IN recent weeks, the government — central and local — have been demolishing homes designated as illegal structures in Harare, Chitungwiza and Goromonzi, leaving thousands of people without shelter and vending stalls. The housing problem, with a national backlog at an overwhelming 1,5 million, is a matter that demands redress. The Zimbabwe Independent’s Brian Chitemba (ZI) had a conversation with a property development and management expert Aaron Kumanja (AK) of Realtor Ville Real Estate to discuss housing and property problems stalking the economy. Below are the interview excerpts;
ZI: Housing demolitions have been going on for long. What must be done to deal with this problem once and for all?
AK: The most appalling thing is that the government and councils do not act when people are given the land in the so-called undesignated areas. Authorities witness structures being built and then act when people have used their hard-earned money to build homes. The painful thing is that some officials in government and councils are involved in the selling of the land. We have seen former ministers being arrested over some of the land in question.
What a reasonable government should do is to regularise and make things right; maybe punish the homeseekers through penalties. That is what a people’s government must do, not to demolish houses worth US$40 000 or more. That is wrong.
Z1: What then should homeseekers do to ensure they buy legitimate properties?
AK: People are desperate to get land and build homes for their families. Resultantly, some people then do not pay attention to due diligence. If someone wants to buy land, one can deal with registered estate agents; they can check with the Estate Agency Council of Zimbabwe because if one loses after buying land, the council then compensates through the compensation fund. Land acquisition requires expert advice. We check if the land has a parent deed, subdivision permit or an offer letter from council and it was granted to who. Are there permits to subdivide and compliance certificates from the council? If we can not answer such questions, then there is a problem.
Land barons take advantage of the desperation of homeseekers, and they sell the land cheaper. They get the money and disappear, to track and seek refund is a headache. Property buyers must do due diligence and get proper advice.
ZI: Yes, estate agents help in property deals but there have been many cases of bogus agents. What is your reaction?
AK: It is very easy to verify whether an estate agent is genuine or not. The Estates Agency Council of Zimbabwe has an active website. There is a list of registered estate agencies in Zimbabwe. That way we can cut off bogus middlemen who steal from unsuspecting people.
ZI: How is the current economic situation affecting the property sector?
AK: The main problem we have in Zimbabwe is policy inconsistency by the government. For instance, Statutory Instrument 127 of 2021 gazetted new foreign currency regulations. The flipside of the law changes is that, for example, I bought land for US$200 000 and I want to sell stands in USD so that I recoup my investment. It will be a loss for me to then sell the land in Rtgs. Problems started with the introduction of bond notes; as business we told monetary authorities that it was not going to work.
The government should do more consultations especially on the currency issue before they make dramatic changes overnight. We have been through Rtgs, Nostro, fixed foreign currency rate and then liberalised and then back to controlled forex rate again. That causes confusion and instability. Policy inconsistency affects transactions.
ZI: What are the main headaches for the property sector?
AK: Across the world, the property sector is moved by mortgages. There is nowhere around the world where people pay US$300 000 cash for a property, I think it is only prevalent in Zimbabwe. The unfortunate thing is that not everyone can be in a position to raise that kind of money. When things are stable, those who work in banks can easily buy properties, even low-cost houses in Budiriro and Kuwadzana. Property owners want cash and it’s very rare to find someone who accepts RTGS. So in our volatile economic situation, transactions are very few. We are only dealing with forced sales whereby one has to sell for serious reasons. Those who are not forced to sell have high prices. This then explains why we have few transactions.
ZI: What must be done to improve access to housing?
AK: I suggest that banks work with estate agents and property developers to establish mortgages even in our volatile economy. It can be done. Banks should change policies because it takes about eight weeks to process a mortgage but they should find ways of engaging realtors and then do speedy evaluations and due diligence to complete processes within a week, even on RTGS transactions because the foreign exchange rate while it is stable on the official market, the parallel rate is fluctuating.
ZI: Explain to us advantages of mortgages in an economy?
AK: Once mortgages are processed, cash is released into the market; say someone buys a house for US$200 000, it means we have injected that money into the economy. The seller may then downsize and buy another house for US$60 000, meaning fresh hands have received cash. So that enhances liquidity in the market. We cannot deny that we have liquidity challenges in Zimbabwe and it is difficult for low-and-middle-income earners to buy houses.
There are a few financial institutions which are doing mortgages but bottlenecks of banks to release the money are suffocating the property sector. Banks should adapt new ways that suit the prevailing economic trends. The government is implementing laws which existed during the Rhodesian era where people were not allowed to sell their wares in pavements. However, during the Ian Smith days, there were formal jobs, so there was no need for vending. But now, there are no jobs; this explains why we have a lot of informal traders.
ZI: When did you get into the property business and how have you found the terrain?
AK: We started operating in 2019 when we obtained our compensation fund certificate. Realtor Ville is a group of young people led by me as the managing director and my colleagues are university graduates who are shaping their careers. In 2019, things were better in terms of disposable incomes and we managed to do a number of transactions. The problem started when the government said RTGS and Nostro accounts were separate. Things went haywire. The property business changed drastically.
When we started we were doing agency work, where we would connect buyers and sellers but because of economic volatility, we would put a lot of effort into concluding transactions.