|
Dubai: A "voluntary" rent cap could allow landlords to take advantage of the situation and raise rents rampantly, analysts say.
Dubai's rent cap could become voluntary, allowing landlords to adjust rents in line with market rates, according to a leading government official.
Marwan Bin Ghalita, CEO of Dubai's property market regulator, the Real Estate Regulatory Agency (Rera), said the cap on price increases for renewed rents should be renewed next year at a lower level than the current seven per cent.
But he stressed that if landlords of residential or commercial property feel the cap is keeping rents well below market prices, they should be able to argue for an adjustment based on a benchmark rate recommended by Rera.
Bin Ghalita said the system would reduce occasions where landlords turf out tenants on flimsy excuses to avoid keeping renewed rents within the rent cap.
"We will have a rental cap, but allow the landlord to adjust the rent based on the market value," he told Gulf News at the Cityscape. "We want the market to be regulated, but also left to supply and demand forces."
Registration
Under plans first reported by Gulf News, Rera will register all rental contracts in Dubai, allowing it to build up an annually produced rental price index for each community in the emirate - a benchmark for rental rates.
Since the rent cap was first introduced in Dubai, numerous landlords have refused to renew rental agreements on the grounds that properties needed to be decorated or were required for relations.
Many residents argued that landlords in fact wanted to avoid the rental cap for renewed contracts and subsequently re-leased properties to new tenants on a higher rate.
"Both parties should be happy. If you are a tenant staying in a property which is under-priced, there should be a mechanism to resolve this. At the moment, landlords feel they have one option, to kick the tenant out of the property and re-rent it. We want to stop this," Bin Ghalita said.
He added that landlords will still not be able to increase rents in the second year of a contract. If landlords feel the rent cap is keeping prices below standard market rates beyond then, they will be able to go before the Rent Committee to argue their case.
According to a report released by Colliers International, Dubai's rent cap will be a short term measure. It argued that the significant residential product set to hit the market will curtail rising rents.
Your comments
Everything is in favour of the landlords.The authorities fail to realise we are talking about increase in rent from an already overpriced market.
Nobody is trying to cut rents. Inflation is in double digits.
Anthony
Dubai,UAE
Posted: October 17, 2007, 10:30
It looks to me that there can be no respite for expatriates living on leased properties in this country. People are still just reeling out of the previous rental hikes and expecting that there will be some normalcy in their lives now. But it looks like they will finally just have to stop dreaming of a better future and face the reality.
Femida
Dubai,UAE
Posted: October 17, 2007, 10:01
Market Rates? Who will decide the so called "Market Rates"?
Abraham
Dubai,UAE
Posted: October 17, 2007, 09:42
Mr Ghalita's statement sounds like a win win situation for both tenants and landowners but it is not. If the rule of law keep on changing every year or so then there will never be any stability in the market. If the cap is implemented for a time then it should be honoured.
Ali
Dubai,UAE
Posted: October 17, 2007, 08:47
Allowing landlords to increase rent at their discretion as per the market rates and so-called "Rent Cap" are contradictory to each other. The "Rent Cap" will be then ineffective.
Munawwar
Dubai,UAE
Posted: October 17, 2007, 08:42
The rent has already been increased so much during the last couple of years that they should not even think of increasing the rent for at least two years.
Fasihullah
Dubai,UAE
Posted: October 17, 2007, 08:29
RERA talks about apartments, how about villas shared by families? Is the law same for both.
Haja
Dubai,UAE
Posted: October 17, 2007, 08:16
The final remark about Colliers is the only really accurate piece of analysis in this article. I have no doubt that the Dubai's landlords, who have somehow tripled Dubai's rents in under five years, is in for a shock when they learn that "market forces" are a fickle master to serve.
Alexis
London,Great Britain
Posted: October 17, 2007, 08:11
It is very necessary to reduce the rent, because half of our salaries goes into paying rent.
Suni
Sharjah,UAE
Posted: October 17, 2007, 08:08
It is really a shocking decision on the part of the authorities to scrap the rent cap rule. It will again throw the people to the mercy of unscrupulous landlords.
We were all expecting a fair decision from the part of RERA, by lowering the rent cap. As such we are finding difficulty in meeting two ends with the raising cost of living and stagnant salary structure. I am sure that all the landlords will take advantage of this new rule and increase the rents. This decision from RERA is really a disaster for salaried people like me. We are left with no other option than leaving this country. I think that is what the authorities want. Indirectly they are implementing the rule whereby people do not stay here for long periods.
Tathri
Dubai,UAE
Posted: October 17, 2007, 08:05
We have seen even 50 per cent to 100 per cent rent increases by the landlords. So how can a voluntary rent cap be effective when the rent cap was placed to control these rent increases in the first place?
Amir
Dubai,UAE
Posted: October 17, 2007, 08:04
Dear Gulf News, please stop asking people ( have your say ), simply advice us what to do!! In such situations your role must be to advise people what to do, how to act and how to survive!
Reem
Dubai,UAE
Posted: October 17, 2007, 02:30
CEO of RERA is saying: rent will be controlled, but not controlled. I am confused.
Naeem
Dubai,UAE
Posted: October 17, 2007, 00:43
Send us your comments
TERMS AND CONDITIONS
Gulf News may edit comments for length and clarity but will not change the tone of the message. Comments will only be accepted all if fields (including name) are filled correctly and the message isn't abusive, defamatory or offensive. The Gulf News website will only print your first name along with your comment. Please state in the message if you wish to remain anonymous. All comments sent may be forwarded for use in the Gulf News newspaper.
|
