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Ailing economy bites landlords

The biting liquidity crunch obtaining in the country has resulted in many people failing to honour their rental obligations forcing landlords to reduce their charges.

By HAZVINEI MWANAKA

Poverty Reduction Forum Trust (PRFT) programmes coordinator Tafara Chiremba said reduction in rentals was being fuelled by several factors.

“To a large extent, it is because of increasing poverty which is compounded by company closures and rising unemployment. The loss of jobs and the reduction in livelihood opportunities make it difficult for people to pay their rentals,” he said.

“Urban livelihoods have now been hinged on unsustainable income generating opportunities such as vending. Such activities have been negatively affected by the fact that people have no money.”

A landlord in Kuwadzana who identified herself only as Mrs Chimukono said she was forced to reduce her rentals significantly as tenants were finding it difficult to pay.

“Last year around October, I was charging about $70 per room. In December it went down to $60 and now its $50. There is now a lot of competition, so if you don’t reduce the rates tenants will leave, so it’s better to get that $50 than nothing at all,” she said.

Tafara added that for as long as households continued to face financial difficulties, rentals were likely to go down further.

“In Harare, our Basic Needs Basket surveys have established that areas such as Budiriro and Kuwadzana extension are seeing the reduction of rental prices and in other cities such as Masvingo and Bindura, our researches have revealed that some owners of houses in the urban area have opted to move to the rural areas, leasing out their houses so that they can get maximum income to meet their basic human needs,” he added.

He also said the reduction in rentals made life easier for poor tenants who also found life tough in these difficult times.

According to Finance minister, Patrick Chinamasa, since 2011, 4,160 companies have shut down, resulting in 55 443 job losses.

Property managers have also alluded to the fact that the current economic conditions had affected businesses.

Lamudi properties Business Development Consultant, Ogylive Makova said the economic situation prevailing in Zimbabwe was affecting both residential and commercial real estate.

He said many companies were closing down and tenants who used to afford the rentals were no longer in a position to pay and were defaulting.

“On the other hand, some landlords used to have houses with cottages where no-one was staying or guest rooms to be used only by visitors,” Makova said. “However, the need to earn money is forcing them to find tenants for the free spaces, creating more supply in the market resulting in low rentals. Landlords are now reducing their rentals as many tenants can’t afford high charges thereby settling for lower rents than to have a defaulting tenant.”

Analysts said on the commercial side, rentals in the city centers were still very expensive as prices averaged around $10 per square metre while parking costs $1 per hour. This is forcing many companies to relocate to residential areas close to the city centres where rentals are cheaper and parking is free.

Zimre Property Investments (ZPI) said recently it was mulling the disposal of its properties in the CBD saying it had good buildings in the wrong place.

Pearl Properties said its rental yield eased to 7, 50% as compared to 80% in 2013 reflecting a decline in rental income.

General manager for developments Christopher Manyowa said there had been stagnation and a decline in occupancies across most sectors.

Harare Residents’ Trust (HRT) director Precious Shumba attributed the decline in rentals to the prevailing economic challenges.

“The reason why rentals are declining is that most residents are living from hand to mouth. Most Zimbabweans are unemployed and they are failing to raise money for rent,” he said.

“The prices will continue to dip the more housing cooperatives are formed in urban areas. Residents prefer to own their own stands where they can put up makeshift structures until they are able to build proper houses,” Shumba said.

“The areas most affected (by the rental declines) are Mabvuku, Highfield, Kuwadzana, Sunningdale, Mbare, Glen View, New Tafara and Mufakose. Landlords are going for more than three months with their houses empty,” said Shumba.

Masvingo Resident’s Trust programmes manager Prosper Tiringindi said areas such as Rujeko A and B and Mucheke D had been affected by the reduction in rentals.

“Rentals have been reduced due to a number of factors such as unemployment and the mushrooming of new suburbs such as Victoria Ranch where rentals are cheaper,” Tiringindi said.

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