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7% Rent Cap


sage & onion From Gulf News; Dubai: The Dubai government has capped the annual rent increase at a maximum of seven per cent on all rental properties as of January 1. His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, issued a decree yesterday saying the rent increase will not exceed seven per cent of the annual rent of the property, WAM reported. Dubai was the first emirate in the UAE to introduce a rent cap in November 2005, when Shaikh Mohammad issued a decree capping the increase at a maximum 15 per cent of the annual rent. That decree ended on December 31. At least this is good news for the New Year. What are your comments?
devilsdiciple WOOOOO HOOOOOOOO!!!!!!! :thumbleft: :cheers: :hello1: scot1870 Good news, even if it's a little late in coming. Market pressures will probably ease rents this year anyway, but it stops prices getting out of control in popular areas. Now all they need to do is have a tough system on landlords trying to avoid the system and all is sorted. kanelli Hubby just called me and told me the news! I think it is great that the rents will be capped at 7%. There are a lot of unhappy landlords today. :lol: jabbajabba It is great news - but without wanting to put a downer on things. That means all property will rise by 7% still? sage & onion
Not necessarily, if you are already in a property and your rent was raised during 2006, then they cannot raise it at all within 2007. The only time control is lost will be when the property is actually vacated. kanelli No, not necessarily. At the moment it has been increasing at about 40% since last year. Those who had enough documentation could take their landlord to court to get the new contract set at the 15% (and now 7%) rental increase cap. It is the people just moving into new places that have the problem because the rental amounts are higher. For example, some people have renewed for a 2 bedroom villa at 15% increase for about 95-98,000 AED, but new people moving into a villa for the first time have to pay 130,000 AED for the same villa at the moment, because the landlords increased the rents as much as they wanted after their tenants moved out. So basically, you can only take advantage of the rent cap in subsequent years of living in the same place. This is why landlord are so busy trying to evict people - so they can raise the rents in excess of 40%. Having said this, lots of new apartments and villas are coming onto the market soon, so that could drive rents down as landlords fight to get people to move into their places since there will be so much available and they don't want their apartments and villas sitting empty. This could drive rental prices down. I personally think only apartment rents will come down, not villas. MaaaD
+1 scot1870
Yup, expect apartments to be the main driver of the decrease. Villas will follow at a slower rate only as people realise they could have a 2 bed villa or a bigger 3 bed apartment at the same price and move. There are some more villa complexes in the pipeline but they won't be as quick or as numerous to make too much of a difference, rather just soak up the general population increases. zam A very good rule for the start of the year :P :P :P

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gtmash Hehe, people sem to forget that rents will still RISE either way, with no annual 7% increase in salary. And there is a lot of talk about tons of new property coming online. What's out there besides International City that is affordable and coming online this year? The overpriced cubicles at Marina? Palkid7
+1 Chocoholic Also another issue which we've just run into. The lease ran out on the 31st December, so of course all the contracts were resigned and everything before that date, with the 15% increase. I doubt very much that any landlord will go back and redo the contract according to the new rates. sage & onion
Surely though this would be an issue for the Dubai Municipality Rent Committee. Chocoholic Yeah, if you've got a spare 7,000Dhs to take your case to them. Not worth it. Concord
if you win your case (as you would) the money is refunded. Don't give in. jabbajabba gtmash has hit the nail on the head - its still another 7% increase against a static salary for most. I am probably about to steer things off-topic , but where is the next new Dubai then for a decent salary and a low living price? As i seem to have totally missed the boat turning up here at the end of 2006 :oops: kanelli We've been to the rent committee and it was excellent. Our landlord lost the case in 5 minutes flat. kanelli
Didn't the the 15% still apply up to Dec 31st?
fayz
If you read the newspaper articles, it seems there is a clause for housing where the majority of the period of rent is 2007, I think Choco has a good chance at getting the increase reduced to 7% should she wish to follow up.
