Tenants caught in contract trap in Oman

Muscat: Expat workers who have been forced on to shorter-term job contracts say they are being caught in a debt trap as they have no choice but to rent homes for 12 months.
Currently, more than 90 per cent of agreements to rent homes are for a minimum one year period, but austerity measures and falling oil prices have forced some companies in Oman to offer shorter employment contracts – some as short as six months.
Despite requests from workers to shorten rental leases, many landlords refuse to budge, according to estate agents, lawyers and workers caught in the rent trap. Landlords are wary of short term leases because each time they renew they have to pay municipal fees and taxes.
The rent trap has left some expat workers with huge bills to clear before they can leave the Sultanate. “It’s a little tricky for some people in Oman. We have a work contract of six months and a residential contract of one year. Seems more like a leap of faith for us,” said Ahmed, an Indian expat in Oman.
According to article 6 of the Oman Tenancy Law, an agreement between two parties can be signed for an agreed duration that could be yearly, half yearly or quarterly, and tenants failing to comply with the duration for any reason can be forced to pay the entire amount in the contract by the landlord.
“If the tenant has agreed a one-year lease but decides to leave the premises, thus terminating the lease agreement before expiry of the term, then the person may be obliged through the courts to pay the rent for the whole term agreed in the lease,” said Jeffrey Greene, Partner and Head of Corporate Advisory at Al Alawi and Co Advocates and Legal Consultants.
Greene added that it is all about communication between the landlord and tenant. The compensatory rent can be waived by the landlord or the amount reduced to a month or two but the tenant can also be asked to pay the whole rent. “Although recently due to drop in demand some landlords have started to accept shorter term contracts, conventionally they shy away from them because they have to pay 10 per cent municipality tax, 5 per cent agent fee and most importantly face the trouble of finding a new tenant,” an official from Engel & Volkers estate agency said.
“The issue with giving a tenant an easy way out is that the law can be misused. Some of them have said they have been terminated by their company showing some documents and I have found them shifting to other houses. Also, even if we allow people to leave without paying anything, the moment we get another tenant we have to pay taxes and fees again,” said an official from a real estate firm.
Faisal, a resident of Qurum, said that his work contract expires in May but he recently signed a rental contract until the end of the year as he had no option.
“I asked my landlord for a shorter contract but he told me that he does not want to have the hassle of looking for another tenant in the middle of the year so I had no option apart from signing the year long contract or vacating the house. I hope I get my contract renewed in May else I will have to pay out my entire contract before leaving,” he said.
He added that there should be a law which allows an easy route out of the contract if the tenant has been dismissed by the company.
Yasser, a resident of Ruwi, said he was forced to leave an apartment due to flooding but paid double rent for three months as the contract in the water damaged apartment ran for a year.
“I was new in Oman and rented out a flat for a year. It seemed good until water pipes started leaking just few weeks after shifting in. The landlord did not do anything about it for months and I was forced to shift out within three months. I had to double pay rent for the next three months. I understand this may be an isolated incident but it cost me three months rent,” he said.
According to Greene, the options available to resolve the issue are executing an agreement specific to the terms of tenant employment and having the agreement reviewed by a lawyer to protect the interests of both parties stating that the lease shall be terminated in case of non-continuance of the employment of the employee.
Typically if a tenant decides to leave the rented house before the end of the contract, he/she pays around two or three month worth of rent to the landlord.
An official from Al Habib Real Estate said that it is usually up to the landlords to decide but in most cases if tenants inform the agents or landlords well in advance the agreement can be quite flexible.
“If landlords are informed well in advance they normally ask tenants to search for new tenants themselves or make sure the house is rented as soon as the older ones leave. The whole point is giving landlords the time. Even if people come with issues related to shorter work contracts or approaching retirement age, the rules can be flexible and we can certainly give them shorter residential contracts. Again, they must have a good reason for it else the contract will be for a year,” he said.