Why are UAE residents paying more rent than a year ago?

Yallacompare's findings raise some surprising statistics about our rental habits
Why are UAE residents paying more rent than a year ago?
More than one in five UAE residents are paying more in rent for the same property in the second quarter of 2018 compared to the year-earlier period, according to a survey by yallacompare, the Middle East comparison site. Jonathan Rawling, chief financial officer of Yallacompare, explains why.
By Jeremy Lawrence
Thu 06 Sep 2018 08:07 AM

More than one in five UAE residents are paying more in rent for the same property in the second quarter of 2018 compared to the year-earlier period, according to a survey by yallacompare, the Middle East comparison site. Jonathan Rawling, chief financial officer of Yallacompare, explains why. 

What are the bottom line statistics?

Yallacompare’s Consumer Confidence Index Q2 polled 1,347 UAE residents on the state of their finances. It found that 38.6 percent of residents are paying more rent, with 21 percent paying more for same place.

How many people were paying the same amount or less?

19.8 percent are paying less to rent out the same property now than they were last year, while 34.9 percent are paying the same.

Remind us why is that such a surprise?

Recent studies suggest that apartment rents in Dubai and Abu Dhabi fell in Q2 by as much as four percent compared to Q1. And according to Cavendish Maxwell, the vast majority of agents expect rents to decrease by a further five percent in Q3.

Why the discrepancy between the market and what people are paying?

Some people are taking advantage of good deals to upgrade, with 10 percent of residents moving to a bigger home. But the majority (66.5 percent) of UAE residents are still in the same homes as they were 12 months ago. More broadly, rent surveys are based on new listings, which doesn’t take in to account the people who aren’t moving, unlike this survey.

So why are over a fifth of residents paying more to stay in their current home?

People perhaps don’t realise that they are in a good position to negotiate, given the market conditions. And if their landlord tries to raise the rent above RERA’s (Real Estate Regulatory Agency) index area average, they can file a case with RERA. And RERA is very good – it doesn’t automatically take the landlord’s side.

However, this is till perceived as a hassle by many residents, plus they have to pay five percent of the rental contract value to raise the case. And then you think about the cost of moving instead, which people don’t want to do because it is a hassle and also costs money, so they often elect just to pay more and stay where they are.

Are there other reasons for landlords raising rents?

The landlord is still within their rights to raise rents if your home is at least 10 percent undervalued in your area according to the RERA index. However, Rawling notes that the landlord again has to give at least 90 days’ notice to do this. However this will mostly apply to people who have been in their home a long time and are paying legacy rents.

What other rules should tenants be aware of?

If you either you or your landlord wants to negotiate the rental price this has to be done prior to 90 days before the end of your contract. As soon as you get to day 89 the contract will automatically renew at its current level.

What’s the advice to tenants?

“Simply put, consumers may get a better deal if they move but are generally not paying less rent for the same property. We’d recommend trying to negotiate lower rental rates wherever possible.

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Last Updated: Thu 06 Sep 2018 09:19 AM GST

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