High rents, demands for huge sums in advance, tied in to long contracts and homes left to fall into disrepair. Sound familiar? It’s all part of being a tenant in Muscat, reports Kate Ginn
Fresh off the plane at Muscat International Airport with a new employment visa stamped in their passport, new arrivals in Oman have much to look forward to as they prepare to embark on expatriate life in the Sultanate.
There’s just the simple matter of putting the essentials into place – bank account, car and somewhere to live. But the latter – finding a home of your own – is proving to be somewhat more challenging than many anticipate. With too many people chasing too few properties, tenants are finding themselves at the mercy of landlords who are making, even letting agents agree, unreasonable and excessive demands.
Stories of would-be tenants being forced to take out bank loans to cover six months or even a year’s rent in advance are not uncommon these days, while others are being asked to stump up 12 months of postdated cheques before keys are handed over.
“It’s definitely in the favour of the landlords at the moment,” said a lettings professional, who works for one of the bigger agencies in Muscat. “The local landlords, in my experience of four years, prefer six months or one year in advance. Most tenants cannot afford to pay this.
“Also, landlords are asking high prices for rental. They would rather leave the place empty than drop the rent.
“Rental prices in Muscat are over budget. When you compare rents with salaries, it’s hard for people to afford the prices. They often have to set aside 50-70 per cent of their salary for the rent.”
Some tenants are being forced to take on thousands of rials of debt to afford advance payments demanded by landlords.
Naushad Aziz, 44, had to take out a bank loan to cover the RO8,000 cash advance to renew the lease on his three-bedroom flat in Ghubra.
“I could not come up with the cash and the bank loan was the only way out,” Naushad, a college teacher, told a local newspaper. “My landlord insisted on the six-month down payment and he threatened to evict me if I did not pay up.
“Hopefully, I will be able to manage to pay the instalments and the usual domestic bills.”
He is not alone. Another tenant looking to pay around RO350 a month was told he would need at least RO2,100 in ready cash to offer landlords as advance payment.
“Most tenants want to pay monthly or quarterly and think it is us that are demanding these advances, but it’s the landlord,” says the letting agent that Y spoke to.
While it is not a legal requirement to secure a property in Muscat or beyond, asking for months of rent in advance seems to have become the norm, rather than the exception these days.
Better Homes, one of the region’s largest real estate companies operating in Oman, even mentions it on its website as part of a “General Guide For Renting”, saying: “It is common here in Oman for either three or six months to be paid in advance, however this can sometimes be negotiated depending on the property.”
Hasnain Bokhari, a lawyer specialising in commercial real estate at legal consultants Al Busaidy Mansoor Jamal & Co, tells Y: “When it comes to taking advance rent for several months up front, there is no law that says the landlords can’t do it, in fact the law is slightly pro landlord in this regard.
“If the tenant has paid advance rent and has to leave the country for any reason, there isn’t much they can do If you have a difficult landlord, you may get stuck, so it would be advisable to agree something in writing with them.”
As one letting agent points out, often landlords have bought the property they’re leasing with a housing loan as an investment and have monthly payments to meet, so need the security of money upfront to make sure these payments are met. This is good news for property owners, but not for tenants who may find their landlords have less incentive to fix problems or carry out regular maintenance when they have six or 12 months’ rent already sitting in the bank. Losing the bargaining tool of withholding payment weakens their position.
Some tenants believe demands for advances are not just down to greedy landlords, but properties being sublet, which is illegal but goes on nonetheless.
“An Omani friend of mine rented out their villa to an Omani man, who then sublet the house and got six months’ money upfront from another family,” one expat tells Y.
“My friend’s family has been trying to evict these people for months and are now going to court. It’s been a nightmare for them.”
Scraping together the finances to secure a property is often just the beginning, however. Tenants are also complaining of being hit with rental hikes above the 14 per cent per year set down by Muscat Municipality, with reports of increases of up to 30 per cent.
Then there are horror stories of old and decrepit buildings left to wrack and ruin by landlords who refuse to carry out any maintenance, often leaving tenants with no choice but to pay for repairs out of their own pockets to make their homes habitable.
Martin* was delighted when the oil company he was working for in Muscat found him a five-bedroom villa with a maid’s room and large roof terrace in a private compound with a mix of expats and locals close to the beach in Al Hail in February last year.
The company signed a one-year contract at RO700 a month, renewable for three years, and duly handed over the requested 12 post-dated cheques. Within weeks, however, things began to go wrong or break down, which, Martin tells Y, became the catalyst for a long-running battle with the managing agents.
