UAE | Housing & Property

Agents ignore Rera index, charge higher rents

Rera official says no penalty against landlords hiking rents beyond index average, while industry sources say index only applies to leased units

  • By Jay B. Hilotin, Chief Reporter, XPRESS
  • Published: 21:45 May 22, 2013
  • XPRESS

  • Image Credit: Gulf News Archives
  • Big jump: In many areas across Dubai the asking rate is much higher than Rera index average, leaving residents confused

DUBAI: Owners and real estate agents are asking up to 50 per cent more than the average updated rent index in Dubai, an XPRESS survey has found.

Based on a listing of apartments and villas on property classifieds, asking prices have spiked considerably compared to the index that was updated in April.

For example, while the average index rate for a two-bedroom unit in Dubai Marina is Dh120,000, an advertisement for a unit in Marina’s Quays West tower is quoted at Dh175,000, a 45-per cent increase. A four-bedroom apartment in JBR has an index average rent of Dh200,000, but some owners are asking for Dh300,000, a 50-per cent jump.

The Real Estate Regulatory Agency (Rera) Index, first used in 2009, is a sliding rule, updated frequently, that prevents exorbitant rent increases.

many factors at play

A number of factors are at play according to a broker. Mohammad Kazerouni, who has been in the real estate industry for 10 years, said: “It’s demand driven, an unintended outcome of the Arab Spring and UN sanctions -- there’s a massive movement of business from Egypt, Syria and even Iran to Dubai. These companies bring in people who need both office and living space.”

Kazerouni added more multinational companies, schools as well as manufacturing facilities are coming up in Dubai. “I had people calling today [Monday] looking for over 100 units as school staff accommodation,” he said.

He reckons the index works fine and protects existing tenants, but not new renters.

“It [rent index] applies to units already rented out. If you have a tenant, you can’t raise more than the allowed rate,” said Kazerouni.

Pavan, a real estate agent, said that high rents affect fresh renters or those upgrading to bigger units. “If your apartment is empty, you don’t have to follow the index. You can rent based on your desired rate. If there are takers, good for you,” said Pavan, who has been in the real estate industry for six years.

“There’s nothing wrong with the index. It goes by averages. But since last year we’ve seen a 20 to 25 per cent increase in rents. At the same time, buying and selling of property is up 20 per cent,” he added.

Laura Choueri, managing partner of Choueri Real Estate, said: “Prices change depending on market conditions. Higher rents are more likely to apply to first-time renters.”

INDEX NIXED

While the index regulates the realty market, some owners and real estate agents claim it is outdated, and does not reflect market realities. A senior official at the Dubai Land Department (DLD) said this isn’t true. Mohammad Khalifa Bin Hammad, Head of Real Estate Relations Management, Rera, the regulatory arm of DLD, said: “The rental index is available on the DLD website, and it is regularly updated on average three times a year, around every four months.”

“The index is updated through rental data collection from several sources. These include leases recorded at the department, field surveys and follow-up of units available for rent through billboards, newspapers and websites. These are also based on periodic meetings with real estate companies and landlords during which data is collected, compared and studied continuously to identify the variables and factors in rental values. We prepare reports to update the index periodically.”

He said landlords will not be penalised for raising rents beyond the index, but tenants can refer to it if they want to dispute the increase. “There are no financial penalties [against owners], but if the owner raises the rent more than the planned increase and the tenant doesn’t want to pay, the tenant has the right to file a complaint against the owner with the Rent Committee of Dubai Municipality. The committee will judge between them,” he said.

RENT INDEX

As per Law No. 2 of 2011, rents can be raised from five per cent to 20 per cent based on the difference between existing rent for a property against the average rent of a similar property in the same area.

Comments (12)

Your comment
  1. Added 12:59 May 23, 2013

    Sudden increase in rent has disturbed our life and budget. No prior notice was given by my landlord for increase in rent. Is there any rule and regulation for increasing rent and staying in villa. Any time any month he will come and ask for rent hike. Can anybody tell me were we can complain for this. As staying in villa we dont have any contract with landlord so he charges whatever he wants. So please let me know the right place to complain for this.

    Lodhi Azmatullah, Dubai, United Arab Emirates

  2. Added 12:38 May 23, 2013

    Law protects only existing tenants, what about other dubai residents willing to rent a flat? What about those who are living on their salary? Come on guys do not be so greedy, do not lose your human values!

    upset, dxb, United Arab Emirates

  3. Added 10:18 May 23, 2013

    Dubai Properties in Al Khail Gate they increase the price from 41K to 50K & Some 55k which is 35% more .

    Babu, Dubai, United Arab Emirates

  4. Added 09:44 May 23, 2013

    The RERA index was brought in with some fanfare, as if that would enable tenants to pay a reasonable rent in a given area. However if landlords can continue to do what they want, what purpose is served of the RERA index? As usual the tenants have to bite the bullet and take all the increases, not to mention other charges like housing tax and utilities related extraneous charges. Salaries are not being increased with any index in this country. On top of it there are restrictions about family visas. Challenging times ahead for many expats now.

    R.Vasudevan, Dubai, United Arab Emirates

  5. Added 09:42 May 23, 2013

    again , I have commented on similar articles before , the key is to regulate the fees for agents not to be based on Percentage but a fixed fee for preparing the contract documents and so , say 250 dhs , ... only if the client goes to the agent , and signs an agreement with him to do a search on his behalf , and then show him a short list that matches what he is looking for, and he agrees to rent one of this, the agent should recieve certain agreed fees for his efforts ... The other thing, Landlords are going to many tricks to vacate the tenants , if not after the first year after the second so they can get another tenant for higher rent , but it is the agents more than the landlords who put efforts to make the tenant vacate, as their commision recieved on the first year is no longer coming from this particular property ... it is in their favour to kick the tenant out , get another one for the sake of another commission . Tricks include , Landlord giving 12 months notice becuase he needs the house , ... Landlord hsas sold the property ... Landlord needs to do manjor change in the interiors of the flat ... etc .... the 12 months rule was always subject to a condition that the landlord then cannot offer the property for rent for at least 2 years .... how ever recent event with a relative of mine , who called RERA to enquire , he received a response from a lady that regardless the reason , if a 12 months notice is served , he has to vacate .... WHY Don't RERA , put the clear conditions in BIG font in teh papers for all public to know their rights ?? and kill this issue

    AZH, Dubai, United Arab Emirates

  6. Added 08:43 May 23, 2013

    The fact of the matter is that agents are flouting the regulations as there is no monitoring; Despite what is mentiioned, these real estate agents resort to unscrupulous means to get rid of tenants by holding the security deposit as ransom.

    Manoj, Dubai, United Arab Emirates

  7. Added 08:19 May 23, 2013

    One assumes the RERA index is like a dog with No Teeth, that if you choose to you can just ignore without any recourse ...........

    ametis, Dubai, United Arab Emirates

  8. Added 07:26 May 23, 2013

    Its not a good sign, unless rules or not in place, we may need to face one more bubble, which will be very hard. The way rent is project is not aceptable.

    Shareen, Dubai, United Arab Emirates

  9. Added 07:22 May 23, 2013

    Rent prices have spiked too fast. This type of increase is not sustainable. I recently rented a property and was under pressure to make a quick decision as the rent was increasing week on week. Are we back to this?

    Fadi, Dubai, United Arab Emirates

  10. Added 07:14 May 23, 2013

    While fixing the rent for an area, factors like age of the building, car parking, lift availability for building having more than two floors, maintanance provided by the landlord etc. are not considered.

    ks, Dubai, United Arab Emirates

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