rentals in forex is within the right of property owners as forex is part of the basket of multi-currencies introduced by government in 2009 after the Zimbabwe dollar was phased out due to hyperinflation.

“They are entitled to charge in the currency of their choice,” Juru said. “Just as someone can choose which ice-cream they would like to eat from chocolate, vanilla and other flavours. One can choose to charge rental in the currency of their choice from the basket of currencies legalised by government.”

However, economist John Robertson pointed out that the practice is rendered futile because most tenants do not have access to foreign currency as they are paid in RTGS or bond notes.

“The trend is increasing because of the uncertainty on the market. At least with foreign currency they know what the value of their money will be in six months’ time,” Robertson said. “However, they are likely to be disappointed because many of the tenants do not have access to foreign currency as they are paid in local currencies. Only those who work for international organisations can pay in foreign currency but they are very few.”

Most property owners, seeking to hedge their investments from inflation, now prefer to levy rentals in hard currency.