“First, we had a leak with the water tank on the roof. My neighbour had the same problem. The agent sent a workman round five times to try and fix it. He had no idea what he was doing,” says Martin.
“He was an odd-job man who wasn’t qualified in anything. The same ‘expert’ later turned up to do the plumbing and electrics.”
It was just the start of issues with the villa over the coming months. “We’ve had termites, rotting doorframes, air-conditioning units not working properly, windows badly fitted and blocked and smelly drains. The list goes on.
“One of my air-con units started smoking the other day. They’ve fixed it, but I’ve told them that I want it changed. It’s dangerous.”
Martin wasn’t the only tenant to find that behind the façade of the apparently structurally solid villas, the reality was starkly different.
“A family in another villa withdrew payment for six or seven months because repairs were not done with the air-con and leaking windows, among the complaints,” he says.
“One of my neighbours also had water heater problems and his back door was broken. When they came round to fix it, the new door was too short, and they tried to screw on another piece of wood to fill the gap.”
These villas are relatively new, constructed a few years ago, so you can imagine the problems that tenants living in the older buildings around Muscat are suffering. Rodent infestations and crumbling walls are just some of the issues that have been reported in the past month.
“Some landlords charge comparatively low rentals for their old buildings and in the process they take their tenants for granted,” according to one property manager. “Maintenance or replacements are carried out only if necessary, otherwise tenants carry out repairs on their own.”
People renting in the more high-end, luxury developments such as Al Mouj Muscat (formerly The Wave, Muscat) or Muscat Hills have the peace of mind of maintenance being covered by the service charge paid by their landlords. Dolphin Village in Bawshar, for instance, offers 24-hour maintenance cover.
Of course, you pay premium rents to live in places like these. According to property management firm Cluttons’ Muscat, Spring 2015 Residential Market Outlook report, Muscat Hills is the most expensive submarket to rent a property, with average monthly rents of RO1,250. Mabela and Ruwi were the most affordable with an average outlay of between RO400 to RO500.
“Overall, tenants remain budget conscious and continue to target what are perceived to be good-value, high-quality properties,” says the report, published earlier this year.
Martin believes the problem of poorly maintained properties stems from poorly constructed buildings. “Cheap materials and poor workmanship are to blame. I have damp on the ground floor because the builders didn’t use damp proofing.”
An exasperated Martin is now moving out of the villa and his company has withheld rent for three months in a dispute over maintenance.
His advice? Put everything down in writing, list your maintenance complaints and email it to the landlord or company, giving them a timescale to finish the work and withdraw rent until the work is done to your satisfaction. Having a written record helps if you need to go to your bank and stop any outstanding postdated cheques.
But once the ink is well and truly dry on the contract, many tenants (mostly expatriates) find they hit a brick wall when it comes to getting recourse and, in some cases, avoid avenues such as Muscat Municipality and the Public Authority for Consumer Protection out of fear for possible consequences.
“A landlord or property manager is required to carry out all necessary repairs and maintenance to maintain the leased premises in such a condition that it is usable for the purpose. This would not necessarily include minor paint jobs or repairing chipped tiles unless they posed a major risk or jeopardised the safety of the tenant. The tenant is required to have day-to-day repairs conducted at its own expense,” Bokhari tells Y.
“Sometimes the tenant and landlord may include a contractual provision in the lease contract stating that the landlord or property manager shall fund all maintenance works and if he/she fails to, the tenant may claim reimbursement from the landlord.” But of course, the level of success tenants have in getting this money back varies.
The result is often a kind of “ostrich syndrome”. The landlords bury their heads in the sand, hoping the tenant and their problems will just go away, agrees another Muscat letting agent.
To put the boot on the other foot, landlords claim they’re insisting on advance payments to cover them should tenants stop paying rent or disappear, leaving a trail of unpaid bills.
There is some justification to this, but others suggest there must be a better way forward to protect both the landlords and tenants without resorting to demands for large sums of cash.
But the issue may be soon be swinging in favour of the tenant.
Over the coming months, the rental market in Muscat will be undermined by weak oil prices, according to Cluttons.
“The subsequent impact on the rental market will be a stablisation or even a weakening in demand, particularly as jobs generated by the hydrocarbon industry still form the cornerstone of lettings demand,” it says in the Muscat, Spring 2015 Residential Market Outlook report.
A glut of new residential developments in Muscat, including Al Hail, Qurum and Madinat Qaboos, are also nearing completion and early next year, a host of apartments and townhouses will be flooding the market, hopefully bringing down rental prices in the process.
