Dubai: Housing costs, along with utility bills, are one of the biggest expenses for residents in the UAE, constituting nearly about 50 per cent of the consumer basket. News about declining rents should therefore provide some cheer in the tenancy market.
However, many tenants have argued that they are not getting any respite from high accommodation expenses, with some landlords still asking for increases amid a downturn.
For tenants who are about to renew their contracts, there are still ways to get the costs lower. Property analysts said that through negotiation, due diligence or research, among others, tenants can shave a few dirhams off their annual rent.
Industry analysts explained that their reports are often based on new rents, hence tenancy contracts for old buildings don’t always reflect the latest trends. “The feedback you’re getting from tenants on increasing rents is most likely because they are on old rents,” Jesse Downs, managing director of Phidar Advisory told Gulf News.
The latest report from REIDIN showed that apartment rents in Dubai dropped by 4.2 per cent in September compared to a year earlier and 0.95 per cent over the preceding month. Villa rents posted bigger declines at 6.8 per cent year-on-year and 1.04 per cent month-on-month.
According to Craig Plumb, head of research at JLL Middle East and North Africa, tenants have bigger chances of benefiting from the downtrend if they look for new properties.
“If tenants wish to benefit from the lower rentals, they will need to be prepared to move to a new villa or apartment, particularly those that have been completed in recent years, that are now offering discount to attract tenants for the first time,” Plumb said.
“Tenants should also enquire what rents landlords are asking for vacant units in their building or compound and then negotiate to pay the same rent as a new tenant, arguing they deserve a loyalty discount.”
For those who are prepared to pay for the moving costs, worth looking into are Dubai Marina, Jumeirah Beach Residence, Silicon Oasis and Arabian Ranches, according to Umer Ali, sales director at Propertytrader.ae.
It’s also a good idea to double check the market value of their residential unit on the rent calculator provided by the Real Estate Regulatory Authority (Rera) office. “This will inform them if their current rent is in line with the market level. Landlords are only allowed to increase rents of existing tenants where they are below the current market level,” said Plumb.
“We have found that just presenting this information back to the landlord is often enough to persuade them to accept the same rent as last year. There should be very few cases where rents have gone up over the past year, so the best the owner can realistically expect is to maintain the rent at the existing level.”
Should negotiations fail, the last recourse would be to file a complaint. “If landlords are not willing (to maintain the rent), then tenants can challenge this in the Rera rental dispute centre, which has found many cases in the favour of tenants,” added Plumb.
Ali noted that the maximum increase allowed by the Rera rent calculator is 20 per cent. “And that is against Rera’s index of rental values – they calculate increases on a sliding scale. A property would need to be over 40 per cent undervalued for a 20 per cent rent increase to be legal.”
“If not able to reach a settlement with the landlord and a tenant has tried every reasonable solution, then they should file an official complaint with the Rent Disputes Settlement Centre at Dubai Land Department’s head office in Deira,” Ali advised.
Tenants have also the right to dispute rent increases if landlords fail to give them a three-month notice. “If you landlord wants to increase your rent, he or she needs to inform you at least three months prior to the lease expiry and the rent change cannot exceed the range set in the Rera rental increase calculator,” said Lukman Hajje of propertyfinder Group.
“There are laws in place that prevent landlords from excessive increases. The rent cap which was introduced in the booming days have been kept in place to prevent unfair rent gouging. The Rent Committee was set up a few years back specifically to hear and quickly process rental disputes. Tenants are well protected and have more rights than in most other markets in the world, including most more mature western markets,” Hajje added.
Hajje also suggested there are good deals to be had for tenants looking for villas in Emirates Hills, where rents fell 18.5 per cent, Dubai Sports City, which saw double digit declines, down by 10.1 per cent. There have also been significant drops in Al Barsha (- 7.3 per cent) and The Meadows (-5.7 per cent).
“Advertised apartment rents have in general dropped even further, but a couple have bucked the trend. Dubai Marina, always the most searched community in the country, saw advertised rents fall 6.3 per cent since January. JLT was also down 3.9 per cent. Big double digit declines were seen in Discovery Gardens (down 18.3 per cent), International City (down 17.5 per cent) Jumeirah Village Circle (down 12.5 per cent) and The Greens (down 12.2 per cent).”
If you opt to stay in the city centre, or places close to Dubai Metro stations, be prepared to get higher rents. In Downtown Dubai, rents were slight up by 1.6 per cent and DIFC by 1.8 per cent, according to Hajje. In Business Bay, rents were flat, while in Dubai Silicon Oasis and International Media Production Zone (IMPZ) saw modest increases of 2.5 per cent. Residential units in Al Furjan also bucked the trend, rising by 12.5 per cent.
Where to get lower rents (% of decline):
Emirates Hills: -18.5 (villa)
Dubai Sports City -10.1 (villa); -3.8 (flat)
Al Barsha -7.3 (villa)
The Meadows -5.7 (villa)
Dubai Marina -6.3
Discovery Gardens -18.3
International City -17.5
Motor City -13.8
Jumeirah Village Circle -12.5
The Greens -12.2