It is 2008 and renters in Muscat are breathing a sigh of relief: the Government has just announced drastic changes to Oman’s rental laws in a bid to cut rising inflation. The biggest change, according to a March 2008 news report, would see annual rent increases capped at 7 per cent, while a government committee was pushing for four-year contracts.
“Both the rent cap and the tenancy period clause are expected to be enacted soon,” PropertyWire reported at the time. “Imposing minimum tenancy restrictions will keep rental property owners from being able to evict tenants in favour of higher rent. This will also make it easier for lower-class citizens to budget over the long term.”
Fast-forward to February 2011 and the 7 per cent rental cap is no more, having been eliminated by the Government in an amended Royal Decree (107/2010). The amendment allows landlords to raise rents by as much as they want.
Since the amended Royal Decree was announced in 2011, there has been no change to the law, while there is still no rental cap in place. However, landlords are only permitted to increase rents once every three years. “Following the change in law, there is currently no limit on the percentage increase in the rent that a landlord may charge,” Hasnain Bokhari, a lawyer specialising in commercial real estate at law firm Al Busaidy Mansoor Jamal & Co, tells Y. “No further legislation has been enacted in this regard.”
The elimination of the rental cap has led to a recent spate of complaints by tenants who are facing rent increases of up to 30 per cent in areas such as Ruwi, Al Ghubra, Wattayah and Al Khuwair.
Local media last month reported that many tenants in these areas arrived home to find notices hanging at the entrance of their buildings declaring that their rents would be “increased by 20 to 30 per cent and failure to pay would result in eviction”. Tenants are blaming greedy landlords and estate agents for the skyrocketing rents, saying they believe that if existing renters fail to pay up, then there are many others waiting in line who are willing to move into the same properties at inflated prices.
One tenant, who does not want to be identified, lives in a two-bedroom flat in an older apartment complex in Wattayah. In June, he received a letter from the company that manages his complex informing him that his rent would be increased by 25 per cent. “I received an official letter saying that our rent was to be increased by 25 per cent, which would make it RO625 from the RO500 that I have been paying from the time I have been living in this apartment,” says the media sales executive, who is married with children and has rented the flat for the past three years.
However, he says his cousin, who lives opposite his apartment, is only facing a 10 per cent increase, from RO500 to RO550, for exactly the same flat. “Most of the tenants in our building are paying different rental amounts,” he says. “There is no uniformity in the rents – there are people paying RO620, RO600, RO550 and RO500 for the same two-bedroom apartments.”
Cluttons, the property management firm, recently released its Muscat, Winter 2014 Residential Market Outlook, which found that average rents had jumped by 4.8 per cent since the third quarter of this year. Driven by a steady influx of expat families arriving in the city, Cluttons said demand for gated communities was on the rise, particularly for three- and four-bedroom villas.
While the flight to quality is good news for developers of gated communities such as The Wave and Dolphin Village, it doesn’t explain the huge discrepancies in rent increases that tenants are facing in other parts of the city. This is particularly evident in the Cluttons report, which was released last month. “Rental value growth for two- and three-bedroom apartments during the first three quarters of 2014 followed a path of stabilisation, with Q3 experiencing no change in average rents, following a 0.7 per cent rise in Q2,” Cluttons said in the report. “This equates to a 2.3 percent rise during the 12 months to the end of Q3 2014, with two-bedroom apartments [3.1 per cent] outperforming three-bedroom apartments [1.5 per cent] over the same period.”
The tenant in Wattayah says he was expecting an increase in his rent when it was time to sign a new contract, but at a more reasonable 7 to 15 per cent.
His contract expired on August 25 and he hasn’t paid rent since then. “I am still waiting for final confirmation from the manager and I am expecting them to make it a reasonable increase,” he says.
“After I received the letter, I had meetings with our property manager, after which they brought it down to RO600, which was still not acceptable to me. So I wrote them another letter and also met with the property manager. We are still negotiating.”
The father of two believes that the manager’s response will not be positive: “When I spoke to him and said that there are rules in the rental increase and that there is a cap, he said that there is no such rule and that ‘we can increase it however we want’.”
The agent is correct, according to Mr Bokhari. While there is no regulatory body that oversees rental properties, Mr Bokhari says if there is a dispute between a landlord and tenant, then an Omani court would be required to settle it. “There is no specific Government body which is authorised or obliged to oversee rental increases in Oman,” he says. “Disputes between the landlord and tenants are to be referred for resolution to the competent court in the jurisdiction where the leased premises are located.”
The Wattayah tenant is unsure about what will happen and adds that he has also heard some bad news: “A friend has told me that because I haven’t paid the rent for about two months now, they might ask me to move out because apparently I am flouting the tenancy laws. I will either have to compromise or search for another place to live,” he says.
Flat for rent:
Aftab* lives in a two-bedroom apartment in the Central Business District with his wife and three children. He pays RO250 a month for it, but recently received a letter from the landlord stating that they had to move out by December this year. Here is his story:
“Our building was sold to a new landlord about three months back and ever since, there were rumours that our rents would be increased, which is why we were expecting it. However, I was in a state of shock when the landlord gave us an official letter saying that we needed to move out by December because there was some renovation work to be done in the building.