“I see things changing in 2016 and 2017 with much more competition for landlords,” says a Muscat lettings agent. “Hopefully this will make things better for tenants, in terms of prices and maintenance.”
Such changes certainly couldn’t come soon enough for Martin and others currently caught up in the tenant trap.
* Name changed for privacy
Advice
Go through a bonafide letting agent if possible
If you do deal directly with the landlord, make sure any lease contract is registered with Muscat Municipality (this is a legal requirement and the landlord should pay the fees)
Be wary of giving large sums of cash up front. Your letting agent should negotiate on your behalf
Ask for the full details of the landlord: telephone number, fax number and address. If they refuse, don’t sign
Look at the contract fine print
Before signing, make an agreement with the landlord to cover any eventualities, such as you have to leave Oman and need to break the contract. Contracts can be terminated, but you must give three months written notice and have the agreement of the landlord
Time for Reform and Regulation
Words: Felicity Glover
I’ve been house hunting for a couple of months now and the more I look, the more disheartened and outraged I become. Not because there is a limited supply, but because each agent is demanding at least six months’ rent up front and the rest of the year in post-dated cheques.
It’s definitely a landlords’ market out there – and not only because everybody accepts these unreasonable demands. I don’t know about you, but I have serious issues with paying so much rent ahead of time. Why? It’s a huge slug out of my savings, not to mention the interest payments I am losing on my hard-earned money.
Instead, that precious interest is going to the landlord, who sits on our cash for goodness knows how long and they end up getting more than what the original rental contract stated. On the flipside, some renters have also been forced to take out high-interest loans just to come up with a year’s rent. Again, the only winner here is the landlord. Oh, and the bank.
Then there’s the matter of responsibility. As a landlord, their responsibility is the property and its upkeep. Horror stories of landlords not bothering to repair their rundown properties, despite tenants having invested up to a year of their hard-earned cash for the privilege of having a roof over their head, are a dime a dozen in the Sultanate.
When I was living in Abu Dhabi, I was fortunate to work for a company that would pay my year’s rent up front and then deduct it from my salary on a monthly basis. They also dealt with the landlord or agent on my behalf, which gave you an edge in the negotiations. In fact, it worked so well for us, our rent dropped from Dh12,000 per month to Dh5,700 over the course of three years.
Unfortunately, renters have little or no legal recourse to stand up for their rights in Oman. There are no regulations governing the rental market, while landlords are also not accountable for their actions.
The sooner we see reform to the rental market, the better off we will be. But it is a regulatory body that is most urgently required to protect not only the tenants, but also landlords.
And until this happens, the landlords will continue to make unreasonable demands on hapless tenants who, until now, have had no choice but to pay up – or find somewhere else to live.
Oman’s Tenancy Agreement Terms & Provisions
The Landlord is bound to register the agreement with Muscat Municipality and pay the 3 per cent fixed tax.
The Tenant abides himself to pay electricity and water bills, Municipality rates, sewage service charges, and any other fees/charges that should be borne by the tenant. The provisions of this clause should be adhered to with effect from the date of handing over of leased property to the tenant up to date of taking over the leased property by the landlord, unless otherwise is mutually agreed in writing.
The non-registration or renewal of a lease agreement and/or the failure of payment of the fixed tax within one month from the date on which it has been signed or expired, concluded and entered into shall result in the lease agreement being considered legally null and void before any government authority in the Sultanate, in addition to imposing a fine equal to three times the fixed tax.
The Municipality tax that has been mentioned in the provisions of the Royal Decree No. (6/98) and its amendments, are a governmental debt that is to be paid by the landlords or tenants as per the agreement and can be collected by administrative confiscation.
The tenant is bound to hand over the leased property to the landlord on the expiry date of the lease agreement. He is bound to repair any damages that may result from the misuse of the property. The landlord is bound to undertake any maintenance/ overhauling/restoration works required for maintaining the leased property in a condition consistent with the purpose it is rented for.
Other terms and conditions may be added to the lease agreement as mutually agreed by both parties, provided not to contradict with Royal Decree No. (6/98).
In the event that any party fails to comply to his commitments hereto prescribed, the other party shall have the right to rescind this provisions.
The lease agreement can be renewed for a further period or more unless one of the parties advises the other of his wish to evacuate the property before the expiry of the valid period by at least three months or half of the period if it is less. The landlord may not ask evacuation of the property except in the cases and according to the provisions and procedures of the Royal Decree No. (6/98).
The tenant may not alienate this agreement or sublet the leased property to any third party whatsoever unless first party issues prior written approval.
Source: Tibiaan Properties
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