Rents in old Dubai buildings dive

Chairman of rent dispute committee says panel gets 100 cases a week

Dubai is currently witnessing a drop in rents of old buildings, according to Saeed Al Kindi, Chairman, Dubai Rental Dispute Settlement Committee.

A drop in rents of old buildings in the emirate is because people are increasingly shifting to newer ones, he added.

Most of these buildings lack modern infrastructural facilities such as health clubs, underground parking, entertainment units, dedicated security, etc.

Currently, as there is no dearth of new buildings with modern facilities,demand for the same is also on the rise, which means people are moving from old buildings to newer ones causing the rents to drop in the former, said Al Kindi.
Intrestingly, the global slowdown has had its effect on property disputes in the emirate, too.

Al Kindi confirmed the committee receives about 100 cases of rental disputes a week, and up to 30 per cent of the litigants want to get something in writing.

The committee issues 30 verdicts every day.

Currently, the committee is handling about 2,000 rental dispute cases, which is about 30 per cent of the cases handled by the panel prior to the onset of the financial crisis.

The committte has so far managed to amicably settle rental disputes between the lessor and lessee. Earlier this was not the case as the landlord or lessor insisted on increasing rents as they knew no better, he added.

Al Kindi said there is absolutely no conflict because of a decline in rents and the specified decree on rental increase, which stipulates that rents can be increased only every two years on residential properties and every three years for offices, subject to the location and level of construction and type of building.

"The committee has the powers to consider market conditions and specifications of housing as well as the existing contract when deciding on rental disputes.”

"However, we do issue orders for rental increase only between five and 20 per cent, he added. The committee never raises the upper limit [20 per cent] in any dispute even if the owner claims to have incurred huge losses in purchasing land and construction in the current market condition, Al Kindi said.

In case of a disagrement with litigants we are obliged to refer the case to another committee. The latter panel has the right to either uphold the decision of the first committee or modify the verdict.

A dispute is settled within one month, said Al Kindi. "In case the litigants do not attend the session, the committee announces the verdict through newspapers, whererein both disputing parties will sign the documents and the decision is
finalised in a few weeks, he added.

The committee issues its rulings as per the latest law - Act No 1 of 2008, which considers rental value contracts of individual buildings, he said.If the rental value is not added to the property in dispute, the committee will take
the current market value of the property, he added.

The party wishing to amend the rent is obliged by law to inform the other party before a period of not less than 90 days from the expiration of the contract.

But if the tenant shows a history of timely rent payments, the committee allows
him to continue staying even if the other party urges for his eviction, Al
Kindi added.

Currently the real estate market in Dubai is witnessing abundant supply in quantity of residential building but scarcity of quality deals, he said.

Al Kindi urged Dubai Municipality to use the word 'architectural' consultants in the development of specifications and standards of model building.
They should keep in mind the climatic conditions, needs of a modern family when desiginig buildings.

He also urged offices of investment and real estate sectors to pay financial guarantees to landlords [cash or bank guarantees] equivalent to the value of the rent for the next two years at least.

He said in order to ensure the absence of embezzlements in the real estate sector, mortgage loans must be strictly monitored and banks must provide construction loans. Similarly, if both the investor and mortgage broker have no financial guarantees, the landlord has to give the broker his commission and deal directly with the tenant.

Twenty-five members representing sectors such as legal, banking, real estate and industrial are distributed among 12 rental dispute committees.

The committee holds three meetings per day on four days a week from Snday to wednesday, he said.


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