JEDDAH, Jul 1 (Arab News): Tenants are accusing landlords of unjustifiably increasing their rent prices and taking advantage of the absence of a clear law regulating real estate owners.

Owners tend to increase the rent cost by more than 25 percent without prior notification each year, tenants say.

The landlords’ usual excuse is that they are adjusting their prices for inflation.

However, tenants say they are victims of unjustified increases and their only options are to pay up or vacate the apartment.

Many real estate offices are calling for a new law that regulate and limit annual rent increases.

Building owners say they have the right to set whatever price they see fit.

The extortionate increases usually put a strain on families who are operating on a tight budget.

In 2007, a five-bedroom apartment cost SR20,000 to SR25,000 depending on the location and neighborhood. Now the average cost is over SR30,000.

A three-bedroom apartment in 2007 cost SR18,000 to SR21,000. This has risen to SR25,000 on average.

The Dubai government introduced a seven percent cap on annual rent increases for all rental properties in 2007.

Abdullah Basalem, tenant and father of five, said that he suffered a lot when his landlord increased the annual rent by SR5,000.

“I received a letter from the owner saying that the price changed from SR20,000 to SR25,000, an increase of 25 percent,” he said.

“When I confronted him to complain, he told me that prices had increased everywhere. After a hard negotiation, he agreed to an increase of SR3,000 so I would pay SR23,000 in total. He said that he would increase the rent by SR1,000 the following year and by the same amount the year after that.”

Basalem said it was clear that the price increase was totally dependant on the mood of the owner.

Awad Al-Dowsi, a member of the real estate committee at the Jeddah Chamber of Commerce and Industry, said the committee helps draw up new contract forms between building owners and tenants. These contracts would protect the rights of both parties.

“The new contact forms will be approved by the Interior Ministry and Ministry of Commerce and Industry,” said Al-Dowsi. He added the new contract would limit any rent increase to five percent annually.

“The unorganized rent increase is considered abnormal and will reflect negatively on the Saudi market. Statistics by the committee confirmed that the rate of rent increase for buildings in Jeddah reach 30 to 40 percent annually, which is considered very dangerous.”

He added that the new contract would force landowners to inform tenants about any rent increase as early as six months before the contract ends.

Landlord  Abdulghani Al-Sabbagh said real estate companies drove prices up by renting whole buildings to companies for their employees.

“Such companies are ready to pay high prices, which encouraged other building owners to do the same,” he said.

“Building owners believe that even an unjustified increase is part of the free market. Basically they take advantage of the absence of a law that regulates rent increase.”

“Rent increases are considered part of the real estate sector’s freedom. It is not logical to set a limit on price increases annually,” said Khaled Abu-Rashed, a Saudi lawyer.

“However, it is the tenants’ right to be informed about the new rent increase earlier and decide whether to continue living there or not.”