Chocs, check out today's Emirates Today and stick it to the man. Good luck. Chocoholic Yeah, we're going to do that. Our landlord has always been quite reasonable, particularly if you make the effort to go and talk to him in person. Concord
As I read it, If your lease was signed in 2006 your rent increase for 2007 should be "zero" (not 7%). The reasons being, I believe, is to level it off to 7.5% over 2 years (as most likely your 2006 rent went up at least 15%). I will certainly fight for "zero" increase - it should be fun (real word "fun" not censorhip). kanelli Important points from the Gulf News article yesterday about the rent cap.
The new rent cap rule on properties announced on Monday came into effect from January 1.
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Mohammad Ahmad Al Shaikh, Secretary-General of the Committee, said the rent committee takes action on rent increase issues only if a tenant formally files a complaint with the rent committee.
"We cannot do anything whatsoever if both landlords and tenants agree on the rent increase," he said.
He advised tenants not to hesitate to come to the rent committee if they have any complaint.
The Dubai Rent Committee's office is located on the ground floor of the Dubai Municipality headquarters on Baniyas Road. It's telephone numbers are: 04-2232766 and 04-2215555.
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So, this means that if the contract was agreed on and signed by both tenant and landlord during 2006 and according to the 15% cap for 2006, the committee will likely not allow a re-negotiation of the price. The only thing that could have been done was to wait to sign the contract until after Jan. 1, then you could ask the landlord to renegotiate or take him/her to the rent committee with the unsigned contract, because it then shows you did not agree to the 15%. You'd be risking that the committee would be holding the contract to the 2006 dates and rent cap, but then they might find in your favour and apply the 2007 rent cap. You could call and ask for advice from the committee office (if they will give it without you forking over 7,000 AED) or a lawyer who has been dealing with rent committee issues for clients (will definitely cost you money). sage & onion It certainly looks like you don't have a case if you have negotiated your contract and signed it before 01/01/07. weary_heart My tenancy contract is soon to expire (Jan 31). This is really such a great news. woohoo! Since my landlord increased my rent 15% last year - therefore based on the rule - I can have the same rent for this year!!! As Concord said - Im gonna fight for 0% increase. It will definitely be fun haha Cant imagine myself again in my real estate's office. kanelli And don't forget people, you are not obligated to pay any fees to real estate agents for renewing a rental contract for the same property. Sometimes they try to charge the tenant around 2.5% of the rental amount just to make the same contract as last year with a change in dates and rent figure. If the landlord hired the estate agent for looking after the contract and the property, then the landlord pays, not you. Hold your ground! There is mention of this in the Ask the Law column of Gulf News, but I can't seem to find it now... Jeevan hopefully the landlords follow the cap rules . even with this the rents are on a highrer side with the salary staying the same for most of the people. wish there was a law where a raise was made compulsory as the rent hike :) sage & onion
That would be something, although my Company has a 6 monthly review and adjusts the allowances accordingly, I am just waiting for the rents to drop and see some of our guys start winging :lol: shafique After having studiously avoided the Dubai Forums for 3 weeks whilst sunning myself in Mauritius - I find this piece of good news awaiting my return. If the landlord doesn't kick us out, it looks like no rent rise for us (as we were new tenants last year) - woo hoo! Cheers, Shafique ISH yea at last MOHAMMED comming wit some justice & all them Landlords be bunch of hustlas (madd propps) hahaha DON ISH MaaaD
WB Shaf ... Now thats an interesting point , so some landlords to avoid the cap last year just kicked out the residents saying they want to live in there property or something along those lines. could a tenant take that to the rent committee ? kanelli Yes, you can challenge the landlord's claim at the rent committee and they will ask that the landlord to provide lots of evidence that they intend to move into the flat/villa. If the tenant finds out that the landlord has not moved in (within 6 months I believe), they can then sue the landlord. MaaaD interesting thanks for the info K. Seraphim I got 15% eventhough my contract begins in Jan '07 Talked to my landlord and he said he knows the law but that our building was paying less than the market standards for a 1 bedroom apartment That sux ^ian^
It sux for him. Tell him you're going to go to the rental committee if he doesn't pull his head in. kanelli
