|
 |
News |
 |
|
| |
Email this article |
 Printer Friendly Version
|
| |
Rental hikes capped at 20% |
| |
1/22/2009 10:24:13 AM |
| |
|
| |
| |
The maximum a landlord can hike rent is 20 per cent, according to an important clause in the new decree issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and ruler of Dubai.
Using a series of "mini rent caps" through a rent slab, the index prevents rent from rising too high.
For example, if the rent is 36 per cent to 45 per cent below the average market rate for properties with similar specifications in similar areas, the rent can only be increased by a maximum of 10 per cent, according to the decree.
If the rent is equal to or up to 25 per cent less than the average market rate for properties with similar specifications in similar areas, then there will be no increase in rent.
However, it is worth noting that the index was compiled using figures from the second half of 2008, and since then, rents have dropped much further. The index states that the average rent for a two-bed apartment in Mirdif falls somewhere between Dh120,000 to Dh130,000.
But currently, tenants in two-bed apartments in Mirdif are paying around Dh90,000.
Marwan Bin Galita, chief executive of Real Estate Regulatory Authority (Rera) has been very clear when saying the rental index should only be used as a guideline, with plans to update it every six months. With the decree now in effect, however, it is even more important that Rera keeps a closer eye on rental rates across Dubai, especially as they are set to fall further in 2009.
For this reason, some industry experts say the rental index should be updated regularly.
"It may be wise to update the rental index on a weekly basis as the market rates are still fluctuating - a rent cap at this stage may be slightly premature," Ryan Mahoney, managing director of Better Homes, added.
Rera issued a statement yesterday saying there will be no increase in rent for new contracts signed in 2008 for residential and non-residential properties.
However, the rent will neither have increased nor decreased as it is a new contract.
"There will be absolutely no increase in property rent values for new residential or non-residential tenancy contracts signed for the first time in 2008. Any contract that was renewed in 2008 is subject to increase," Rera said in a statement to media.
Interestingly, according to Rera's website, 3,400 people, around 85.8 per cent of those polled, say there should be a rent cap law in Dubai.
Other experts believe that the index is fair, provided that housing allowances support any rental increases.
"The key therefore will be relying on getting the rental index accurate so that it becomes a benchmark that everyone can rely on ... Provided employers recognise that the rental index is the benchmark and pay staff housing allowances in line with this benchmark, then everyone should be able to balance their existing lifestyles without too much pain," Ashley Palm, head of property management, International Property Services, said.
There has been a lot of confusion in the rental market this year, as Dubai's Rera has not been as transparent and open as needed.
"The main problem is that rents have already risen too high. The rent cap appears to have had no impact and landlords seem to have unrealistic expectations of rent and payment terms. Anyone fancy paying Dh200,000 for a two-bedroom Jumeirah Lake Towers? I am really not expecting much from Rera," said another tenant.
|
| |
Source: Zawya.com |
news |
| |
Email this article | Printer Friendly Version |
|
 |
| |
|
|
|
| Current Events |
 |
|
| DubaiGetaway |
 |
|
| Featured Links |
| |
|
|
|
