News / National
Govt pushes for suspension on seizure of mortgaged property
16 Dec 2013 at 09:33hrs | Views
HARARE - The Zimbabwe government is pushing for a suspension on the seizure of mortgaged property, a move that might hugely affect lending businesses, analysts have said.
Government last week moved a motion at a meeting to freeze acquisition of property, at a time when Zimbabweans are failing to meet their loan obligations.
Economist John Robertson said a move like that would blow anyone's chances of owning a house as businesses will stop issuing loans.
"That will be doing terrible damage to a system that has been working well for many years," Robertson said.
"The immediate effect is that nobody will issue any new loans and many people will suffer."
He gave an example of how Native Purchase Area farms were destroyed when farmers stopped meeting their bank loans obligations after seeking protection from Zanu PF.
He said after that, banks refused to give farmers loans, resulting in low production.
"This development will not only destroy chances of borrowing money, but result in the destruction of the building industries, there will be no jobs in factories, the list goes on and on," Robertson said.
Property analyst Mernad Chekai said such a scenario could result in a depreciation of loans.
"The obvious reaction is absence of lending as the only viable collateral is property," he said.
"We expect to fall very far behind because there won't be any viable collateral.
"If someone cannot attach property, then that means no one wants to take risks. We expect a contraction of property value, even banks will make losses as the point of recovery will be low," he said.
This comes as businessman and loan shark Frank Buyanga was this year blocked from auctioning property of a debtor.
Labour minister Nicholas Goche, who sits in Cabinet, was once sued by Zimcor Trustees Limited, owned by Buyanga, over an unpaid loan of $70 000.
Government last week moved a motion at a meeting to freeze acquisition of property, at a time when Zimbabweans are failing to meet their loan obligations.
Economist John Robertson said a move like that would blow anyone's chances of owning a house as businesses will stop issuing loans.
"That will be doing terrible damage to a system that has been working well for many years," Robertson said.
"The immediate effect is that nobody will issue any new loans and many people will suffer."
He gave an example of how Native Purchase Area farms were destroyed when farmers stopped meeting their bank loans obligations after seeking protection from Zanu PF.
He said after that, banks refused to give farmers loans, resulting in low production.
Property analyst Mernad Chekai said such a scenario could result in a depreciation of loans.
"The obvious reaction is absence of lending as the only viable collateral is property," he said.
"We expect to fall very far behind because there won't be any viable collateral.
"If someone cannot attach property, then that means no one wants to take risks. We expect a contraction of property value, even banks will make losses as the point of recovery will be low," he said.
This comes as businessman and loan shark Frank Buyanga was this year blocked from auctioning property of a debtor.
Labour minister Nicholas Goche, who sits in Cabinet, was once sued by Zimcor Trustees Limited, owned by Buyanga, over an unpaid loan of $70 000.
Source - Daily News
