MADINAH: Several realtors and tenants in Madinah have urged the intervention of authorities to rein in the exorbitant increase in housing rent in Madinah.
They said that there has been a steep hike of 150 percent in rent during the last five years, according to a report in Al-Madinah Arabic daily. Even though the real estate and construction sector witnessed a massive expansion during the period, it could not contain the spiraling rises in rent, they pointed out.
Hussein bin Talal Al-Sharif, an investor in the real estate sector, said the Kingdom's real estate sector is the strongest compared with that of some other GCC states and was not affected by the slowdown in the global and regional real estate sector. "The market conditions of huge demand and low supply are the major factors that contributed to the soaring prices of real estate in the holy city. Many landlords exploit this situation and cash in on the growing population in the city," he said, adding that there has been a 38 percent increase of foreigners who came to live in the city between 2004 and 2010.
Madinah is the third largest city in the Kingdom in terms of territory and the fourth largest in terms of population. The city's population reached 1.6 million, according to the latest statistical figures. Al-Sharif noted there was a steep hike in rent keeping pace with the rapid growth of population in the city over the past four years. He called on the municipality to introduce regulations aimed at reining in soaring prices of real estate and residential apartments. "There are some citizens who do not own either land or a house. There should be some concessions for this section of people to help realize their dreams of owning a house," he said.
Al-Sharif also drew attention to the discrepancies existing in the current real estate regulations in the city. "It is allowed to construct two-story buildings in some localities, while the branch municipal authorities in neighboring regions permit construction of buildings with four to seven floors. Some real estate investors who buy plots of land after spending more than SR1 million are eager to earn huge profits by renting out their residential buildings at a higher rate," he said.
Fahd Al-Bashiri, a tenant, told the newspaper that he is a victim of a reckless landlord who increased rent exorbitantly regularly. "I leased a four-room residential flat in Al-Manarat district for SR15,000 a year. Four years ago, the landlord hiked the rent to SR18,000, and later to SR20,000. He informed me this year the new rent would be SR23000," Al-Bashiri said, adding his attempts to fix the rent for the flat at a lower rate have failed. "The age of the building that was constructed more than 20 years ago is not apparently not good enough a factor for a reduction," he added.
Badar Al-Jabiri, another tenant, said he rented a residential apartment for SR16,000 four years ago. "At beginning of the new year, the landlord informed me that the revised rent would be SR18,000. The building was an old one with poor electric and plumbing in addition to regular water shortages," he said, adding that his search to find out another apartment with a lower rate of rent was a failure.
According to Al-Jabiri, the rent of almost all residential apartments that are offered for rent are above SR20,000.
"This forced me to continue living at my current building and enduring such unreasonable hikes in rent," he said.
Al-Jabiri asked the Ministry of Housing to enact a law aimed at regulating rent hikes by landlords. He noted the ministry recently classified residential apartments and had put a ceiling on rent.
On his part, Khalid Al-Motairi, another citizen, called on authorities to urgently intervene to protect the interests of tenants. "There should be provisions in the law banning landlords from raising rent for a specific period of time. For example, the Ministry of Commerce can fix the minimum valid period of a rent contract at five years," he said, adding that the tenant can have the option either to renew the contract or vacate the apartment.
Al-Motairi said the landlord could approach the Ministry of Justice in case a tenant failed to make a prompt payment of rent. "But where can the tenant go in case the landlord resorts to the reckless practice of increasing rent at regular intervals?" he asked.
Majed Gouth, member of the provincial council in Madinah, recalled this problem has been a hot topic of discussion and debate for several years. "Global indexes have showed that rent makes up nearly one-third of the cost of living of citizens without their own property. This means the annual increase in rent deals a severe blow to the budget of citizens in particular and society in general. This incapacitates a major segment of the society who have a fixed annual income from meeting their financial obligations," he said, adding this forces many people to borrow money and eventually fall into debt traps. Gouth also underlined the need for building residential towers to meet the rising demand for homes for the growing population, increasing by more than 3 percent annually in most regions in the Kingdom.
On his part, Jamal Farghali, member of the real estate evaluation committee in Madinah, stressed the need for easing procedures for the construction of residential towers and compounds to attract more investors to this vital sector. He said landlords are raising rent by 10 percent to meet expenses such as the cost of maintenance work including painting and plumbing, paying the salary of guards and more.
© Arab News 2012
