The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Bahamas Real Estate Association (BREA) president yesterday warned that the government’s rental assistance initiative threatens to place many landlords at “an unfair disadvantage”.

William Wong, a broker/appraiser with Darville-Wong & Associates, told Tribune Business that “who’s looking after us” was the message he was receiving from many residential landlords he deals with in the wake of the prime minister’s Monday announcement.

Arguing that the proposal appeared weighted in favour of tenants, even though many landlords relied upon rental income to pay their own bills and mortgages, Mr Wong said the government’s intervention into what is a private contractual relationship between the two parties threatened to place the industry on “a very dangerous road”.

He added that COVID-19 had brought “the chickens home to roost” by exposing the near-total absence of savings among many Bahamians, and warned that many tenants may be unable to pay their arrears even when the economy re-opens because numerous companies are likely to close or downsize.

Pointing out that The Bahamas lacks the resources and means to finance a multi-billion dollar stimulus package like the US, Mr Wong added that the Central Bank’s decision to halt approvals for dividend payments by the Canadian-owned banks to their foreign parents showed just how “serious a state” the country’s economy was in,

Recalling how the likes of Royal Bank of Canada and Scotiabank sent “millions of dollars” in profit to their parents every three months when he worked in the financial services industry, Mr Wong said the Central Bank’s potential halt to any such approvals until September 2020 spoke volumes as to concerns over The Bahamas’ foreign reserves and one:one peg with the US dollar.

As for the rental assistance initiative unveiled by Dr Hubert Minnis, the former BREA chief said he was unable to see how the three-month initiative would assist landlords - especially those relying on rental income from their tenants to pay mortgages and other bills.

“Landlords have a commitment to their bank. What are they going to tell the bank?” Mr Wong queried. “Who pays the landlord? Quite frankly, you’re talking about the landlord being unable to disconnect the water of the electricity. It really puts the landlord in a precarious situation, and I don’t know how legal that is.

“Who looks after the landlord? Like the tenant he has bills to pay. The landlord could be stuck with a big bill. It appears he [the Prime Minister’s] looked after the tenant, but the landlord has mortgages, bills, children in school. Who’s looking after us? What about me? That’s what landlords are saying.”

The initiative unveiled by the Prime Minister is more a “rent deferral” than a “rental assistance” plan as it allows tenants who have lost their jobs, or experienced a dramatic reduction in income, to only pay 40 percent of the rent due for a three-month period with the 60 percent balance deferred.

The proposal, which appears to have keeping tenants in their existing residence as its primary objective while blocking evictions, also minimises the Government’s risk as no outlay of public funds seems to be involved. The Prime Minister said, though, that commercial banks had “indicated they are open” to deferring mortgage payments on rental properties although this does not appear to be set in stone.

Landlords will not be able to evict tenants who were in good standing prior to April for those three months, and will not be able to disconnect their electricity or water. This means there will be no evictions of those who qualify before end-June, but the sums due to landlords are being deferred - not waived. Tenants will have 12 months to pay back the deferred amount.

The need to come up with 40 percent of the due rate will likely mean a significant number of tenants will be unable to qualify. And Mr Wong voiced doubts that many of those who do will be able to pay the deferred amount given the economy’s likely struggle to rebound from COVID-19.

“Unfortunately you’ll have some tenants that really take advantage of this situation by burning air conditioning and using a lot of water. I think this is a very dangerous road we’re going on,” he told Tribune Business.

“I understand some people will not have the savings to pay their rent. This is a situation that no one has envisaged, and goes back to where Bahamians never save for a rainy day. The chickens have come home to roost, and it puts landlords in an unfair situation where they cannot collect their rent. That’s the long and short of it right there.”

Mr Wong also expressed doubts over whether landlords will be able to recover the deferred rental income portion, adding: “It’s kind of a messed up situation. The key here is: Will they [the tenants] have a job to go to? A lot of companies may not survive. A lot of companies may cut back. They cannot pick up and start like nothing happened. It’s a chain reaction and domino effect. Someone is going to be put at a serious disadvantage because of this.”

The former BREA chief warned that The Bahamas simply cannot afford a multi-billion stimulus or bail-out package to save the economy post-COVID-19, adding: “The Government’s got to be financially responsible and provide people with food but, at the end of the day, we as the taxpayer are going to have to pay for this.”

And Mr Wong said he was unsure whether Bahamians “appreciate” the seriousness of the country’s economic position as indicated by the suspension of exchange control approvals for dividend payments by the Canadian-owned commercial banks to their parents. “That’s a big, big statement right there. Wow,” he added.