Realtors: rents rise by up to 30%
A shortage of properties is pushing up rental prices, with increases of as much as 30 per cent in the past 12 months, according to realtors.
Digital nomads moving to Bermuda on one-year residency permits were one reason for the squeeze on the availability of rentals “across the board”, the island’s top realtor said.
Penny MacIntyre, chairwoman of the real estate division of the Chamber of Commerce, said that prices had risen dramatically in the past year.
She added that a shortage of rental properties had resulted in bidding wars between prospective tenants, driving prices even higher.
Ms MacIntyre, speaking on behalf of the division, said: “Every company trading regularly in rentals is reporting historic low inventory.
“The rental sector across our real estate industry has certainly experienced monthly rental rate increases anywhere from 10 per cent to 30 per cent uplift by comparison to last year, and even two years ago.
“For the last year and a half, Bermuda's long-term rental market has been solidly a landlord-favourable market. Agents and tenants continue to experience challenges finding rental options in the face of significantly reduced available rental inventory island-wide.
“One, two, three or four-bedroom condos or homes, especially in central parishes with quality interiors, have rented quickly — even resulting in bidding wars, driving rental rates higher.”
Earlier this month, Jason Hayward, the Minister of Economy and Labour, insisted that stable rent rates were having “a stabilising effect” on the overall rate of inflation — which the Government says stands at 2.5 per cent.
According to the latest Consumer Price Index released last week, the cost of rental accommodation actually dropped by 0.7 per cent in the 12 months between March 2021 and March 2022.
Ms MacIntyre said that Bermuda’s reputation as a safe jurisdiction that had handled the Covid-19 pandemic reasonably well made it an attractive venue for foreigners seeking to live here on Work from Bermuda permits.
She said: “The Work from Bermuda programme has absorbed a number of rental inventory both in central and non-central ends of the island which has helped Bermudian property owners. Long-term renters — both Bermudians and work permit holders — are experiencing challenges finding options to rent.”
The Government launched the scheme in August 2020. According to figures released in November 2021, 937 permits had been approved from 1081 applications.
Ms Macintyre added that “quality rentals” were getting “snapped up in days”.
She said: “Well-maintained properties … have multiple tour requests with prospects prepared to bid sight unseen to get ahead of the demand and quickly secure a property.
“Those properties are enjoying notable increases in their rental rates upwards of 30 to 40 per cent over rental rates a year or two years ago. Bidders are agreeing to even longer than one-year rental terms with landlords who want to lock in tenants at these higher rental rate levels.”
Ms MacIntyre said that tenants continued to “struggle” to secure properties at rates they either previously paid or thought to be at a “fair” rental rate based on historical estimates.
She said: “Those on company housing allowances have either sought increases or paid the difference out of pocket to secure a property.
“The rental market is even stronger than when our industry had a surge of demand in the lead-up to America's Cup.”
Ms MacIntyre said the trend for higher rents was likely to continue “so long as Bermuda maintains a safe, enjoyable and reasonably logical way of life”.
She said: “The challenge our real estate industry faces along with prospects is finding inventory to satisfy the current demand.”
According to government figures, the average household spends almost 27 per cent of its outgoings on accommodation, by far the biggest household expense.
Defending the figures in the House of Assembly this month, Mr Hayward said that properties under rent control — where prices are fixed — were included when calculating the cost of housing.
In 2018, some 17,077 homes fell under rent control — meaning they had an annual rental value of less that $22,800 — from a total in the 2016 census of more than 28,000 households.
By press time, the Government had not responded to questions by The Royal Gazette on the impact rent control had on accommodation costs.
The Government has come under increasing criticism in the past year for the way in which the rate of inflation is calculated.
Detractors argue that inflation in the United States, Britain and Canada is running at about 8 per cent — a figure that should be mirrored in Bermuda, which imports the majority of its goods from those jurisdictions.
Responding to that criticism, Mr Hayward, speaking in the House of Assembly this month, said: “This House will be aware of recent comments in the media about inflation in other parts of the world and the concern regarding the accuracy of the statistics produced here in Bermuda.
“The Government of Bermuda stands firmly behind the methodology used and the integrity of the data produced by the Department of Statistics.”
Mr Hayward has also acknowledged that the method by which inflation is calculated needed to be revised — but that an update will not come into effect until 2025.
David Burt, the Premier, has also defended the figures, claiming that inflation was low because of a recent government-imposed cap on petrol prices.
Earlier this month Mr Burt declared: “This tangible relief at the pump is an important saving to a household budget. This is one of the reasons that Bermuda's inflation rate is, and will remain, lower than other jurisdictions.
“It is because this Government's actions have prevented the increase in fuel prices in Bermuda, which is a major factor in inflation around the world.”
That claim was dismissed by economist and lecturer Craig Simmons, who said: “According to CPI, fuel and power make up only 4 per cent of consumer spending.
“Holding gas prices constant cannot explain the difference between local inflation and that observed elsewhere.”