New Exception to Mandatory Extension of Lease Agreements

EghtesadOnline: The new decision by the National Coronavirus Headquarters recognizes a landlord’s right to forfeit a lease agreement during the time of coronavirus, if they prove that they need their properties for the use of their sons or parents, a deputy minister of roads and urban development said.

News ID: ۷۵۱۷۴۲

27 December 2020

Mahmoud Mahmoudzadeh added that in such cases, the tenant must vacate the premises, News.mrud.ir reported.

In the early months of the coronavirus disease, the taskforce ordered the mandatory extension of lease agreements to protect renters at a time when the country was battling the health crisis, plus three months after the Health Ministry declares the end of the outbreak.

It also said that tenancy agreements signed as of June 29 might not increase rents by more than 25% in Tehran, 20% in large cities with a population of over one million, namely Mashhad, Isfahan, Tabriz, Ahvaz, Qom, Shiraz and Karaj, and 15% in other Iranian cities.

But there are some exceptions to the rule, including the provision that tenants must have delivered on their commitments during their tenancy term; in other words, they should not be recognized as a tenant in arrears by the judiciary.

Also, those who have caused financial losses for the landlords won’t be entitled to the new facility. Once the landlords legally sell their properties during the lease period, the tenants must move out within two months. The final exception was when tenants refuse to accept the aforementioned rent increase ceiling. If a landlord asks for a higher rent (than what was approved), the tenant can refuse to pay the rent without facing eviction.

As per the new exception introduced by the taskforce, landlords who prove that they need their property for the use of their sons or parents are allowed to terminate the lease agreement.

According to the Central Bank of Iran’s latest report on Tehran’s real-estate market, the price of rented residential units in Tehran and across urban areas increased by 28.7% and 31.9% respectively during the eighth month of the current year (Oct. 22-Nov. 20) compared with the similar month of last year.

The Statistical Center of Iran has disclosed figures for monthly home rents, which could include 3% collateral legally paid to rent one square meter of residential floor area in the whole country.

It reported that the average rent prices increased by 43.8% during the current year’s Q2 (June 21-Sept. 21) compared with the Q2 of last year and 12.7% compared with the first quarter of the current year.

The minimum price of each square meter of residential floor area rented in the Iranian cities stood at 2,796 rials (1 cent) with the maximum being registered at 4.9 million rials ($19) in bringing the average to 194,176 rials (76 cents) per month.

Compared with the second quarter of last year, the current year’s Q2 rent deals increased by 61.1%, which increased by 266.7% when compared with the preceding quarter.

SCI reported the average area of total rent deals at 100 square meters and put the average age of rental homes at 14 years.