.
There seems to be a lot of confusion between owners and tenants as to how and when a rent increase can be implemented.
I will try to clarify what governs rents today as ignorance seems to be the cause of arguments that leads to so many cases before the courts.
There are two categories of properties/tenants.
Sitting Tenants
The first involves properties under the rent control legislation while all others make the second category.
Which are the properties under rent control?
1. All properties located in controlled areas based on the legislation, which make for about 99.9% within towns as well as suburbs.
The list of controlled areas is kept at all district courts registrar’s office.
2. All buildings built until 31/12/1999.
3. Properties for which the rental period is over, (there is no valid rental agreement in place), but the tenant still resides there, and rents are paid regularly.
All the three conditions above must be met for a property to satisfy the rent control criteria. If this is the case the tenant is characterised as a sitting tenant and any disputes between owner-tenant are resolved by a special tribunal, called the Rent Control Court.
Zero increase
The Ministry of Justice and Public Order issues a decree every two years, enforcing maximum rent increases when a sitting tenant is involved.
A zero increase has been in place for the past six-year period, ending in April 2019.
Based on the above, any sitting tenant could have denied paying a rent hike, if requested by the landlord.
If landlords feel that the rent in force is considerably lower than the market average, they can go to court and ask for a rent at the level of 90% of the market rent prices.
The owner will have to request an independent valuation and file a case in the Rent Control Court.
Second category of properties/tenants
This is what applies in all other cases:
1. If there is a rental agreement in place, rent increases are set by the clauses of the agreement.
2. If there is no rental agreement, owners can demand any rent increase they choose.
If a verbal or written agreement is reached with the tenant, a new agreement is enforced, and the tenancy continues.
Court decides
If an agreement is not reached the owner can lead the dispute to court, requesting the eviction of the tenant.
Usually the court decides for the eviction and orders payment of the market value rent from the date the case was filed until the eviction date.
As legal proceedings are not beneficial to either owners or tenants, (only to lawyers usually), we strongly recommend that disputes over rent are resolved through a mutually acceptable out-of-court solution.
Disputes surface whenever the rent is either higher or lower than the market norm.
We strongly suggest that common sense is exercised when setting rents to reflect market conditions and avoid unnecessary problems, benefiting no-one.
