Dubai: A new house rent index that will suggest benchmark rents for all the communities in Dubai, to be published soon by Dubai's Real Estate Regulatory Authority (Rera), is expected to reverse the gains of a seven per cent rent cap and turn the tables against the tenants in favour of the landlords.
The index will have separate prices for studio, one-, two- and three-bedroom apartments and villas in each community that will help landlords and tenants to benchmark their rents against the published rents in case of a dispute. It will also help the Rent Committee to settle the disputes.
"We are looking at a lot of factors. The index is a guideline for new people who are coming to Dubai," Rera chief executive Marwan Bin Galita told the media on Sunday.
It is hoped the pricing index will act as a comprehensive guideline to all tenants and landlords in Dubai. "The index will be introduced when we're confident that it's going to help the market," Bin Galita said.
By 2009, all new properties and rental contracts for commercial and residential units will be incorporated into a full database of rental agreements in Dubai, he said.
The new rent pricing index, designed to ensure that new people moving to Dubai have a clear picture of how much property is in specific areas, will help the market, he said.
Rising rents, jumping between 50 to 100 per cent over the last few years, have prompted Dubai Government to introduce a 15 per cent rent cap in 2005 - which was lowered to seven per cent - to help the emirate's marginalised middle income group.
The rent cap, which managed to stabilise the market to a certain degree, has come under fresh attack with landlords, who were trying innovative ways to bypass it, complaining that they are forced to rent out premises below the market price.
Elaine Jones, chief executive officer of Dubai-based property consultancy group Asteco, said, "It's a huge subject. There is so much disparity in the market now. Some tenants are paying more than double what other tenants are paying within the same building."
Growing fears
Analysts fear the new rent index will be used by the landlords as an excuse to bypass the rent cap. "This will provide another excuse to the landlords to bypass the rent cap," said a property analyst, requesting anonymity. "They have tried all tricks in the past. The rent index will provide the necessary tool for them to try and violate it."
Meanwhile, Bin Galita said there is enough housing supply in the Dubai market but the land is being held by greedy investors and real estate agents.
"There is enough supply in the Dubai market but because of greedy real estate agents or greedy investors, they are keeping the ground," he said.
"New projects are coming so people won't be able to leave their houses empty for a long time once the index is in place," he added.
What do you think of such an index? Do you think it favours landlords? How will it impact the rent cap introduced by RERA? Tell us letter2editor@gulfnews.com or fill in the form bellow to send your comments.
Your comments
A rent index is a very good idea indeed. It will at least have a cap on the rate of increase. But the government should also ensure that the tenants are not forced to pay more on rent than the actual rate fixed. The huge rise in rents has made it very difficult for expats to meet the expenses here in Dubai. Something needs to be done at the earliest to curb this tendency of sudden high increases, even after huge escalation in the number of skyscrapers being built.
Beena
Dubai,UAE
Posted: May 26, 2008, 15:49
There is no point in a discussion. Anyhow, every one is playing the game. The rent is going to go high again. No one is bothered about Middle Class life. The best thing is to get away from this place.
Nanda
Dubai,UAE
Posted: May 26, 2008, 15:46
Rents have been a very major issues for the past 3-5 years in Dubai. Middle income families are having difficulty keeping their feet firm on the ground and it is mainly because of rents, school fees and other basic commodities. Dubai is growing on a large scale and so is the population, but the salary scale for middle and low income families is not growing much, therefore, it is a humble request to the deciding community to look into the issues of importance and decide what is in the best interest of the tenants. If there are not much tenants to occupy, where would the landlords get their income from their investment?
Salem
Dubai,UAE
Posted: May 26, 2008, 15:33
The index should be applicable to buildings built from the present year of its introduction
Sunil
Dubai,UAE
Posted: May 26, 2008, 11:16
I think the index will only favor the landlord. As what the news is telling that landlord will use this as an excuse to avoid rent cap.If this things will happen there will be more problems and more disputes between the tenant and landlord.The rent cap will be useless.
Roberto
Dubai,UAE
Posted: May 26, 2008, 11:15
I guess the tenents are the one who have to suffer. whatever rules come and regulations, the landords have the upper hand.the rents are going higher and higher.....the sufferers are the tenants.the landlords are getting away with everything.
niharika
dubai,UAE
Posted: May 26, 2008, 10:57
It is a good move, atleast expats would know the cost of rent in each community and locate themself with what suits them.
STEPHEN
Abudhabi,UAE
Posted: May 26, 2008, 10:49
What is the problem for having people paying less than others in the same building. This is so strange. all those people are just worried for how they can collect more
Juan
Dubai,UAE
Posted: May 26, 2008, 10:18
Keeping a property empty beyond a certain period should be banned by law. Once the database of the properties and rental agreements is established, it could be watched. But there is chances of fake tenancy agreements to fool the authority as it is not empty,
Musthafa
Dubai,UAE
Posted: May 26, 2008, 09:50
It is a shame when the landlord?s are getting greedier, their greed is going to force out the people that are investing and spending in this country to make it become what it is today. They need to change or Dubai will become a ghost town in 10 years due to high inflation, taxes, rents etc.
Rob
Dubai,UAE
Posted: May 26, 2008, 09:25
It might have been a good idea if most of the property in Dubai was occupied. Dubai is clearly a jungle of high-rise buildings held by investors. If prices continue to escalate without any menaingful reason, I don't see more expatriates coming to the emirate. Ultimately, the market forces will kick in and these prices will have to adjust. If not, then these same investors will be desperate to close their investment positions in a potentially illiquid market. Giving more power to landlords when half the city is unoccupied is just unacceptable.
Hassan A
Abu Dhabi,UAE
Posted: May 26, 2008, 08:50
There is a mistaken view that landlords are being forced to rent their properties at below market price. The actuality is that landlords and real estate companies operate in a cartel-like manner and their concerted behavior amounts to a form of price-fixing.
Shezanne
Dubai,UAE
Posted: May 26, 2008, 08:24
But there should be some governmental control like there was Khalifa Committee in Abu Dhabi, a decade back to control such unimaginable rent hikes. It worked for some time. If the rent is not controlled then, it would be out of reach of common residents who have been here for decades.
Dr Altaf
Sharjah,UAE
Posted: May 26, 2008, 08:05
I think the rent cap should be lowered more to 2%-3% as we are already paying a hefty amount for accomodation.Either All the private comps shuld give an employee Housing allowance approximately 5000dhs per month to survive in this country.
Trupti
Dubai,UAE
Posted: May 26, 2008, 07:57
Index will bring more clarity among tenants and landlords
Subhash
Sharjah,UAE
Posted: May 26, 2008, 06:33
