A rent default crisis is looming come month-end. A number of individuals and businesses have been negatively affected by the outbreak of the coronavirus. They will struggle to meet their monthly rent payments.
The country’s precarious position will also cause a bulk of homeowners to struggle to service their monthly home repayments. This comes amid mounting job losses due to the government-imposed lockdown to battle the COVID-19 pandemic. This situation is compounded by an already weak economy.
Financial services company, Cirrus Capital estimates the country could lose as much as N$2 billion per week. This is due to the lack of economic activity as the result of the lockdown. The Ministry of Labour estimates that there have been over 2,000 job losses over the past three months due to this situation.
Justice Minister, Yvonne Dausab said the government was currently engaged with the matter. An announcement regarding its position will be made shortly.
“We have not finalized the discussions. It will probably only be finalized on Friday so let’s expect some update on it next week. For the moment, pay your rent if you can afford and if not, talk to the landlord,” she said.
Quizzed on the options on the table, the minister said the Ministry of Urban and Rural Development (MURD) was taking lead on the matter.
“This is a matter that falls within the power and domain of the MURD/ local authorities. I don’t think anyone can be completely absolved from the liability to pay but there can be some ease on payment during this time. It’s subject to arrangements made between parties,” Dausab said.
Veteran Real Estate Agent, Anne Gebhardt said the coronavirus outbreak presents a challenge to tenants’ ability to pay their rents.
“The tenants work for a salary and pay their rent from this salary. The fear and uncertainty here is if the lockdown continues for a longer period, these tenants will only be paid if they are present at their jobs. If they are not able to be on the job, then they will not be able to pay their rent. This is one genuine scenario,” she said.
“My recommendation in this regard is that it is always GOOD PRACTICE to keep a healthy relationship between the Tenant and the Landlord. There are various options depending on the categories of tenants. The landlord can give a grace period to the tenant not to pay rent for a certain period of time until the tenant’s salary situation normalises.
“This will mean that if the landlord has a bond on the property that is being leased, the landlord may have to discuss this situation with the bank. Some banks are now looking into the advice given by Bank of Namibia (BoN) on 25 March 2020 regarding a loan re-payment moratorium. If this works – it will be a win-win situation for both the tenant and the landlord.”
Popular Democratic Movement (PDM) leader McHenry Venaani has called for the halting of evictions of tenants.
“It is our position, as the PDM that evictions of tenants be temporarily halted as a response to the COVID-19 pandemic. No person should be left out in the streets with nowhere to go. The well-being of all Namibians, in general, is a priority and must be treated as such by Government,” he said.
“Other recommendations include: Tenants to be offered a one-month extension on their lease. Landlords need to see what other options are open to them if tenants lose their income due to the lockdown. Landlords could allow tenants to settle their dues in installments or institute discounts on the normal rental rates.”
With regard to mortgage repayments, Venaani called for the suspension of loan repayments.
“Banks around the world and in Sub-Saharan African countries are suspending loan repayments. This must be done also in Namibia to offer relief for those whose lives, jobs and businesses have been upended in the crisis. Commercial banks must suspend loan repayments during the lockdown through written agreements with borrowers,” he said.
“The same should apply for SMEs (Small and Medium Enterprises). They too should be able to defer payments on secured term loans up to the next few months when the economy is up and running again. The COVID-19 outbreak will have a devastating impact on the country’s economy. We can limit this by assisting small businesses with a grace period of three months.”
Despite increased criticism that measures announced by banks are insufficient, the Bankers Association of Namibia (BAN) maintains its measures are sufficient in light of the existing economic conditions.
“All our members have put measures in place to alleviate and cushion the fallout of the COVID-19 pandemic on their customers. These measures, including those regarding home loans, are guided by regulation.
“Many members have gone beyond the payment relief recommendations. They have also agreed to do a complete debt restructure for extended periods to qualifying customers at no additional administration fees,” BAN Chairperson, Sarel van Zyl said.
“In addition, member banks offered reduced charges, debt guidance, and free digital banking. They continue to help businesses on a case-by-case basis daily. Going above and beyond the regulations is a willing sacrifice many of our members have already shown. This, together with a sharp increase in provisioning for bad debts, will no doubt have a very negative impact on their future bottom-line performances for a long time, as their investment and contribution to the well-being of their customers impacted by the crisis become more visible over months to come.”