Index to solve Dubai rent woes

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A new property index will be rolled out across Dubai in a bid to make the rental market more transparent and stop unscrupulous landlords from charging over the odds for unworthy property.


The index, to be launched on January 15 by the Real Estate Regulatory Authority (Rera) means developments in certain areas will have a minimum and maximum rent price that landlords must adhere to. Any landlords charging more will have to report to Dubai Municipality’s Rent Dispute Committee, which is backing the new scheme.


Although, the full index figures have not been released, Marwan Ahmed bin Ghalita, CEO of the RERA told Emirates Business the rent bands for Mirdif will range from a minimum of Dh100,000 to a maximum of Dh200,000 for all villas and apartments. And in Karama the index will range from Dh40,000 to Dh70,000.


The figures are good news for people being charged too much. It also means landlords who currently have tenants paying under the market value can go to the rent committee to ask that their property be increased to the value stated on the index.


However, Bin Ghalita said it would be unlikely a landlord would win the case because of the five per cent cap imposed this week, which states landlords cannot increase rent by more than five per cent in two years.


At present Dubai does not have a list of property rents in different areas, which means landlords have often charged over the odds for their villas and apartments.


“It is hoped the index will give comprehensive guidelines to both the tenant and the landlord, making the whole process totally transparent thus levelling out the price discrepancies in different areas,” said Bin Ghalita who spoke to Emirates Business to explain what the index means.


“Some property is under estimated and some is over estimated. For new families coming to Dubai we want the market to be very transparent and for people already here we want guidelines to be there for them. The index will be for the majority of Dubai communities and be a guide to the minimum and maximum rent cost of a property.”

If a new arrival in Dubai flicks through the property classifieds, they could find they cannot afford to live where they want to. Yet some tenants already occupying homes in those dream areas are paying well below the figure advertised.


Rental rates in Mirdif, for example, can be anything from Dh85,000 a year for a one-bed apartment to Dh220,000 for a four-bed villa, and some properties with the same number of bedrooms and similar facilities range in price by as much as Dh30,000. But under the index the cost will be reduced for some tenants thanks to the new index cap of Dh200,000.


Bin Ghalita said:“The rent values will be dependent on many factors, such as the building’s location, age and condition along with facilities provided, like sports courts, swimming pools and security. It would be wrong for tenants to pay Dh200,000 on a three-bedroom that was in a bad condition, had no facilities and was old, but it would also be wrong for someone to be paying 100,000 on a well maintained three-bed villa, with a swimming pool. The idea of the index is to level out the market so people know what they will get for their money.


“In Karama, a much cheaper market the same minimum and maximum rental costs will apply, be it lower. The minimum will be Dh40,000 and the maximum Dh70,000.” Currently properties in the area are being rented out for Dh100,000. In October 2005, a one-bedroom in the Greens was Dh65,000, today it is around Dh105,000 and two years ago a three-bed villa in Arabian Ranches was Dh95,000, today that has increased to Dh170,000.


Under the index, properties in the Greens and Arabian Ranches will have a minimum and maximum range. This will set guidelines for landlords and tenants alike and help people know how much a property is worth renting for.


The index list will be updated every year so landlords have a benchmark for each property and can refer to it for guidance.

After two years landlords can negotiate with the rent committee to increase the price range of the property.


But landlords may not be able to increase properties by more than five per cent. “The law still states that rent can only increase by five per cent. It would be a long process for a landlord to ask for a property to increase to the market value and they might not be successful,” said Bin Ghalita.


As the news filtered through to Dubai property companies, many were consulting legal advisors to see exactly what the index means for owners. Better Homes said it was too early to make a judgment on what the system means. “We are speaking to our legal department and head of leasing before we comment,” said a spokesperson.


The Dubai Land and Property Department (DLP) believes the index will clarify the price of property in Dubai putting an end to the chaos and rent variations currently surrounding the real estate market.

A spokesperson from the DLP said: “The index will give a clear indication of how much each property in certain areas is worth. This will put an end to the confusion in the evaluation of real estate in the local market.”


The DLP also believes the rent index will enhance confidence in the real estate market for all parties. “Tenants will know the amount of increase that will be applied to them and landlords will be aware of the amount they should demand. ”


All information about properties, including date and statistics will be provided by the DLP. “This will enhance transparency and help deliver unprejudiced, objective and logical information reflecting the real image of the market,” said a spokesman.


Bin Ghalita agrees: “We are trying to regulate the market and make it clearer for both landlords and tenants so the Dubai realty market continues to flourish.”



Steps to the rent committee

  - Call the Rent Committee on 04 221 5555.

  - Prepare the correct documents. You will need a tenancy
    agreement, a copy of your passport and any other relevant
    correspondence with your landlord to explain your issue.

  - Know your rights. Remember all tenants have the right to 
    complain to the committee.

  - Be prepared for a visit from the Rent Committee. They will send a
    team to visit the building and then determine whether the rent
    increase is justified.


Viewpoint

Briton Hannah Stevens, 29, who has just moved to Dubai said the new index would make finding a home in her budget easier. “At the moment it is difficult to know if you are being ripped off or if you have a great deal. Properties in the same area with the same number of bedrooms range in price by as much as Dh30,000. 


“I think it is good news for the market as a whole because it will make it more transparent and stop landlords from over pricing substandard units. My only concern is for people who are paying a lot less rent because they arrived here three years ago when their property was worth less than it is now.”

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