Reconciling interests of landlords and tenants

The relationship between landlords and tenants is historically not an easy one.

Each party requires the other to survive, but their goals often directly contradict each other.

The tenant wants the cheapest rates, while the landlord wants to charge as much as possible for the property in order to make back their original stake, or use the rental from one property to finance another.

Another frequent issue of contention between landlords and tenants is the maintenance of a property and its facilities. Tenants may feel that landlords are quick enough to cash rent cheques but move far slower when it comes to fixing problems, while landlords may be dissatisfied with how a tenant is treating a property purchased as an asset or frustrated by unreliable payers.

Sometimes these issues spiral out of control, breeding bad blood on both sides and creating an atmosphere of suspicion and distrust.

Adding another layer is the fact that the face of the Dubai rental market is changing as a result of the credit crunch. As workers are forced to leave the country, so more properties are becoming available and tenants more powerful.

The Real Estate Regulatory Authority (Rera) recently announced that contracts signed in 2008 cannot be raised in 2009 as long as rates is equal to or as much as 25 per cent below the market rate as listed in the new rental index.

The development effectively puts a freeze on rents that fall within a certain bracket, while other landlords, whose current charges are 25 per cent lower than the area index, could technically hike rents by the same percentage.

For years the rental market in the UAE has favoured landlords, who could charge what they wanted, often resulting in prohibitive, one-off payments that cripple workers before they even get started.

But post crunch, when tenants believe rents should be aping sale prices and coming down, renters are far less likely to accept things like single-cheque payments or badly-maintained buildings and facilities.

And now, as the financial implications of having empty properties begins to hit landlords harder than ever in the pocket the emphasis will be on retaining good tenants for long-term rentals rather than finding high-paying short-term renters for the quick-flip market.

One way to add value is to have a third party to act as a go-between in the tenant/landlord relationship. Property management can take many forms, but historically the most frequently-used is a simple "Let Only" arrangement in which the real estate company brings the tenant and landlord together, oversees the signing of the lease, takes a commission and then walks away, leaving all future dealings between landlord and tenant to fate.

Ryan Mahoney is Managing Director for Better Homes LLC.