Rent Increases Capped At 15%

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Rent increases capped at 15% Nov 14, 2005
From the Gulf News:

General Shaikh Mohammad Bin Rashid Al Maktoum, Dubai Crown Prince, UAE Defence Minister and Chairman of the Dubai Executive Council, ordered yesterday that rent increases in all leased properties in Dubai must not exceed 15 per cent annually.

The order came into effect yesterday and will remain in force until the end of 2006. The order says that if property leasers or landlords decide to increase the rent for any property, it cannot exceed 15 per cent of the annual amount.

Shaikh Mohammad instructed authorities to implement the order, which came in line with his keenness to preserve social stability and reduce pressure on all sections of society. The decision also aims to reduce the burden on tenants.

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15% per cent is still alot though when there are no salary increases to help pay for it, I know I haven't received the 15% pay increase that was announced for Government workers, yet of course the nationals got their 25% increase - how fair is that?

Chocoholic
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Re: Rent increases capped at 15% Nov 14, 2005
Chocoholic wrote:From the Gulf News:

General Shaikh Mohammad Bin Rashid Al Maktoum, Dubai Crown Prince, UAE Defence Minister and Chairman of the Dubai Executive Council, ordered yesterday that rent increases in all leased properties in Dubai must not exceed 15 per cent annually.

The order came into effect yesterday and will remain in force until the end of 2006. The order says that if property leasers or landlords decide to increase the rent for any property, it cannot exceed 15 per cent of the annual amount.

Shaikh Mohammad instructed authorities to implement the order, which came in line with his keenness to preserve social stability and reduce pressure on all sections of society. The decision also aims to reduce the burden on tenants.

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15% per cent is still alot though when there are no salary increases to help pay for it, I know I haven't received the 15% pay increase that was announced for Government workers, yet of course the nationals got their 25% increase - how fair is that?


I agree, this has come far too late. I too have not had a 15% pay-rise to cover rent. In fact, since I have been here for only 1 year, I have seen 1 bed flats that I could have got for Dhs55K late last year, now go for Dhs72-78K
yorky500
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Nov 14, 2005
I dont knoe about you guys but I think even the 15% cap is too liberal! I mean, it really shouldnt be more than 3-5% per year. Not 15%. So if your rent, for example is 50,000 now, in say 3 years it will be 76,000, an increas eof almost 52%!! That's lunacy over the long term!
jag
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Nov 15, 2005
HP, Go away. Actually I can work in my PJ's if I damn well want to! I work my a*** off and do well over and above my normal duties. I've been here 2 and half years, no pay rise, holiday time deducted from my salary, so in effect no paid holiday and I haven't had any flight tickets.

So naff off you loser.

Luckily I do a hell of a lot of freelance work. Plus I love what I do, if I didn't I'd have been outta here along time ago!

But the rent thing is still far too high, it's well above the market averages for yearly increases and people shouldn't be expected to pay it until they sort the whole structure out where people are getting paid more for the increases.

Oh purlease, the reason there are many Indians living so many to one place is many get paid appalling wages in the first place so it's the only way they can afford to live here and send some money home.
Chocoholic
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Nov 15, 2005
15% increase??

Wow, great news for people who are going to Dubai for the first time to look for a place to live. And the hits just keep on coming.
A64Venice
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Nov 15, 2005
Well before people were being hit with anything from a 30 - 100% a year increase and if you'd didn't like it the landlords told you to leave, so that they'd whack the rent up for new tenants anyway, it's sheer and utter greed! And has nothing to do with market influences. Plus many landlords want the whole lot in one go, how many people can afford a years rent up front? Many will take 2 - 4 cheques now though.

But I've noticed certainly where I live that the prices of new villas and apartments are so high that they're not being taken. There's a complex of little villas, and they're tiny, in Mirdiff and they want 140,000Dhs a year. They're just not worth it, and it's showing as they've been finished but empty for months now.
Chocoholic
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.. Nov 15, 2005
Hi folks,

umm... interesting debate.


First and formost, any economist will tell you that artificial caps on price increases NEVER work. This will hold true in case of rents also. Think about it... so long as demand outstrips the supply, rents will continue to move north.

This kind of a cap will only give rise to cash transactions. BLACK MONEY as some will understand it.

