Registration Fee for Lease Contracts and Sale of Real Estate Units

Under the Tenancy Law (Royal Decree 6/1998), a tenant is entitled to utilize a leasehold property in accordance with the terms of the lease agreement. Corporate bodies and individuals may lease property from the government or individual landlords for specific purposes. Such lease can only be transferred if the prior written consent of the landlord has been obtained.

It is mandatory for the landlord to register the lease agreement, unless the landlord and tenant agree that the registration will be carried out by the tenant. In order to avail the rights and privileges provided to the landlord and tenant, it is necessary to register the lease agreement as required under the Tenancy Law. In the event the landlord fails to register the lease agreement within a period of one month from the date of signing the lease agreement, the tenant may do so within the specified period.

A lease may be a short-term lease or a long-term lease. Short-term leases are leases with a term of less than seven years and are registered with the relevant municipality. Generally, short-term leases usually have a term of one year and are renewable upon expiry. Any lease with a term exceeding seven years is considered a long-term lease and such lease must be registered with the Ministry of Housing (MOH).

All leases must be registered with either the municipality or the MOH. The payment of registration fees will differ depending on whether a lease is a short-term lease and registered with the relevant municipality, or a long-term lease and registered with the MOH. In the case of a short-term lease (i.e., a lease with a term of less than seven years), the lease needs to be registered with the relevant municipality and a registration fee of 5% of the lease rent payable over the term would need to be paid. The Muscat Municipality registration fee has been recently amended by Ministerial Decision 20/2016. Prior to the amendment, the registration fee was 3% of the lease rent payable over the term.

If, however, the lease was for a period exceeding seven years, the lease will be registered with the MOH and a fee of 0.5% of the total lease rent for the entire tern of the lease is payable by way of a registration fee (pursuant to Ministerial Decision 5/1991).

Unless the lease agreement is registered and the prescribed fees are paid, such agreement shall not be recognized by any official authority in the Sultanate. Landlords failing to register the lease agreement will incur a fine of three times the prescribed fees.

Similarly in the case of sale and purchase of real estate units, all transactions pertaining to the transfer of ownership in real estate units, whether through an outright sale and purchase, inheritance or pursuant to a judgment issued by the Omani courts, would need to be recorded in the Land Register through provision of relevant documents in support of the same. The objective is to control and protect the rights of ownership for the benefit of the owner. The MOH has also announced through Ministerial Decision 13/2016 issued on February 1, 2016 that the fee for registering real estate units has been increased from 3% to 5% of the total value of the real estate unit.

Transactions relating to transfer of ownership in real estate units need to be registered in the Land Register in the absence of which a fine equivalent to twice the registration fee will be imposed on any person who has intentionally ignored registration of the real estate unit.