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 relationship between 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 as their 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 inheritance of tenancy in the event of landlord’s death.

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

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 economic circumstances.

Interpretation of three-year period

The tenancy must be continuous and uninterrupted for the entire three years in order for the landlord to validly impose an increase in rent after the three years, wherein such increase may not exceed 7% of the rent amount, except if renovations and reparations were undertaken on the leased property based on the tenant’s requests, for which they will be liable to compensate the landlord.

If the tenancy agreement is terminated prior to the completion of the entire three years, and another tenancy agreement is entered into between the same parties, then the new agreement shall be considered independent from the previous one, and the duration thereof distinct from the original.

Duration of the lease

What happens in case of a long lease (over seven years’ tenancy)? Will the specified rent in the contract be always enforceable? Unless stipulated otherwise in the tenancy agreement, the three years will be applicable, regardless of the contract’s duration. The rent will be in accordance with the agreement, and may be increased or decreased as per the parties’ mutual consequent agreements.

Rent reduction for market driven reasons

The market plays a role in influencing the increase and decrease of rents, whereby the landlord may impose higher rents within a short notice on all tenants, provided the pre-requisite condition of completing three years is met. Similarly, reduction of rent, which is often welcomed by tenants, can be forced upon by landlords by the abundance of supply in the market and by plummeting in demand, for which they may enter a new agreement with the current tenants, amending thereby the rents to secure the continuation of the tenants in the leased properties.

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