Pack Up your Bags Kids, Our Lease Expired.

As most of you in Oman have heard, or might have even cheered about, Rent increases have been capped at 15% per two years. I first heard about it from Muscati’s post, and recently did a blog search to see what people think this cap is actually going to do. Most seem to be under the impression that property rent will not increase by more than 7.5% per year.

I will agree, under the assumption that supply of housing increases drastically within the next year and property owners cant/ don’t want to increase rents.

Let’s really think about this! So you decide to rent a property, the owner say here lets sign a lease for one year. Your excited, you found a great flat and you know that you signed a lease for a year and when next year rolls around your rent wont go up by more than 7.5%. A year of bliss passes, and you’re looking forward to sign a new lease at a maximum of 7.5% higher rents. What are the chances of that happening?

Well it depends. Assuming no changes in supply of housing and the current increases in demand, the landowner is not going to sign a new lease. The owner is going to inform you that he is not renting the property to you this year and you need to pack up your bags and leave.
He signs a new lease with a new tenant at 200% increase in rent. You on the other hand, get to move to a new flat where the cap no longer applies!
Obviously under my assumption, the rent increase has to be high enough to compensate for the cost of finding a new tenant, but in today’s market that’s not much.
Also, I expect an increase in shorter duration leases (6 months depending on how restrictive this cap is).
My advice to you, sign as long of a contract as possible. Pray that new developments are completed before your lease is up. Finally, don’t buy too much furniture and keep your bags packed so that moving isn’t too much of a hassle.