COVID-19: Landlords cave in to pressure as rents fall

Landlords have caved to the economic pressures arising from the COVID-19 as they now agree to rental adjustments with tenants. According to the just released Hass Consult Rental Price Index, landlords have headed to calls by tenants to slash rents in recent months preceding the end of the second quarter in June. 47 percent of tenants surveyed in the index indicate they had sort rent discounts of between 25 and 30 per cent. Rents in Donholm registered the biggest quarterly drop of 4.8 per cent while Kitusuru has marked the highest drop on an annual basis at 7.7 per cent. The fall in rental prices during the quarter has been more profound in detached houses and apartments at one percent and 0.3 percent respectively. Other regions to mark a cool down in rent have included Gigiri, Langata, RidgeWays, Nyari, Kilimani, Athi River and Westlands. However, regions including Parklands, Kiserian and Thika have defied the trend in rent depreciation as landlords’ mark growth in rental yields “COVID-19 has resulted in the closure of many industries across the economy and thereby reducing incomes of business owners and employees who are in turn exerting pressure on landlords to reduce rents,” said Ms. Sakina Hassanali, Head of Development Consulting and Research at Hass Consult. The adjustment of rental leases is expected to last through the third quarter as landlords face up to risks of losing tenants should they leave the costs unchecked. “We would expect landlords to hold rates over the next three months but we would expect them to subsequently seek for a normalized return on their assets,” Hassanali added. On the overall however, rentals charged on combined properties remained on a positive 0.2 percent quarterly growth and annual change of 1.4 percent driven in part by declining sales. “The hit on sales has been causing pressure on rentals. We however see this as a knee-jack reaction to the current market conditions,” said Ms Hassanali.

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