It’s becoming less attractive for landlords to hang on to tenants, according to Realtors’ Association of Jamaica (RAJ) President Gabrielle Gilpin-Hudson.

“It’s happening islandwide,” she told the Jamaica Observer. “It’s not as lucrative to be a landlord for a long-term tenant as it might have been in the past.”

Some landlords have traditionally held the view that it’s less of a hassle to earn a steady stream of income from a long-term tenant than cater to the needs of a revolving door of clients on shorter stays. But with monthly rent prices inching up, landlords who have not been adding the 7.5 per cent maximum increase per year are likely losing out. They may find themselves with firmly entrenched renters paying well below what a new long-term tenant would be willing to pay today.

“I have one family in my place now for about five years, and all they do is mash up the house. The one-month security deposit cannot cover all the damage they have done. The rent was $30,000 when they come in, and now it’s at $35,000,” said one frustrated landlord with property in Montego Bay, St James.

“I need to get them out, fix it up, and try to get a tenant who will pay at least $50,000 a month,” said the individual, who asked not to be identified by name. The rented property is a two-bedroom, one-bathroom apartment.

Based on numbers culled from property listed on the RAJ’s database, monthly rent across all categories of property in Montego Bay started at $40,000 in 2002. Now it starts at $95,000 and goes all the way up to $631,000 monthly. Rents are typically higher in areas such as Freeport, Ironshore, and Rose Hall, especially if you can get even a glimpse of the sea. In Kingston, rentals are now at a high of $868,000 a month, up from a high of $663,000 in 2002. In Ocho Rios, they go up to $1.1 million a month, up from a high of $316,000 in 2002.

Gilpin-Hudson stressed that the RAJ’s data only reflects property listed on its Multiple Listing Service (MLS), and prices fluctuate based on the pool of information available. With that caveat established, the RAJ president explained that one of the factors driving up the cost of renting is tenants’ expectations.

“They want nicer bathrooms and amenities, and so you as a landlord have to spend the money to make your property desirable and upgrade it, or you’re not going to get the rent that you want. So all of these things contribute to the price of rentals and puts the real estate market where it is,” she said.

In addition to upgrades, the initial cost of buying property is another major factor that impacts the cost of rent. Like tenants who expect more, Gilpin-Hudson also noted buyers’ increasing demand for “luxury finishes”. They spend more on property purchases and this is passed on in the rent.

The RAJ president also pointed to the general appreciation of real estate over time, and the resulting dent in tenants’ wallets.

“The rental prices are higher because the price to buy the properties is higher. When I first got into real estate, which is about 10 years ago, you could get an acre of waterfront land on the north coast for US$1 million an acre. Now you’re looking more like US$2 million an acre for something that’s on the waterfront. And even then, you’re lucky if you can find something on the waterfront. Persons have bought these things up over time; a lot of people that have them don’t necessarily want to sell them,” she told the Sunday Observer.

Rent prices are also steeper as landlords try to recoup their investment in a high interest rate climate.

“Some people buy properties with mortgages to then rent them out long term as investment properties. With the interest rate environment being where it is, mortgage payments are higher. They’re trying to get higher rent for their properties than before, because they want to try and make the rent help them with the mortgage, help them with their maintenance and all of those other little things that they have to pay as a part of buying this investment property. It’s not just real estate; there are many sectors where prices have increased a lot. It’s the new normal. I don’t think it’s a bubble. It’s just what happens when the economy is operating this way,” Gilpin-Hudson explained.

Prices are also driven by factors such as improved infrastructure and transportation projects, for example the under-construction Montego Bay Perimeter Road; the prevalence of gated communities; and the unavailability of land. The western city checks all three boxes right now, so rents and selling prices are reflecting that. However, according to the RAJ, property prices in Montego Bay tend to be more volatile because of the city’s heavy reliance on the tourism sector.

Kingston, on the other hand, has a more stable real estate market because of its “economic significance” as the capital of the country, and there are options to paying at the very high end of the scale. Property in Ocho Rios is particularly in demand right now, and sales prices on the MLS range from $10.4 million to $2.3 billion. In 2002, they began at $3.9 million and went up to $186 million. Rent has kept pace. In 2002, it began at $81,000 per month and went up to $316,000. Today, rent for Ocho Rios properties listed on the RAJ’s MLS starts at $111,000 and goes up to $1.1 million.