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Tue 12 Feb 2008 10:52 AM

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Qatar considers lowering rent cap to 7%

Inflationary pressures could see 3% reduction in rate implemented by week's end.

Qatar could lower a cap on rent increases that landlords can charge by three percentage points to 7%, the local Peninsula newspaper reported on Tuesday, citing a lawyer who said he had seen draft legislation.

The cap now is a maximum 10% increase.

Inflation in Qatar was 13.7% in September, just off a record, as rents and accommodation costs surged.

The possible new cap would apply for two years and could become law this week, Jamal Al-Nema said, according to the newspaper.

Qatari Finance Minister Youssef Hussein Kamal told newswire Reuters last month the government was considering lowering the rent cap - which expires this month - as part of efforts to curb inflation.

A move by Qatar would follow similar actions taken by authorities in the UAE, which lowered rent caps from 7% in 2007 to 5% in 2008 in an attempt to alleviate the pressure of inflation.

Supply bottlenecks for real estate have been a major factor driving record inflation around the Gulf in recent years.

Official inflation figures touched 9.3% in the UAE in 2006, the last year for which data is available.

Inflows of capital from the sale of oil, which has shot up near five-fold since 2002 and is almost universally priced in dollars, and the rising cost of basic food due to a global commodities crunch have also weighed heavily on inflation in the region.

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