Rise in number of bounced cheques as Oman economy slows down

Energy Saturday 11/March/2017 22:34 PM
By: Times News Service
Rise in number of bounced cheques as Oman economy slows down

Muscat: Bounced cheques are increasing across Oman as residents facing pay freezes struggle to make ends meet.
The economic downturn in Oman has led to lay-offs, delays in salary payments and a freeze on housing, flights allowances and expenses.
Those residents who have chosen to remain in the Sultanate hope they can weather the storm, but some employees are reporting non-payment of salaries for more than three months, leaving landlords with piles of rent cheques they cannot bank.
In some cases, agencies and landlords are demanding a OMR10 fee to hold a cheque for a month without banking it.
Indian expat Sabita, who lives in Ruwi, said that for the last three months she has been paying OMR10 more to her real estate agent for holding the rent cheques.
“As our salaries are delayed, I have no other option but to call my agent so that he can hold the cheque, and for that he is charging OMR10 more every month,” she said.
Bangladeshi national N Das said that he is losing OMR25 every time his cheque is bounced by the bank. “The bank is charging OMR15 and then my agent is charging OMR10 for every cheque bounce,” he said.
“It is totally a tenants’ market now, with most buildings half empty and looking for tenants. Payments are coming late and cheques have started bouncing as people are finding it hard to sustain,” Country Operations Manager of Eqarat, Salman Jalil said.
“In every building there are one or two cases. Earlier there were no cases. Initially, we try to give them more time but if it happens regularly, we hand over it to our legal department,” he said. Eqarat manages more than 1,000 units in Oman.
Hassan Mohammed Juma, Deputy Chairman, Oman Real Estate Association, said: “We are talking to our clients and trying to restructure the payments, rather than taking hard measures.
“So, I would urge people - if you are facing problems, speak to the real estate agents or to your landlord and explain the problem,” he said. Admitting demand is weak, Sudhakar Reddy, Chief Executive Officer Al Habib, said: “Prices of old and tired properties are struggling the most. They are already down and they will be falling more.” Al Habib manages 4,800 units in Oman.
Reddy added that the issue of bounced cheques remains. “There were always some cases,” he said.
Property experts, however, said that the landlords are not authorised to evict a tenant over a bounced rental cheque.
“They will need a court and/or police order to do so,” according to a property expert.
Another trend developers are seeing is that people are going for shorter contracts.
“This is because of the uncertainty that some of tenants are facing. Therefore to stay safe they prefer short agreements for three or six months depending upon their situation, rather than having one year contract and ending it abruptly in an unforeseen situation as it can have its own implications. Then we are seeing a trend that tenants are cancelling their agreements, even after signing it. They are even willing to pay the municipality fees and other charges when they are cancelling the agreements,” he said.
Real estate agents said that developers are coming up with new ideas to attract tenants. “I know some real estate agents are offering one or two months of free stay if you willing to pay for 10 months at one go,” said another real estate agent.
Real estate agents also admitted that the rents are falling all over Muscat and in every street people can notice for rent board put up on their buildings.
“Rents are falling and this has to do with the current market conditions, and the demand and supply imbalance. Cost cutting and saving is a top priority and tenants are no exception. They want to pay less and demand reduction in rent. There are two choices for the agents/landlords: Don’t reduce the rent and let the tenant go, or reduce and let the tenant stay. The agents/landlords are going for the second option as they stand to lose more if they don’t. Tenants have many options available, and many tenants move to different properties even if the difference in rent is insignificant, because of the many options of newer properties available,” another real estate agent said.
The fall in rental rates is attributed to the economic slowdown in the country, following a decline in oil prices by 60 per cent since July 2014, which has, in turn, seen organisations shedding staff in large numbers.