Overview
Definitions
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
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.
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