Plan to avoid cost overruns when deciding to rent

Dubai: Since owning a home is not a financially viable option for a majority of residents in the UAE, renting seems to be the only alternative.

If you are currently on a house hunt or considering renting a flat on your own for the first time, it's worthwhile to be aware of the various fees associated with rentals, so you can budget accordingly. Real estate experts gave Gulf News the lowdown on the basic costs:

In Dubai, the start-up fees that are always borne by the tenant are housing fees, utility deposits (Dh1,000 for apartment and Dh2,000 for villa), utility connections fee (Dh100), Ejari registration fee (Dh200), agency fee (5 per cent of the annual rent), deposit (5 to 10 per cent of the annual rent) and housing fee (5 per cent of the yearly rent).

The housing fee, calculated around 5 per cent of the assessed yearly rent, is payable to Dubai Municipality. It is incorporated in the Dewa (Dubai Electricity and Water Authority) bill and payment is spread over 12 months.

The other 5 per cent of the annual rent is payable to the real estate broker. The Ejari fee, required by the Real Estate Regulatory Agency, is paid upon registration of rental agreements.

Michael Michael, director of sales and leasing at Landmark Properties, however clarifies that the security deposit, which is paid by the tenant to the landlord, is refundable at the end of the tenancy contract, provided the property has been turned over in good condition.

Camilla van der Merwe, Asteco's head of operations for sales and leasing in Dubai, says these figures are not hidden costs as they are "quite clear and substantiable".

"These are the occupation costs of renting accommodation and are pretty constant. Replace ‘housing fees' with council tax or rates and then the list is the same as you would see in most countries. The only difference would be that in some markets, these are landlords or owners' expenses and in others, the tenants'," she explains.

Maintenance bill

Van der Merwe says the rents quoted in advertisements often cover maintenance fees, "unless it is specifically mentioned or otherwise negotiated".

"No maintenance is free, someone always pays. If a development is owned and managed by a single owner, then they would provide maintenance services for the building or compound."

"If a unit is a new freehold area of Dubai, then the common area is maintained through the landlord's payment of service charges. Inside the unit is the responsibility of the owner or landlord."

She, however, cautions that an owners' association may restrict a unit's access to common area facilities if the service charges are not paid, so the matter has to be resolved between the landlord and the tenant.

Parastoo, a rental consultant at House Hunters Real Estate, says there are two types of maintenance services.

Major maintenance, which is often borne by the landlord, covers structural, plumbing, electrical or air-conditioning issues.

"Minor maintenance, on the other hand, is often shouldered by the tenant. It might just be changing the tap or lights. But this matter is usually agreed between both parties."