Overview

  • Oman Sultani Decree No. 6/1989 on the Regulation of the Relationship between Landlords and Tenants of Residential,Industrial and Commercial Premises and Registration of Lease Contracts related thereto governs the relationshipbetween a landlord and a tenant in Oman.
  • Oman Sultani Decree No. 6/1989 governs the rights and entitlements of the landlord and tenant respectively, as well astheir individual and joint obligations.
  • Lease Agreements are further governed by Oman Sultani Decree No. 29/2013 Omani Civil Transactions Law, which essentially narrates the rights and entitlements of the parties and their legal capacities for entering into a tenancy contract.
  • This Practice Note covers the general characteristics of a tenancy contract entered in respect of a property situation in Oman.

Definitions

  • Usufruct right: Under Oman Sultani Decree No. 5/1981 on the Usufruct Law it deems this to be a real right, however the ownership is to be returned upon expiry of the finite period of 50 years or with an extension option in additional 50 years.
  • Lease: It is an agreement that formalizes the relationship of and between the landlord and the tenant.
  • Landlord: The person who lets the property on rent.
  • Tenant: The person who takes possession of the property against payment of rent.

Practical Guidance

Lease agreements

Lease agreements for residential purposes are typically completed on a standard one page form issued by the respective municipality, which has the general terms of the lease on the overleaf. The terms mentioned there are the reproductions of Oman Sultani Decree No. 6/1989 in nutshell. In cases where the lease is for commercial and industrial purposes, the parties usually enter into an addendum to the tenancy contract with additional terms and conditions that can be separately agreed upon by the parties, provided that such terms and conditions do not contradict Oman Sultani Decree No. 6/1989.

Maximum and minimum period of contract

There is no minimum period under Oman Sultani Decree No. 6/1989. However, a lease to be registered with the municipality cannot be more than seven years. If a lease period is longer than seven years, then the long lease must be registered with the Ministry of Housing. In any case, a lease cannot be more than 50 years. A usufruct contract that affords more land and property rights to a lessee cannot itself be entered in for more than 50 years.

Maintenance of leased premises

Generally, the landlord is liable for all the major or minor repair works that may be required from time to time, whereas the tenant is responsible for the everyday maintenance of the leased property.

Taxes and duties

The landlord is responsible for registering the lease agreement with the Muscat municipality and must pay the 5% rent tax. The municipality tax is mentioned in Oman Sultani Decree No. 6/1989 and is a governmental debt that has to be paid by the landlord, or the tenant, depending on the terms mutually agreed upon by the parties. If the landlord fails to register the lease agreement with the Muscat municipality, or fails to renew the same, or fails to pay the fixed tax rate one month from the date the agreement is signed or in cases where the agreement has expired, then the agreement will be legally considered as null and void before any government in the Sultanate of Oman. Additionally, the landlord will incur a fine equivalent to three times the fixed tax rate as a delay penalty.

Other charges

In most cases, the tenant is responsible for electricity and water bills, municipality rates, sewage services and any other related fees or charges. This becomes the tenant's obligation from the date of receiving the leased property until returning the leased property, unless otherwise is mutually agreed in writing.

Surrender of leased property on termination or expiry

The tenant is irrevocably responsible for returning the leased property in the same condition as it was taken at the end of the lease period and must undertake any maintenance, repairs and restoration work as required to return the leased property back to its original state.

Landlord's right of entry into leased premises

During the lease period, unless agreed otherwise, the landlord may not enter into the leased premises. If entry occurs, this will amount to trespassing.

Termination of lease

  • Lease agreements will remain effective until the expiry stipulated in the lease agreement or by mutual agreement by both parties. However, if it is not expressly stated otherwise by either party, the lease will be renewed for a similar duration upon expiry. The tenant is required to provide at least three months' notice, or half the period of the contact if it was less than 3 months. Failure to provide a notice period will result in automatic renewal of the lease on the same terms and conditions for a period matching the original term.
  • In the event that either party fails to comply with the provisions of Oman Sultani Decree No. 6/1989 then the other party reserves the right to immediately terminate the lease agreement.

Increase of rent in case of renewal of lease

Article 6 of Oman Sultani Decree No. 6/1989 provides that the landlord may not, under any circumstances, unless otherwise mutually agreed upon by the parties, increase the rent fees prior to the expiry of the lease agreement. However, the landlord is permitted to increase the rent fees every three years if the duration of the lease agreement exceeds that period. The landlord must discuss any increase in the rent with the parties. However, in the event of a disagreement, the municipality will decide the amount with respect to the social and economical circumstances.

Assignment and transfer of lease

Article 5 of Oman Sultani Decree No. 6/1989 states that the landlord may not transfer the lease to any third party or alternatively sub-lease the property without the express written approval of the tenant.

Related Content

Legislation

  • Oman Sultani Decree No. 6/1989 on the Regulation of the Relationship between Landlords and Tenants of Residential,Industrial and Commercial Premises and Registration of Lease Contracts related thereto
  • Oman Sultani Decree No. 29/2013 Omani Civil Transactions Law
  • Oman Sultani Decree No. 2/1998 Promulgating the Land Register Law
  • Oman Sultani Decree No. 5/1981 on the Usufruct Law
  • Oman Sultani Decree No. 88/1982 on the Executive Regulations of Oman Sultani Decree No. 5/1981 on the Usufruct Law
  • Oman Sultani Decree No. 29/2002 Promulgating the Law on Civil and Commercial Procedures

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