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Thu 2 May 2019 02:17 PM

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Dubai said to mull plan to freeze rents for 3 years

Dubai Land Department is reportedly mulling a proposal to block rent increases for three years after the signing of a lease agreement

Dubai said to mull plan to freeze rents for 3 years
According to a recent report by ValuStrat, rents in Dubai in the first quarter of 2019 have declined by 23.5 percent since 2014, and softened by 1.9 percent quarterly and 9 percent annually.

Dubai Land Department is reportedly mulling a proposal to block rent increases for three years after the signing of a lease agreement between landlord and tenant.

If made official, Dubai would follow Sharjah which currently has a three-year cut-off on new contracts when it comes to rental increases.

According to a recent report by ValuStrat, rents in Dubai in the first quarter of 2019 have declined by 23.5 percent since 2014, and softened by 1.9 percent quarterly and 9 percent annually.

“The Dispute Resolution Committee is studying such a proposal, but no decision has been taken on the ‘if and when’ to roll it out,” a DLD spokesperson was quoted as saying by local media.

“Right now, all rental decisions are based on the Dubai Rent Index, and it will continue to be so until the three-year no-hike proposal is cleared,” the spokesperson added.

Gulf News also reported that it isn't clear whether the proposal will cover residential properties only or could include other real estate categories such as retail.

As per the Dubai Rent Index, a landlord can only seek increases within carefully set parameters.

If the current rent is up to 25 percent below the average for a similar property in the same neighbourhood, the landlord cannot increase the rent.

But if the rent is 25-35 per cent lower than the average, he can see a 5 percent increase, and 10 percent if the gap is as wide as 36-45 per cent.