VZCZCXYZ0004
RR RUEHWEB

DE RUEHAM #2768/01 3561011
ZNR UUUUU ZZH
R 221011Z DEC 09
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 6570
INFO RUEHGB/AMEMBASSY BAGHDAD 6342
RUEHLB/AMEMBASSY BEIRUT 3146
RUEHEG/AMEMBASSY CAIRO 4224
RUEHDM/AMEMBASSY DAMASCUS 4298
RUEHJI/AMCONSUL JEDDAH 0943
RUEHJM/AMCONSUL JERUSALEM 5741
RUEHRH/AMEMBASSY RIYADH 2261
RUEHTV/AMEMBASSY TEL AVIV 1983
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS AMMAN 002768 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA AND EEB 
STATE PASS OPIC 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV SOCI AMGT ABLD JO
SUBJECT:  Controversial Landlord and Tenants Law Comes into Force; 
Some Predict Unrest, All Expect Rent Hikes 
 
REFS:  A) Amman 2673 
B) Amman 137 
C) 08 AMMAN 2369 
D) 08 AMMAN 2316 
 
¶1. (SBU) Summary:  A new Landlord and Tenants Law came into effect 
on December 1 which will increase landlord rights and establish a 
mechanism with which to base future increases in rents.  The law 
also includes termination dates for old leases.  Critics expect the 
new law to hit hardest lower-income Jordanians by raising rents, and 
they further predict possible social and economic unrest given the 
lack of public housing programs in Jordan.  Proponents say the new 
law will fairly compensate landlords and balance in a more equitable 
manner landlord and tenant rights and responsibilities.  Embassy 
leases are exempt from the new law's changes.  End summary. 
 
Erasing A Long History of Pro-Tenant Laws 
----------------------------------------- 
 
¶2. (SBU) A new Landlord and Tenants Law, passed by parliament in 
August, came into effect on December 1, following the issuance of a 
royal decree.  The controversial law included amendments proposed by 
the government and the lower house's legal committee, which studied 
the law over the preceding six months.  The new law erases a history 
of regulations which, since 1941, have been pro-tenant with leases 
that could be extended indefinitely if the tenant so desired and 
offered rent controls.  The 1941 law was amended in 1982 to include 
a clause allowing tenants the right to transfer property to 
immediate family members.  A subsequent 1994 law obligated the 
government to examine rent levels at least once every five years.  A 
2000 amendment finally attempted to address the de facto practice of 
favoring tenants' rights over those of landlords by setting December 
31, 2010, as the termination date for all leases signed prior to 
March 2000.  Leases signed after the March 2000 cut-off date must 
adhere to the negotiated terms, including the agreed-upon 
termination date.  Leases held by expatriates, such as those 
negotiated by embassies on behalf of their diplomatic staffs, are 
not subject to the termination date. 
 
¶3. (SBU) The new law has raised concerns among contacts because of 
an article under which "the landlord has the right to vacate the 
tenant from their properties."  This aspect is controversial in 
Jordan because there is no institutionalized safety net for renters 
who are evicted from their homes as a result of the law.  Note:  The 
government does not provide public housing for citizens and the 
"Decent Housing for Decent Living" initiative for low-income housing 
has only assigned approximately 6,000 units (as apartments or 
parcels of land) out of the 100,000 units planned for construction 
during a five-year period.  Moreover this initiative primarily 
targets public sector employees, leaving others to fend for 
themselves (ref C).  End note.  Contacts fear the potential rise of 
social and economic problems should a rash of evictions occur. 
Defenders of the new law contend that it promotes rational criteria 
for property disposal, renter eviction, and raising rents using a 
formula based on the number of years since the original lease was 
signed and the value of the property, a change from years of having 
a law that favored tenant rights over landlord rights. 
 
Mandatory Lease Termination; Rental Rates to Rise 
--------------------------------------------- ---- 
 
¶4. (SBU) The new law mandates termination dates for rental property 
occupancy.  Tenants will have to vacate properties based on the date 
their original leases were signed unless they sign new rental 
agreements with the property owners.  Additionally, renters who 
signed leases before 1970 will have to vacate their rentals or sign 
new leases by December 31, 2010.  Leases signed after that date will 
have graduated termination dates falling between 2011 and 2015. 
 
¶5. (SBU) The amended law further specifies that in instances of 
contract renewal, increases in the amount of rent should be 
calculated based on the number of years since the signing of the 
original lease and the current property value.  Under this formula, 
the added percentage rate for residential leases ranges from 1% to 
3% for contracts signed between 1975 and 2000, and is a flat 5% for 
contracts signed prior to 1975.  For non-residential contracts 
signed between 1975 and 2000, the added percentage rate ranges from 
2% to 4%, and is set at 6% for those signed before 1975.  Rents can 
 
be raised beginning January 1, 2011. 
 
¶6. (SBU) An additional substantive change under the new law will 
allow rental contracts to be renewed automatically for a similar 
contractual period if a renewal condition was included in the 
original contract.  If the tenant notifies the landlord prior to the 
contract end date of his intention to terminate the contract, there 
is no automatic renewal. 
 
Real Estate Gains, Social Hardships Ahead 
----------------------------------------- 
 
¶7. (SBU) Opinions on the new law vary greatly.  Contacts have told 
EconOffs that the motivating change was a desire to develop the real 
estate sector and increase investment.  Critics of the new law, 
however, assert that the past five years have seen massive, inflated 
growth in the real estate sector and that the new law will create 
further economic hardships for many Jordanians by raising rents as 
monthly incomes stay flat, a situation that could lead to social and 
economic instability.  Minister of Justice Ayman Odeh told the media 
that he also expects the new law to increase the burden on 
Magistrates Courts, where landlord and tenant cases are heard, as he 
expects more litigation when it comes to tenant and landlord rights 
under the new law. 
 
¶8. (SBU) For non-residential real estate, the main concern is 
expressed by tenants who have invested in the properties they rent. 
Under the new law, some of these businesses will be forced to vacate 
their shops, and owners will have no recourse for compensation for 
their self-financed improvements to rental properties.  Defenders of 
the law say that statistics show that tenants are often stronger 
financially than landlords and that the new law will not only set 
fair rent increase mechanisms, but also more equitably balance the 
rights and responsibilities of both landlords and tenants. 
 
¶9. (SBU) Comment:  While the new Landlord and Tenants Law will 
rationalize current rent levels, its implementation will surely hit 
poorer segments of Jordanian society hard, particularly given the 
lack of public housing programs in the country and the dramatic 
elimination of funding for social safety net programs in the 2010 
budget (ref A).  The law's implementation will also be met by an 
uproar of protest from Jordan's business and commercial community, 
as the bulk of commercial enterprises in Jordan are conducted from 
rental properties.  Already on December 21, the Irbid Chamber of 
Commerce, which claims that the law will hurt 90% of its business 
members, began calling on the GOJ to issue a provisional law that 
would mitigate the effects of the law enacted in early December. 
End comment. 
 
Visit Amman's Classified Website at 
http://diplopedia.state.sgov.gov/index.php?ti tle 
=Embassy_Amman 
 
BEECROFT