THE Zambia Institute of Estate Agents (ZIEA) says the proposal for landlords to relieve tenants of rental obligations during the COVID-19 pandemic can only be feasible if government also offers some financial relief to landlords.
And the Institute has advised tenants to ensure they carefully understand tenancy agreements before signing so that they can fully comprehend all provisions available to them in case of a force majeure.
Last week, Chief Government Spokesperson Dora Siliya said government was considering an initiative where landlords could relieve tenants of rental obligations in light of the Coronavirus pandemic.
But in an interview, ZIEA president Bryan Mushota, however, said that for the move to be feasible, government needed to offer financial relief to landlords in return.
He also noted that there was need for clarity on whether or not there were going to be any tax rebates and waivers on other obligations for the suggested period.
“Zambia is a very small economy and in other countries where this might apply, the government is coming up with emergency funds, either through tax rebates or refunds or actual cash, which citizens can have access to. We don’t really have a welfare system in Zambia so if the government, in a free market economy has to say that, ‘landlords should not charge rent,’ that is very well, we would welcome it. But then, we would also want to understand how that is being done, the rationale, perhaps maybe there is going to be rebates in terms of taxes for property owners for a similar period and other obligations as well because it’s a far-reaching effect,” Mushota said.
“For example, a building that tenants will be paying as an office building, there are people, who maintain that building; there is water; there are electricity charges, which are all collected from rentals, so does it mean that the utilities would also forego the bills that have to be paid to Lusaka Water and Sewerage, Zesco, telephone companies and various other overheads, which would be due at the end of the month and also salaries at the end of the month for those staff. So, it’s a ripple effect.”
He observed that the Coronavirus pandemic’s full effect was yet to be felt.
“But then, this COVID-19 sort of disruption has been two, three weeks now, so are we saying that within the 14-days, somebody wouldn’t have prepared their rentals, or if they are employed, does this mean their company didn’t pay their March salary? So, I think perhaps the full impact of this COVID-19 is yet to be felt because the measures are just reaching about two weeks, now, and I think the impact could be far-reaching. So, we would have to seriously study the situation and see how it goes,” Mushota added.
And he advised tenants not to be in a hurry to sign tenancy agreements until they fully understood what relief they could get in the event they were unable to meet their obligations due to an ‘act of God’.
“In terms of tenancy agreements, there is what is known as the ‘force majeure,’ which is a clause that says, ‘should this scenario happen like this or should I be unable to fulfil the other condition, then I would evoke this measure or force majeure as the case may be.’ So, as a comment, generally to tenants is that, they should not be in a hurry to sign tenancy agreements because the future is uncertain so if they can, they should rather wait and study the tenancy agreement, ask a professional to look at it, either a registered estate agent or a lawyer and then advise them on the clauses because once you have this clause in your lease, then you can either terminate or you can have a certain portion of your rent suspended due to some act of God or something,” said Mushota.
“In terms of tenancy, there is what is called the tenancy agreement, which sets out the conditions onto which the landlord will lease out and the tenant will lease. So, those conditions stipulate the relationship between the landlord and the tenant, that is in addition to the Rent Act and the Landlords and Tenants Act for business premises, so it would be difficult, we need to understand in what context the Minister (Siliya) was speaking, obviously, we are a government statutory body so we support what our parents, the government, do say, but we need to understand in what context, whether it was from a morality point of view, because you cannot expect to draw blood out of a stone…so, if your tenant is hard-pressed (financially) and you’re still asking for rent, where are they going to get the money from?”