QUESTION:
Dear Legal Wiz,
I have a house in the in Jamaica, valued around 12 million dollars. Do you have any guidelines on how calculating rent?
Dwane Mighty
Dear Dwane
In most instances, The Rent Assessment Board which is the body that governs rentals, accepts the ‘standard rent’ as agreed or accepted in the area. This is because most persons will not be able to afford the real rent when calculated as prescribed.
Real estate agents are a useful alternative.
Generally, the prescribed method is to multiply the value by the estimated rate of returns. On a 12 million dollar property the rate of returns is usually 7 per cent. Hence the rent recommended is
12,000,000 x 7% = $84,000.
If the house is a split tenancy, this sum is the total to be collected.
PLEASE BEAR in mind that some factors which can also impact calculating rent:
area
conditions of home, and elements such as roofing, flooring
needs for repair
lack of maintenance over the years
function-ability
whether utilities are included in the sum
It is also useful to consult the Rent Restriction Act as obligations by landlord and tenant differ for residential properties as opposed to commercial properties. This also affects how some persons charge. This act also sets out how rent can be calculated.
Legal Wiz
