Rera rent index updated every four months
Contrary to the believe that the Real Estate Regulatory Agency’s (Rera) rent index is updated quarterly or half yearly, the agency has said the index, which has now become the main reference to determine the average rent in Dubai, is updated every four months and till date 220,000 contracts have been registered through the Ejari, e-registration portal.
“The index is renewed three times a year i.e. every four months. Around 220,000 contracts have been registered in the Ejari system so far,” Mohammed Khalifa Bin Hammad, Head of Real Estate Relations Management Department, Real Estate Regulatory Agency, told Emirates 24|7.
He added that any changes in the index is based on one of the following: Price data provided by the Ejari system, agency surveys, regular meetings and periodicals of real estate companies and researching media tools.
Rera made it compulsory for all rental/lease contracts in Dubai to be registered on Ejari in March 2010, making effective the provisions of Law No.26 of 2007 Regulating the Relationship between Tenants and Landlords in Dubai that requires all individuals and companies acting as landlords to register tenancy agreements.
Asked if the index needs to be updated every quarter, Charles Neil, Chief Executive Officer, Landmark Properties, said: “The more frequently it could be updated the better, but it would require a lot of resources from both Rera and the brokerages that provide data to do so more frequently under the present arrangements. The best way will be through the Ejari system as once all the properties being leased are entered on to the system, compiling indexes would be very straightforward to do.”
Neil believes the “market “ will drive the Ejari system forward as tenants will see the benefits of only leasing properties that are registered on the Ejari system as the law protects their rights and obliges the landlord to provide the tenant with maintenance.
“It also protects the tenants with their security deposits. It will soon become very risky for tenants to lease a property that is not registered on Ejari , as the tenants could find that they might not be able to connect Dewa, du or etisalat , and the landlord could face up to a Dh50,000 fine.”
Richard Paul, Associate Director, Cluttons, said: "We do not think that updating it by a month earlier will have any effect at all, the prices are not changing that radically. Rera uses its own data as they keep databases of all sales transactions, we have sales and leasing trended data which is available either through purchased reports if in depth information is required or via the Bloomberg site that offers leasing prices in certain quarters."
Last week, real estate experts told this website that a number of landlords and agents were still not registering contracts on Ejari.
On January 10, the government issued a decree capping the increase in property rents in the emirate. Article 2 of the decree endorsed Rera's rent index as the main reference to determine the average rent in the emirate.
According to the decree:
If the rent is 26 per cent to 35 per cent less than the average rent for a similar property, the maximum increase shall be equivalent to 5 per cent of rent value.
If the rent is 36 per cent to 45 per cent less than the average rent for a similar property, the maximum increase shall be equivalent to 10 per cent of rent value.
If the rent is 46 per cent to 55 per cent less than the average rent for a similar property, the maximum increase shall be equivalent to 15 per cent of rent value.
If the rent is 56 per cent to 65 per cent less than the average rent for a similar property, the maximum increase shall be equivalent to 20 per cent of rent value.
A notice on Rera website still urges landlords and real estate leasing and management companies to register rental contracts on the Ejari or face penalties for non-compliance.
In April 2010, Bin Hammad told this website that the rental database that will become available through Ejari will inevitably be utilised by the government and the private sector. A Dh160 fee is chargeable to register a rental/lease agreement with Ejari, which is payable by either party to the agreement.
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