The Saudi Credit Bureau (Simah) will launch new system to put a stop to the non-payment of rent by the end of 2014.
“A number of stages have to be completed gradually before the system is operational,” said Simah’s General Manager Nabil Al-Mubarak.
The work includes devising new regulations on compiling data on the number of property owners leasing in the Kingdom, the number of offices and properties registered to each landlord and advising them on the statues of the new regulations regarding volume of activity and financial capital.
“The final stage will include adding tenant information into a database, advising them of a new rental payment system and explaining the guidelines and punishments if rental terms are not met with according to the lease agreement,” Al Mubarak explained. Enrollment in the new system will be free of charge and optional for property owners who wish to participate.
The system will be based on a database of information through a cooperation that was recently forged between the Ministry of Housing and Al-Elm Company, a joint-stock company owned by the Private Investment Fund (PIF).
The database allows landlords to view a history of tenants’ rent payments, run background checks and allow tenants to pay rent on a monthly basis rather than on a traditional quarterly, semi-annual or annual payment schedule.
“The database will be connected to local banks, which will also have access to tenant's credit information,” Al-Mubarak elaborated, adding that if tenants fail to pay rent on time they will be subjected to penalties imposed by Simah. These include difficulties in obtaining bank loans and other credit based products and services such as credit cards and home and automobile payment programs.
Tenants who pay their rent on time will be awarded incentives and an excellent credit rating. Through this rating they can easily obtain credit-based products.
The new rental system is expected to level the playing field between landlords and tenants as the first step in assisting in regulating the Saudi real estate market and protecting the rights of both parties who often have to spend years in court in order to settle rental disputes.