Real estate: The woes of white-collar renters in Islamabad
Dealers convince landlords that they can obtain a substantial upfront payment from renters.
Dealers convince landlords that they can obtain a substantial upfront payment from renters. PHOTO: ONLINE
ISLAMABAD:
“The demand for houses is at its peak and rents are at an all-time high.”
These are the words of a property dealer I recently came across while searching for a house in Islamabad.
With a rental budget of Rs 20,000-25,000 per month, I was expecting to have plenty of options from which to choose, but gradually, I found this was not to be.
I began to realise that property dealers, who already collect commissions as high as 50 percent of the total monthly rent, are greedier than they appear.
To mint more money, the dealers convince landlords that they can obtain a substantial upfront payment from renters — for which the dealers of course demand an increased commission in exchange.
To attract people’s attention, dealers claim that the rental home market has an occupancy rate of 90 per cent, and urge you to look at many of the houses up for rent.
Once you express interest in a house and ask the property dealer to finalise the details, his response will invariably leave you in a state of shock.
“Great my friend, now you just have to pay eight months’ rent up front and a month’s rent as security, as the homeowner has demanded”
When you attempt to bargain for a concession on the demanded rent upfront, the typical response is “Okay, just give me six months’ rent and the security deposit up front”
“It’s frantic out there,” said the property dealer, when I pressed him to give me a concession on the rent due up front for a house I liked.
“This is the height of the rental season. If you don’t pay six month’s rent in advance, you are unwelcome,” he said grudgingly.
After getting frustrated with the rental search, I realised that one has to compromise and cough up at least five months worth of upfront payments.
This is not the end of the ordeal. While signing the lease agreement with the landlord, the renter is forced to accept that there will be at least ten per cent added to the current rent after one year.
At the end of the year, the renter inevitably finds the property dealer at his doorstep asking for a renewal of the original agreement and his commission.
Given the levels of frustration with the apparent “scarcity” of options, a family has no choice but to give in to the property dealer’s demands.
The flush of black money in the market, particularly money made through ‘lesser vices’ such as prostitution and bootlegging, is another unfortunate cause for the upsurge in rental prices.
“Foreigners also have a role in jacking up the rental market. They are always ready to pay upfront amount for one year, and in certain cases, for two years,” Irfan, a property dealer in G-9-1, said.
“Some foreign nationals are even generous enough to meet the demands of the landlord and the property dealer. White-collar and middle-class citizens of this country have no choice but to grumble at their bad luck as citizens of this ‘Pak’ land,” he said sarcastically.
“Urgent legislation is needed to discourage the flow of black money into real estate, and to bind property dealers and landlords to follow set rules for rented houses,” said Muhammad Yousuf, an advocate at the Islamabad High Court.
Yousuf said many wealthy Afghan nationals stay in Pakistan without proper documents and are a major contributor to the increase in rents.
“White-collar families have been left in the lurch, at the mercy of property dealers,” he said.
Published in The Express Tribune, March 18th, 2013.
“The demand for houses is at its peak and rents are at an all-time high.”
These are the words of a property dealer I recently came across while searching for a house in Islamabad.
With a rental budget of Rs 20,000-25,000 per month, I was expecting to have plenty of options from which to choose, but gradually, I found this was not to be.
I began to realise that property dealers, who already collect commissions as high as 50 percent of the total monthly rent, are greedier than they appear.
To mint more money, the dealers convince landlords that they can obtain a substantial upfront payment from renters — for which the dealers of course demand an increased commission in exchange.
To attract people’s attention, dealers claim that the rental home market has an occupancy rate of 90 per cent, and urge you to look at many of the houses up for rent.
Once you express interest in a house and ask the property dealer to finalise the details, his response will invariably leave you in a state of shock.
“Great my friend, now you just have to pay eight months’ rent up front and a month’s rent as security, as the homeowner has demanded”
When you attempt to bargain for a concession on the demanded rent upfront, the typical response is “Okay, just give me six months’ rent and the security deposit up front”
“It’s frantic out there,” said the property dealer, when I pressed him to give me a concession on the rent due up front for a house I liked.
“This is the height of the rental season. If you don’t pay six month’s rent in advance, you are unwelcome,” he said grudgingly.
After getting frustrated with the rental search, I realised that one has to compromise and cough up at least five months worth of upfront payments.
This is not the end of the ordeal. While signing the lease agreement with the landlord, the renter is forced to accept that there will be at least ten per cent added to the current rent after one year.
At the end of the year, the renter inevitably finds the property dealer at his doorstep asking for a renewal of the original agreement and his commission.
Given the levels of frustration with the apparent “scarcity” of options, a family has no choice but to give in to the property dealer’s demands.
The flush of black money in the market, particularly money made through ‘lesser vices’ such as prostitution and bootlegging, is another unfortunate cause for the upsurge in rental prices.
“Foreigners also have a role in jacking up the rental market. They are always ready to pay upfront amount for one year, and in certain cases, for two years,” Irfan, a property dealer in G-9-1, said.
“Some foreign nationals are even generous enough to meet the demands of the landlord and the property dealer. White-collar and middle-class citizens of this country have no choice but to grumble at their bad luck as citizens of this ‘Pak’ land,” he said sarcastically.
“Urgent legislation is needed to discourage the flow of black money into real estate, and to bind property dealers and landlords to follow set rules for rented houses,” said Muhammad Yousuf, an advocate at the Islamabad High Court.
Yousuf said many wealthy Afghan nationals stay in Pakistan without proper documents and are a major contributor to the increase in rents.
“White-collar families have been left in the lurch, at the mercy of property dealers,” he said.
Published in The Express Tribune, March 18th, 2013.