At a Glance

• Business owners say rising commercial rents are increasing pressure on shops and new projects.
• Some merchants say rent and upfront payments consume 50% to 70% of monthly income.
• Proposed measures include rent increase limits, longer contracts, and restrictions on dollar-based pricing.
• Business owners are also calling for changes to how taxes, municipal fees, and deposits are handled.

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Kurdistan Region business owners are calling for new legal measures to regulate commercial rents, citing rising costs, short-term contracts, and additional financial demands as growing pressures on the market.

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Key Statements and Focus Area

• Rent control: Business owners are calling for annual rent increases to be capped at 5% to 10%.
• Contract stability: Merchants are calling for commercial lease agreements to last three to five years, arguing that longer contracts would give merchants greater certainty when investing in shops and businesses.
• Currency and deposits: Proposals include requiring Iraqi dinars for rent payments and limiting excessive advances and security deposits.

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Rising Rents Pressure Businesses

Business owners say the absence of effective controls over commercial rents has contributed to the closure of some new businesses and projects.

They say some shopkeepers are required to direct between 50% and 70% of their monthly income toward rent and upfront payments, leaving less capital available for operations, staff, and expansion.

The demands come as merchants seek greater stability in commercial leases and protection from sharp increases in rental costs.

Business owners are also seeking limits on large advance payments and security deposits, which they say can tie up significant amounts of working capital.

Tax and Municipal Costs

Merchants also say property-related taxes and municipal charges are contributing to their financial burden.

They point to income tax on property income, as well as municipal charges related to signage and waste disposal, saying some of these costs are transferred to tenants.

Business owners further allege that some landlords use different versions of rental contracts for tax purposes, creating disputes over the actual value of agreements.

They say these practices can increase operating costs and, in turn, contribute to higher prices for consumers.

Market Shifts Toward Online Trading

Business owners say rising commercial costs are also affecting younger entrepreneurs, with some choosing to operate online rather than take on the cost of physical storefronts.

They are calling on parliament and government authorities to review the existing framework and consider new measures aimed at providing greater stability for commercial tenants.

Iraqi Law No. 87 of 1979 regulates certain rental relationships and includes provisions concerning rent levels, contracts, and registration. However, the law contains specific exclusions, and its scope depends on the type and use of the property.

FYI

Iraq’s Property Rental Law No. 87 of 1979 sets rules for covered properties, including provisions on rental periods, rent assessment, and the registration of agreements. The law also sets an upper rental threshold for certain non-residential properties, while excluding some categories and leaving others subject to the Civil Code or specific legislation.

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