Moroccan government targets rental housing crisis

2008-10-05

A new study in Morocco found mistrust between landlords and tenants, fewer people renting houses and a lack of motivation for people to rent. The government has resolved to find a solution.

By Sarah Touahri for Magharebia in Rabat - 05/10/08

[Sarah Touahri] New government proposals are in the works to end the crisis in the Moroccan rental housing sector

The Moroccan government is planning to shake up the country’s troubled rental housing sector.

According to a government study released September 24th, Morocco faces a shortage of developers in both the public and private rental housing sectors, few financial and legal incentives for people to rent and an ill-defined and mutually-suspicious relationship between landlords and tenants.

New proposals are in the works to end the crisis, Housing, Town Planning and Development Minister Ahmed Taoufik Hejira said at a press conference announcing the study findings.

One major problem the ministry analysis uncovered: 30% of landlords surveyed said they have encountered disputes with tenants over increasing rent, late payments or no payments.

"Tenants refuse to pay higher rent," said landlord Mohamed Marouane, adding that he is disappointed by the direction the rental market is going. The study showed that the percentage of families living in rental housing units has fallen to 29% in 2008 from 43% in 1982.

"I’ve been renting my house with an area of 100m2 for 800 dirhams a month over twenty years, and now this price is set to more than double," he said. "I’m thinking of going to court."

To address problems uncovered by its study, the Housing Ministry put forward a number of measures. In addition to legal reforms to shake up the sector, it aims to restore trust between landlords and tenants, introduce tax breaks and create rental mediation companies to provide guarantees to landlords.

The government is proposing a 20% cut in the level of taxation on rent and the total elimination of tax paid by small landlords on their rental income. Seventy-seven percent of landlords would like to see the tax breaks available in the property sector extended to the rental sector.

The tax changes also support Morocco's new scheme for expanded social housing. The plan would give higher tax allowances for profits earned from homes rented to low-income families, tax breaks for rental-sector investments and subsidised long-term loans for the construction of affordable rental housing.

Mediation between landlords and tenants must be stepped up if the disarray in the market is to be tackled, the ministry's study recommends.

Hejira has high hopes that these proposals will restore trust between real-estate investors and potential tenants in order to fill some 163,000 currently empty rental properties.

A bill to strengthen the legal framework governing the sector will soon be sent to parliament.

"This will clearly define the rights and obligations of landlords and tenants and ensure conditions of profitability and stability in the relationship between the two parties," Hejira said.

"It is about time to take legal action," said realtor Ahmed Bzioui. "For example, the role of estate agencies should be expanded in this area to cover rent recovery and housing management."

Formalising the rental contract will also protect tenants. Some landlords are unofficially leasing their properties in order to avoid paying tax, leaving renters with no legal protection.

"It’s a common practice," one tenant told Magharebia. "I’m renting a flat in Rabat without a contract and am worried I could be thrown out," Hajer Bakali said. Still, she is willing to take the risk for a good deal.

"The rent is acceptable," she admitted.