Advice for Landlords - Page Properties
As we all know the economy in Zimbabwe is far from healthy. In fact more and more people are not making ends meet. This is reflected by the number of company closures, rental defaults, and homeschooling that is now a preferable option over mainstream schools.
I am not generally a doom and gloom person, I have always thought of myself as an optimist. But with every area of the economy feeling the pinch, I have had to readjust my attitude and look at the glass as having something in it as opposed to being half full. I am looking at our property market as a realist now.
Rental prices have dropped by between 20% and 30% over the last 18 months, and property prices have seen a similar drop. Defaults and late payments have risen by between 30% and 40% over the same period.
Landlords are facing the uncomfortable reality of having less money in their pockets, and some getting no return at all on their investments due to non-payment or their properties standing empty.
If you are in the fortunate position of owning a property, which you can rent out, then this is your reality check. See the glass as having something in it and be realistic about what your goals are in terms of your property portfolio. Here are some points to consider:
- The right tenant is not always the one who offers the highest rental. The right tenant is someone who will look after your property, thus maintaining its resale value. The right tenant is someone who pays the utility bills on the property. The right tenant is someone who makes her rental payments on time month in and month out.
- In order to find the right tenant, Landlords need to look at the whole picture and consider taking a considerably lower rental to ensure that the property is maintained, the bills are paid and that they get their rental on time every month.
- It is better to ensure that you get something out of the property than nothing at all. Properties stand empty because Landlords are refusing to consider lower rentals. This costs the Landlord money, as he will have to pay utility bills and probably pay a gardener or security guard to be a presence on the property.
One of the ways that Landlords can protect themselves from tenants defaulting on utility payments is to include the cost of the rates into the rental asking price and then pay the rates themselves. This does not protect from defaulting ZESA payments, but as these are more likely to be prepaid meters now, it does help. Before the hyperinflation of 2006 to 2008, lease agreements stated that landlords were responsible for the rates on the property. This changed during that time, to tenants paying the rates. The law as it stands does not allow landlords to sue tenants for outstanding rates bills, as according to the statutory law the rates remain the responsibility of the property owner, whose name the rates bill is in.
Another way to protect oneself, is to get a letter from a prospective tenant’s employer indicating that the employer is aware of the rental application and cost of the property the employee is looking at renting, and that the tenant can afford this rental. In that way, if the tenant fails to pay, there may be some pressure the employer can put on the tenant to keep up the rental payments. This is not a foolproof method but it is an avenue, which I feel, can be used to mitigate one’s potential losses.