Muscat Municipality has warned against evasion of the 3 per cent tenancy agreement registration fee by landlords or real estate companies.
“Even after simplifying the procedures and reducing the fee from 5 per cent to three per cent, many property owners do not register the tenancy agreement with the municipality”, a senior civic official said.
Following a directive from His Majesty Sultan Haitham bin Tarik, the fee was reduced to three per cent from five per cent in order to encourage the process of rent documentation.
He said that the teams from the urban inspection departments have detected a large number of cases with regard to non-registration of lease agreements.
“This is violation of the law and is affecting the collection of revenues due to the municipality,” the official told the Observer, adding, “violators will be prosecuted in accordance with the law that stipulates fine and jail”.
The Tenancy Law in the Sultanate mandates that the landlord or his agent should register the lease agreement with the relevant municipality and pay the registration charges.
According to data from the municipality, a total of 11,978 new tenancy agreements were registered and 36,743 agreements were renewed in the Wilayat of Seeb in 2020.
While the Wilayat of Bausher recorded the highest registration of 12,619 agreements and 53,934 renewals, this was followed by the Wilayat of Muttrah with 5,302 new contracts and 39,442 renewals.
In Al Amerat, 2,083 new agreements were registered and 5,860 agreements were renewed. The Wilayat of Qurayat had 344 new contracts and 1,880 renewals.
Referring to the introduction of the electronic services rolled out by the municipality, the official said the new services offer an easy way to register, renew, modify and cancel contracts once they have expired.
The registered agreement not only protects the rights of the parties and establishes a fair tax system, it also enables the landlord to seek compensation the tenant misuses the place, makes modifications or damages the property.
According to a statement posted on its website, the tenancy agreement ensures that the landlord cannot increase the rent in the middle of the lease term.
“The rent may be increased only after the end of the lease term or every three years”, it stipulates.
With the registered agreement, the building owner gets the right to evict a tenant who fails to pay the rent as per the amount stipulated by the agreement.
In addition, it also ensures that the tenant is not allowed to sublease the property to a third party without the landlord’s consent.
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