Oman has a pro-landlord law
November 29, 2006
Rents: Can landlord and tenant freely agree rents in Oman?
The initial rent is normally determined freely by both parties based on their consent and agreement in concluding the lease contract.
The lessor may not increase rent before the expiry of the lease unless:
- the term is more than three years in which case the rent may be increased every three years; or
- the lessee asks for and lessor makes improvements to the property.
If the two parties are unable to agree upon the increase the issue must be referred to the relevant authority at the Municipality.
The relevant Court for rent disputes has jurisdiction over the geographical area where the dispute has arisen. It settles any dispute which may arise during the lease contract term, as well as any other dispute between the parties. The practice is to first, refer the rent dispute to the Municipal Committee in order to seek reconciliation of the parties, taking into account social and financial consideration of each party.
What rights do landlords and tenants have in Oman, especially as to duration of contract, and eviction?
The Law requires that the period of the lease must be agreed by the parties; the Law does not specify any minimum or maximum term.
The lease is automatically renewed for the same period as the original term, unless either party gives notice to the other or termination –
- at least three months before the end of the terms; or
- if the term is less than three months before half of the term has expired.
The contract must be registered with the relevant authority where the estate is situated. Usually, the registration is carried out at the local office of the Municipality according to the relevant forms. Parties have the right to add conditions by attaching documents to the forms. Failure to register the lease contract and pay the required fees within one month of it being signed may render it null and void.
Neither the lessor nor the lessee may revoke the contract except as specified by the Law.
The stipulation of deposits or other forms of security for the payment of rent is a matter entirely at the discretion of the two parties, who commonly agree upon -
- an advance payment of three month’s or 1 year’s rent; or
- promissory note for the payment of rent throughout the lease; or
- post dated cheques for each of the rent payment dates.
The lease also commonly provides for a post dated cheque or promissory note from the lessor as guarantee that the property will be returned to the lessor in the same condition as was in the beginning of the lease (subject to normal wear and tear).
The lessor may charge interest for delayed rent in accordance with rates determined by the Ministry of Commerce and Industry (“MOCI”).
How effective is the Omani legal system?
The legal system safeguards the rights of both citizens and foreigners. Within each relevant Municipality there is a Committee to undertake settlement of all disputes arising out of contractual relations including leases. The decisions of these committees are equivalent to judicial decisions and are enforceable.
The Court system has three levels: Primary, Appellant and High Court. The procedure in front of these courts is regulated by Royal Decree No. 29/2002.
A lease contract is a contract for “a housing, commercial or industrial installations for a specified period of time in return for specified rates”.
The relations between lessors and lessees of dwellings, and commercial properties, and the registration of lease contracts, are regulated by Royal Decree 6/89 and its consecutive amendments, Royal Decree 79/89, Royal Decree No. 60/93 and Royal Decree No. 85/93, in addition to Ministerial and Diwani Decisions (“the Law”).