Little confidence in Dubai's rent plan - survey

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NO TEETH: Dubai's in-coming rental index will fail to stop rising rents, according to an online poll. (Getty Images)

The introduction of a rental index in Dubai will have no effect on curbing the spiralling cost of rents, according to responders of an online survey.   

Almost 45 per cent of those taking part in the Arabian Business poll said the rental index, which will set minimum and maximum rents across the emirate would fail to reign in unscrupulous landlords because the regulator will have no powers to enforce it.

The index which has been drawn up by the Real Estate Regulatory Agency's (RERA), is awaiting approval by the Dubai government and is set to be released at the end of this week, following the announcement of the 2009 rent cap - last year this saw a 5 per cent hold put on increases.

Other results from the poll show that around 39 percent believed the index would stop one-off extortionate rent hikes, but would have little impact on overall rises, while 11 percent thought the move would improve the overall situation as tenants would have more power to challenge unfair hikes.

However, only 5 percent believed it would solve all rental problems.

Commenting on the issue last week, Mohammed Khalifa bin Hammad, director of Rera's real estate relation regulatory said: “The rental index for residential and commercial units is ready and will be launched soon. The regulations for its implementation have been finalised but are awaiting approval from the Ruler's Court."

High rents have long been the bugbear of many residents in Dubai. Experts say the index will give greater transparency to the rental system, helping stamp out cases where tenants are over-charged.

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READERS' COMMENTS

Rent Increase in Dubai
Posted by Debby, Dubai, UAE on Wednesday 21 January 2009 at 16:25 UAE time


Most Companies pay a new Hire approximate salary of AED4,000 of which 50% is listed as Basic, 30% is House Rent and 20% as Travel Allowance. An average studio (not new) today rents out at the inflated annual rent of 45,000AED (compared to AED18,000 of 3 years back) so if no sharing is allowed how are singles to manage? Even those earning a salary of AED10,000 pm and have a family here, half the salary goes on rent and another 30% on children's education...The RERA rent index will only be the last straw on the camels back!

RERA INDEX
Posted by Philip on Tuesday 20 January 2009 at 18:58 UAE time


Mr. Abhay is absolutely correct . The index is a guide based on the extremely inflated and frankly exorbitant rates of the last three years . Rent should be no more than 20% of income for any given bracket. So if a average villa is 300,000 per annum then your income would have to be 1.5 million Dhs. per annum, that"s 125,000 per month. Unrealistic for most people and definitely not the average. As usual in Dubai Landlords want to charge the maximum for everything and pay the least for everything. RERA is a joke as they accept that every landlord in Dubai has dozens of brothers and sisters that they want to have living in their properties.

Index should not consider rent contracts less than 2 years old
Posted by Abhay, Dubai, UAE on Thursday 15 January 2009 at 10:35 UAE time


Am not sure how Rera will calculate the Index but I assume the index will be based on 2008 rentals. Rera should consider rentals of rent contracts which are atleast 3 years old. This is important since this will be the correct indicator of the real rentals. Rental contracts with age of 2 yrs & less should not be considered in the index since these will be the inflated rentals courtesy our greedy landlords and real estate brokers.

I am afraid that Rera is actually working for the landlord & real estate brokers lobby. I am not expecting anything positive from Rera. Lets see how this scene unfolds.

Rents are damaging the country economy
Posted by dude2000, Dubai, UAE on Wednesday 14 January 2009 at 02:54 UAE time

My employer is down sizing the office to a very few people, relocating people to other countries in the region which far less cheaper to live and operate out of it. Reason being the landlord wants to increase the rent by 40% for contract renewal and the HQ is fed up with negotiating artificial prices within an artificial supply / demand market. We relocated people at lower housing allowance to countries in the region and they are managed to get twice bigger accommodation from what they had in Dubai at almost 40% allowance. Would you think people and business will stay? No because everybody wants to join forces and be flexible to survive the downturn in the economy.

I believe the index should be prepared based on actual rents signed (not the asking rent) and should be prepared by a body which sell it to individuals rather than having the government doing it (unless government ensure no one involve in preparing the index don't own or will not a real estate, which is impossible).

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