A tenant must always view the property with a rational assessment of living there, factoring in all the associated costs of moving to a new house. Here’s a checklist of the costs to consider before and after moving into a rental house.
Before moving in
This is the time when you need to assess the condition of the asset, amenities and the financials necessary.
The rent: The rent is paid as post-dated cheques. “The number of cheques is becoming more flexible as landlords are becoming more competitive,” says Zarah Evans, managing partner of Exclusive Links Real Estate. “Also, it’s important to note that UAE cheques cannot be cancelled, and dishonoured cheques can invoke a legal action.”
Security deposit: To secure a property and take it off the market, a 5 per cent non-refundable deposit is collected. “On signing the tenancy agreement, this same payment becomes a refundable security deposit,” says Evans. The deposit, paid in one cheque, amounts to 5 per cent of the annual rent for an unfurnished property or 10 per cent for furnished property. “This cheque is cashed and will be returned on vacating the property, once all utility bills have been settled by the outgoing tenant. Also, the condition of the property should be left in acceptable condition. The changes you made to the property with the approval of the landlord should also be put right before leaving. This includes painting the property if this is a term of the tenancy.”
Put in the agreement all the details of the security deposit and get a receipt upon payment. “Specify that it shall be refunded to the tenant within how many days after the end of tenancy, moving out, settlement of bills, delivery of the property to the landlord, and cancellation of Ejari,” says Nazish Khan, COO of Fidu Properties.
Broker’s fee: When you have used a brokerage’s assistance, a real estate brokerage fee of 5 per cent of the annual rent is payable to the agency.
Ejari: Tenancy contracts are registered via the Ejari system, says Evans. Although this is the landlord’s responsibility, it is usually the tenant who pays for the costs unless otherwise agreed with the landlord. The fee is Dh220 for new or renewal of residential application.
Move-in permit: A move-in permit may be required by a property manager or owners’ association. To apply for a move-in permit, the tenant will need the tenancy and Ejari documents. “After that, the owners’ association/community management usually requires confirmation from the landlord via email,” says Khan.
Evans explains the permit helps ensure minimal disruptions to other tenants and a smooth relocation. “It will include access to the service lifts in the towers and parking closer to the lifts/building,” she says. “With gated communities, confirm if a move-in permit is required to allow removal trucks in. Your leasing agent should be able to guide you and coordinate with the landlord/building manager. A move-out permit is also required at the end of your tenancy to vacate the property/building.”
Utility deposits: There are refundable security deposits to utility providers and for ongoing consumption charges. Evans says the Dubai Electricity and Water Authority (Dewa) will charge a one-time amount of Dh2,140 for an apartment and Dh4,140 for a villa. This will be refunded when you move out, but you will need to present an original deposit receipt. You also need to pay for telecommunication/internet connection and personal relocation costs. “All costs are now all subject to 5 per cent VAT,” says Evans.
After moving in
Congratulations! By now you have paid all major expenses and moved into your home. Now you will need to budget for ongoing costs.
Home decorations: A new home also needs several essential items, including furniture and finishing. The cost of home renovation widely varies based on individual requirements and preferences.
Maintenance: Major maintenance and service charges and community fees are usually covered by the landlord, says Khan. Minor maintenance (usually below Dh500) is payable by the tenant. Damage due to misuse of the property is also payable by the tenant.
Housing fees: The tenant also needs to pay a Dubai Municipality fee, which is 5 per cent of the yearly rent. It is included in the Dewa bill and divided into 12 monthly instalments.
Community fees/rules: Each community has its own rules and regulations regarding amenities, timings, parking spaces and pets. “Also, ask if the property uses central or ducted or split AC, and if any deposits are payable for cooling services,” says Khan. “Make sure outstanding bills and previous Ejari have been cancelled.”
Questions to ask a real estate agent
How long have you been in the business?
Ask about their previous experience, both within the UAE and abroad. Most of all, trust your instincts; first impressions are often correct so don’t be afraid to keep looking for someone else if you have any reservations.
Which area do you specialise?
Many agents concentrate on certain areas so be aware of this when exploring the best location. But also make sure you are not influenced by their particular preference for one location over another.
Can any of your previous clients recommend you?
Word of mouth is a powerful tool when vouching for someone’s professional skills. Ask your real estate agent for references from their previous clients. A good agent will have a handful of past clients that they will not hesitate to put you in touch with.
Source: Samer Zabian, director, residential and commercial property, Dubai Festival City