Renting? Have a Heart

Because of the current housing shortage, many tenants fear a drastic increase in their rent. They also may be wondering where the recently introduced Price Gouging Control Law (2004) leaves them.

According to the Attorney General’s Office the law, which came into effect on 1 November, is intended to cover instances where “unconscionable” rents have been charged, post-disaster. The law does, however, allow for any inevitable price increases in instances where the cost of goods has increased, where the supplier of a service or commodity needs adequate working capital, and where there is need to insure a reasonable return on investment.

Realtors in Cayman have already warned of inevitable rent increases over the next few months as landlords struggle with repair costs and higher insurance and maintenance fees. Some even fear that home insurance costs could double next year after re-insurers have completed their post-Ivan assessments. Higher costs to the owners mean they will subsequently have to charge more to maintain their investments.

But not all is bad news for tenants: Chief Executive Officer of the Chamber of Commerce Wil Pineau said although the chamber Renting? Have a Heart received many complaints against landlords in the days following the storm, there has been a drastic decline in people reporting their landlords to the Better Business Council.

Even as landlords have been faced with many challenges such as shipping delays, a shortage of building supplies, slow insurance payouts and the lack of available contractors, there have been widespread reports of landlords doing everything possible to get people back into their rental units. Many tenants also reported rent reductions for September and October.

If, however, tenants feel they are being treated unfairly or that they are experiencing rent gouging, the Chamber of Commerce advises them to seek legal advice.

In the US, rent gouging following the passing of Hurricane Floyd in 1999 prompted the Governor of New Jersey to sign legislation prohibiting exorbitant rent increases in the wake of any natural disaster.

According to this law an unreasonable rent increase would be anything more than twice the rate of inflation for the nine months preceding the emergency and a landlord found guilty of rent gouging in an emergency area could face fines of six times the rent charges.

Cayman’s Price Gouging Control Law (2004) carries a hefty fine of CI$100,000 if a person is found to be charging unsubstantiated high prices.