Bahrain plans to introduce new obligatory tenancy registration procedures early next month.
While the move will improve the real estate market, the proposed rent increases at renewal threaten to hinder the residential and commercial markets, which have both only recently begun to show increased stability.
The exact procedure and process by which the registration of tenancy agreements will take place is yet to be revealed.
However, the new procedures are geared towards the support of Bahrain’s progressive regulatory framework, strengthening the kingdom’s business-friendly appeal that investors find very attractive.
This move to better regulate the market will be well received by the investment community.
The most critical component of the regulation should centre on what happens at the time of renewal. The current draft proposal calls for an uplift after a period of two years: five per cent for the residential market and seven per cent for the commercial market. Landlords are expected to be restricted on imposing any rent increases on the agreed rate for two years from the start date of the tenancy, or the date of the last increase.
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