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Days of random rent hikes about to end
Published in The Saudi Gazette on 05 - 05 - 2013


Saudi Gazette report
JEDDAH – The Ministry of Commerce and Industry has nearly completed the final phase of studying the unified rent contract with several sources saying it will approve the recommendations of the study over the coming few weeks, press reports said on Saturday.
The authorities hope the unified rent contract, which will clearly state the rights of both landlords and tenants, will put an end to the seemingly random increases in rent. The contract caps the amount landlords can increase rent by, said the sources. Real estate experts who welcomed the move said it would end unreasonably high rent prices.
“Some landlords in Jeddah have taken advantage of the situation by increasing rent prices before the unified rent contract comes into force. Some tenants have reported up to 30 percent increases in their rent,” said a source on condition of anonymity.
Shahwan Al-Shehaiween, a member of the real estate committee at the Jeddah Chamber of Commerce and Industry (JCCI), said rents in Jeddah have unreasonably increased over the past few months compared with the rents in other regions of the Kingdom.
He expected that low-income citizens will have to move to the outskirts of Jeddah where they can afford to pay the rent. “I think this is a dangerous indication which will affect the process of development in the governorate.”
According to Al-Shehaiween, it takes property owners over a year on average to obtain the necessary licenses from the Jeddah Mayoralty so they can rent out their properties. This has played a major role in increasing rents because many owners have not been able to obtain the necessary licenses, which take just three days at mayoralties in other regions.
“There is no equilibrium between supply and demand in the Jeddah real estate market and the absence of such an equilibrium has affected rents negatively,” Al-Shehaiween said, while calling on the mayoralty to expedite the procedures of processing construction licenses.
“Unfortunately, the Jeddah Mayoralty does not have any control over the process of issuing construction licenses and the whole matter is left to individual employees' moods.”
Abdul Aziz Al-Azab, executive manager of a real estate development company, agreed that the delay of issuing construction licenses have had a negative impact on rents. “Of all of the Kingdom's major cities, Jeddah is in dire need of more residential units to accommodate its growing population.
Having more residential units would definitely reduce rents,” he said.
While landlords typically increase rents by a certain percentage, landlords in Jeddah regularly take advantage of the situation by increasing rents at will and in complete disregard to tenant's income levels.
Al-Azab called upon the ministry to speed up the procedures of enforcing the new unified rent contract. “Today, neither citizens nor expatriates can afford the high rent of property in Jeddah.”


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