“The landlord has hung ‘For Rent’ signs outside the apartment building, indicating that he is already looking for new tenants. I have spoken to my neighbours and people around here; we are all quite sure that the landlord is trying to get us all out and rent the apartments for a higher amount. We think he wants RO350 and some current tenants are even ready to pay it, but the landlord refused.
“We have started searching for another apartment and we are hoping to get something within the range of RO250 to a maximum of RO300 in the same area. It is a very convenient location for us because my office is close and my children attend the Indian School Muscat, which is not very far away. But most apartments around here are out of my budget. “I saw an apartment in Muttrah for RO200. It was quite cheap and so I thought I’d take a look. As soon as I neared the entrance of the apartment, I knew how it was going to be inside. The apartment was in a disastrous state. I quickly went into the apartment, didn’t even see it properly and just got out – it was smelly, dirty and entirely unsuitable for us. I saw another apartment near my place, which is being rented out for RO350. It goes beyond our budget, but is clean and suitable for my family. I am still looking around, but if we find nothing, we will go for the RO350 apartment near our place. It will be very tight on our budget, but there is nothing we can do about it. I can’t send my family back to India because their studies will be disrupted. Plus, I need to give them a decent living space. I can’t go from living in a good location to some shack in a bad area.”
* Name has been changed for privacy reasons
British Expat renting in Muscat:
Whenever my career has taken me to a new city, the inevitable chore of finding a new place to live has always arisen. In the UK, there are several dedicated websites that include filters so that you can easily search by facilities required, location and budget. While it has often been time-consuming, it has never been especially difficult to find suitable and affordable accommodation. However, I’ve found no equivalent service in Oman, making looking for a place to live – on the face of things, at least – appear somewhat more difficult.
Upon arrival, my employer gave me temporary accommodation. Four weeks later, after looking online and contacting many people, I am still in the company apartment. My employers are exceedingly generous in allowing me to remain there for so long. Rooms in villas are very difficult to come by and one-bedroom apartments are either beyond my budget or totally unfurnished.
This makes them unaffordable as furnishing and equipping an apartment with everything from curtains to cutlery is not a financially viable option at this early stage.
A further burden that must be added to the housing equation is location. The lack of public transport in Muscat generates a reliance on cars and I am forced to consider whether I can afford any prospective rent prices as well as a rental car. All of a sudden a room that was advertised at RO250 per month has suddenly become RO550 because of car hire prices. Where in other countries I may be able to use the local bus or underground system to get to work, I can’t do that here and so my monthly commuting costs are more important than they may have been in other global cities, such as London or New York.
Pay a visit to a website like Dubizzle and it’s likely there will be well over 3,500 rooms listed. However, that does not necessarily mean that these rooms are habitable or even available to everyone, with many specifying which race may or may not apply.
My fear for Oman is that with the apparent scarcity of affordable accommodation, many people with skills that Oman could greatly benefit from would be put off from coming, simply due to concerns over finding somewhere suitable and affordable to live. The issue of a lack of housing for a growing population is not a new one for any government and it’s certainly not unique to Oman, but it is a problem that needs to be recognised and steps must be taken to avoid the problem worsening. Otherwise, an economy currently made buoyant by expat labour and skills could well see that workforce relocate elsewhere.
Know your rights!
The landlord is responsible for registering the lease agreement with the local Municipality (where the leased premises are located) within one month of entering into the lease agreement in order to render the agreement valid and binding.
The landlord is required to bear all costs associated with registering the lease and if the parties fail to register the lease within one month, the landlord shall be responsible to pay three times the registration cost for registering the lease. The tenant may also register the lease and deduct the costs from the rental payment owed to the landlord.
The rent for leased premises cannot be increased for a period of three years from the date of commencement of the lease term.
The landlord and tenant are required to give notice to each other three months in advance of the expiry of the lease term in case they wish to terminate the lease agreement. However, the landlord is prevented from terminating the lease agreement for three years for residential leases and five years for commercial leases, during which time the lease term will be renewed automatically unless the tenant gives three months’ notice before expiry of the relevant year during the lease term.
The landlord may evict the tenant earlier than the aforesaid periods in case of non-payment of rent or misuse of the property by the tenant, or if the tenant sublets the premises without the landlord’s approval. Moreover, the landlord may evict the tenant if he requires the premises for residential use for himself or his first or second-degree relatives.
If the landlord does not hand over the premises in a good condition to the tenant, or does not hand over the premises at all, then the tenant may approach the court to terminate the lease agreement and refund any rent paid to the landlord.
If there is a new owner of the leased premises, the landlord is required to notify the tenant and the tenant is required to pay rent to the new owner with effect from the date that the new title deed was registered with the Secretariat of the Land Registry at the Ministry of Housing.
Hasnain Bokhari is a lawyer specialising in commercial real estate, tourism and infrastructure at law firm Al Busaidy Mansoor Jamal & Co
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