If you already signed for a 15% increase then there isn't much you can do. If you haven't signed, take the landlord to the rent committee and you will definitely win the 7% increase as long as the date for contract renewal is Jan. 1 or after. Seraphim Sadly I had to renew before the 3rd of Jan and he came over to collect the cheques on the 27th....Im stuck with 15% I guess... anyway...hope the salaries keep pace at least zam what??? you still did it? tsk.....how stubborn! now other people will be force to pay and you will be sited as an example. I can understand of course you dont want the hassle, but sometimes you have to think far ahead, and its not just about the money, me thinks!!! :roll: shafique Seraphim - check out the main story on Gulf News today () - you can claim back the increase from your landlord provided that last-years rent went up from the previous year. In any case, the maximum increase is 7% so you should be able to claim back 8% of the 15% increase. Else, take him to the rent council as the article states. Good luck. cheers, Shafique MaaaD Interesting article by Emaar on the implications of the 7% cap on property investors: 7% rent cap strikes a note of realism for 2007 The Dubai property market is now generally judged to be in a transitional phase from a situation of under supply to the over supply of new units. Part of the logic behind the rent cap, aside from preventing an exodus of residents from Dubai, is that new construction is about to deliver a mass of new accommodation starting this year and accelerating massively in 2008 and 2009. That high rentals have begun to impact on the number of people moving to Dubai is seen in population data. A record of around 250,000 people moved into the city in 2005 while in 2006 the number was probably closer to 130,000; Road Transport Authority data points to 70,000 new car registrations in the first 11 months of 2006, and there are some 1.7 people per car. Completions accelerate Clearly the Dubai authorities do not want to see a further deceleration in new demand for property at a time of exponentially rising supply. EFG Hermes latest report pointed to 69,000 scheduled completions for this year and 139,000 next, while admitting that project delays would hit both totals. However, with market forces of supply and demand beginning to start to move strongly against rent increases, holding rent rises at seven per cent this year makes a great deal of sense, and should inject a note of realism into the market. If nothing else investors who see ever rising rentals and the continuation of the high rental yields of Dubai should sit up and think about the future. For property analysts across the board are predicting falling rentals from the end of 2007 as this massive supply of property arrives on the market. Anybody who is building or investing in property on the expectation of immediate strong rental returns should think again and recalculate their business plan. Falling prices? It is also clearly true that falling rental returns will not be compatible with rising property values. EFG Hermes' study has prices falling by 25 to 30 per cent by 2010 but notes this could be out by a wide range of possibilities. This is not to say that there will not be more money to be made out of the Dubai property boom in the future. In many property cycles it is the people who buy real estate off developers in trouble that make the highest profits of all. But the Dubai property market today has none of the signs associated with a distressed market, and it could be that excess liquidity and supply delays keep the boom going for longer than expected. Nevertheless, the rent cap for 2007 is a reminder that good times do not last forever for landlords, investors and developers. source: Seraphim I called up my landlord and spoke to him and he said that he wouldnt raise my rent next year, as my building is only 36K for a 1 bedroom whilst the market rate in the area is around 45K....that is correct info but im left debating whether I should go to the rent disputes commitee at the cost of jeopardizing my flat tenure eventually...knowing that if I have to move its next to impossible to find a 1 bedroom for under 40K... I cant believe how some people can let greed overtake them.... Shermin In December, I was informed that the rent would increase by 15%. However, after the announcement I called the real etsate development company that informed me that they have not made a final decision but would abide by any law issued by the government, however he could not make any promises before he got the contracts from the lawyer. He did imply that there will be no increase in rent since our contract was signed in 2006. I guess the law is being taken seriously as no company is willing to risk its reputation. sage & onion
What your Landlord does next year is not relevant. The law is now 7% and he has to comply. mighty.one great info. asc_26 My job is to increase rents. Don't call me greedy please. :D sage & onion
So from now we can address you as Miss 7.5% :wink: asc_26 7.5% is too low. :? Not_Sure Since when was paying less a bad thing...



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