Many Dubai residents are taking full advantage of the decline in rental rates. Research from ValuStrat has suggested that rental falls will continue in most areas of Dubai, albeit at a slowing rate of decline. Areas of significant new supply may witness sharper continued drops, as many landlords compete for tenants. So whether you’re planning to move (either to upgrade or to a cheaper home) or save money by renegotiating your current rent with your landlord, it’s the ideal time to do so. But it isn’t always easy to figure out the most suitable option if you intend to save money on your annual rent. You have to consider a number of factors and crunch some numbers to make an informed decision.
According to Bana Shomali, CEO and co-founder of ServiceMarket, it is always advisable to compare savings on rent to cost of moving. If you’re living in one of the expensive areas in Dubai and are willing to move to a more affordable one, then you might be able to save more by moving than renegotiating your existing rental rate.
“Start the process by considering the cost of moving, which would depend on the amount of items in your home and the type of moving service you choose,” says Shomali. “For example, the average cost of moving your belongings to a new home ranges from Dh1,000-Dh2,000 for one-bedroom apartments. You can save a significant amount of money by doing some comparison shopping from multiple movers and packers in Dubai.” Tenants also typically have to pay 5 per cent of the rent as a deposit. “This will be increased to 10 per cent if the property is furnished,” says Lewis Allsopp, Allsopp & Allsopp CEO. “Deposits will be returned to you if the property has been well maintained. The agency fee would also equate to 5 per cent of the rent and often a minimum of Dh5,000.”
It is also essential to know maintenance issues beforehand. “Any major maintenance required, such as electrical, mechanical and significant air conditioning, is the responsibility of the landlord,” says Allsopp. “As a rule of thumb, any maintenance costing Dh500 and under will be payable by you and anything from Dh500 will be the responsibility of the landlord.”
You will also have to register your tenancy contract with the Ejari system, which would cost Dh215. “When you get a new Dewa account, you’ll have to pay a connection fee of around Dh110 for small meters and a security deposit of Dh2,000 for an apartment,” says Shomali. “You might have to face other costs such as buying new furniture, painting, cleaning, renovations, etc.”
Step 2: Calculate savings on rent over the next two years
You can compare the average rent range for your area with that of other areas using the Rera rental increase calculator. Calculate the difference in annual rent, and then find out how much you’ll save over the next two years.
Step 3: Compare
Once you’ve added all the costs mentioned in Step 1, and found out how much you can save on rent by moving, compare the two. If the amount you’ll save is larger than the cost of moving, then it makes financial sense to move. Otherwise, it’s e better to stay put.
If you have decided to move to a cheaper home and are in the process of negotiating the rental rate, see if your landlord is willing to discuss other options like more parking spaces, waiving the rent for one or two months, increasing the number of cheques to pay the annual rent, and free home maintenance.
So, when is it better to regoniate? If you’re happy with your current home and your landlord is willing to renegotiate the rent to your satisfaction, then obviously it makes more sense to stay in the property instead of moving, which can be a costly and time-consuming process.