The only way the rent issue will be taken care of is if the Dubai government ( on its own or by providing incentives to developers) builds low cost housing units. This needs to be done immdediately. Only once the supply is increased, the rents will fall down automatically.

Don't be surprised if the lanslords find a loop to evict you (or else pay the additional rent hike in cash).

All the best.
sa4877
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Re: .. Nov 15, 2005
sa4877 wrote:Hi folks,

umm... interesting debate.


First and formost, any economist will tell you that artificial caps on price increases NEVER work. This will hold true in case of rents also. Think about it... so long as demand outstrips the supply, rents will continue to move north.

This kind of a cap will only give rise to cash transactions. BLACK MONEY as some will understand it.

The only way the rent issue will be taken care of is if the Dubai government ( on its own or by providing incentives to developers) builds low cost housing units. This needs to be done immdediately. Only once the supply is increased, the rents will fall down automatically.

Don't be surprised if the lanslords find a loop to evict you (or else pay the additional rent hike in cash).

All the best.


Exactly! The government needs to make low cost housing in order to curb these greedy landlords. The cap likely wont work (even though it is already sliding in favour of the landlord not tenant).
jag
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Nov 15, 2005
Yep, lease rate is pretty high in dubai.
actually, I am a bit lucky. I just got a 2 BR flat in dragon mart last week.
it's about AED40K. I signed lease contract for a year. as they say rent is gonna be increased next year also. anyway. I am just start my first year over there a few days later. I really have no idea how much they gonna increased next year...
geraintindxb
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Nov 15, 2005
guess i was lucky got a 10% salary hike in first four months only....;)

on a serious note i think all the prices will come down soon as the no. of buildings being made is enormous. once all these buildings are ready i dont think they will have enough supply of people....

so in my opinion prices will be going down in two years...
cadmus
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.. Nov 15, 2005
No way mate. There is no way rents are coming down in te next 2 years. Note that the huge amount of activity in contruction is happening at the higher of the chain. These are the Dubai Marina type. Its like saying that the price of onions will come down if the supply of oranges increases (just a comparision.. no offence meant!! :-) )

Unless the supply of apartments in the low to medium range is levelled, this problem will continue. The real value of rents of 1 bed room hall apartments needs to come down to around 27K per annum and this will not happen even if a zillion developments like Dubai Marina come up.

Just my opinion. Basic economics
sa4877
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Nov 15, 2005
on your lines....when these high end flats will not sell...constructors will reduce prices for these...so more and more people from slighlty lower range will move to these...and so the gap decreases in lower segments...and so on....i am not saying they will go very low....but right now the prices are very high as compared to any city. they are bound to come down...
cadmus
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Nov 15, 2005
The municipality did actually build loads of low cost apartments in the back of Diyafa, but whne I enquired they said it was for families only! The were targeting the low wage worker families and expecting a family of 3 to live in a 1 bed apt.

In Mirdiff they've just started work on 500 low cost villas and apartments which is being earmarked as cheap expat places so we'll see.

10% in 4 months? Did you not have a 1 year contract?
Chocoholic
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Nov 15, 2005
no there is no yearly contract or something...i just have to give one month notice if i plan to leave the company...nothing regarding salary...they increased it for all the employees by 10% of salary....coz of increasing rents
cadmus
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Dec 30, 2005
like the rest of the worlds capital's, Dubai is learning a lot about "market forces" -

Me, i bought on dubai marina 3 years ago when most of the expats were badmouthing the future of the property market. The vision was there in 2002, most people then thought "it wont happen here" - It did!!

its called "supply and demand".

Rents and property value's have risen in line with "market forces" especially with the demand out pacing supply. Propery prices rise in value - rents follow.

does anyone expect to rent a 1.25 million DRH appartment for 35k a year.

That appartment was worth 500/600k 2 years ago and then 35k was fair rent. Now 2 years on it has doubled in value and the rent cost has risen in line with that.
arniegang
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Dec 31, 2005
cadmus wrote:on your lines....when these high end flats will not sell...constructors will reduce prices for these...so more and more people from slighlty lower range will move to these...and so the gap decreases in lower segments...and so on....i am not saying they will go very low....but right now the prices are very high as compared to any city. they are bound to come down...


This attitude and ignorance with regard to the property market is what i was listening too 3 years ago. Get real, where i live in th UK you cant buy a hut in a field for under £150k (900k Dhs).
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