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Tenancy law to take on rent disputes

Dubai is set to announce a tenancy law that will create a new legal framework to handle disputes between landlords and tenants, a top government official said on Tuesday.

The tenancy law will also redefine the relationship between landlords and tenants, as well as specifying rules on subletting, bachelor accommodation and other "social aspects", UAE daily Gulf News reported.
“All issues related to the rents, tenancy and landlord-tenant disputes will be addressed by the new law,” Mohammad Sultan Thani, assistant director-general of the Dubai Land Department told the newspaper.

The new law is expected to replace the current informal arbitration system used to settle disputes, which is overseen by the Rents Committee.

The paper said Sheikh Mohammed bin Rashid Al-Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has already approved the law and it should be unveiled "soon".

Disputes between landlords and tenants have been on the increase in Dubai due to the high demand for rental accommodation coupled with a severe shortage of supply, which has led to huge increases in the cost of accommodation over the last few years.

To try and stem soaring rentals, the government imposed a 15% rent cap in 2005, which was cut to 7% in 2007 and cut again to 5% this year.

However, Egypt's largest investment bank EFG-Hermes said at the end of last year that the rent cap would be unlikely to dent rental prices and that only an increase in housing supply would bring down the cost of accommodation.

EFG-Hermes predicted prices would begin to fall in 2009, a year later than initially expected because of a delay in the delivery of construction projects.

It said the delays would result in a continuing shortage of residential units and that prices could rise 10-15% in 2007 and 5-10% in 2008.

Gulf News said it was unclear whether the rent cap would re regulated through the new tenancy law.

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