Rashid Muhammad Al-Fawzan

Riyadh

 

There are two types of rental properties: commercial and residential. It has been noted that the rent of apartments and shops is on the increase every year.



Of course, the rise in rent depends on the supply of and demand for  commodities or on the location of a place. For example, a shop near the Grand Mosque or the Prophet’s Mosque is considered a strategic one and cannot be compared with any other place in terms of location.



Naturally, the rent will be higher and different from that of a similar shop in another location. The rent of a commercial site is based on the price of a square meter not the total area of the place.



Actually, there are no clear-cut criteria for determining the rent of an apartment or a shop, because rents are expected to continue to rise.



In fact, I believe that apartment rents will increase 30 to 50 percent over the next few years. The rents of shops, on the other hand, are difficult to estimate for the same period because some landlords increase the rent by 20, 30 or 50 percent after the first year while others do not.



However, it is expected that such rents (long-term lease agreements are excluded) will go up by 30 to 50 percent over the next 10 years.



These expectations are based on market trends. Each landlord can raise the rent whenever he likes, which, in my opinion, is a negative thing that needs to be reconsidered as rent prices should be regulated.



The increase in the rent of an apartment should not exceed five percent annually; this is a very reasonable increase. The same thing should hold true for the rent of shops.



Giving the landlord full freedom to control the rent of his property contributes to the inflation of rental prices. Those who are harmed are the tenants who have to bear the brunt of such increases.



If we look at some of our neighboring countries and compare their markets with ours, we will notice that a landlord in any of these countries does not have the freedom to increase the rent in any way that he likes because there are laws regulating this practice.



Why do we not have similar laws that serve the interests of the landlord and the tenant alike? We need to strike an equilibrium in the rental market as this will reflect positively on our economy.



I believe that the Ministry of Commerce and Industry should control rental prices and prevent their inflation.