Confused by the new rent law?

Confused by the new rent law?

So were we, until we picked up the papers today. Rera has clarified the law issued by the Sheikh Mohammed earlier this week.

January 22, 2009 12:08 by Dana El Baltaji

Following a decree issued by Sheikh Mohammed bin Rashid Al Maktoum forbidding landlords from raising rents in 2009, the Real Estate Regulator Agency (Rera) has issued a statement clarifying the decree.

According to the law, landlords are not allowed to raise rents in 2009, unless if the rents they charge are more than 25 percent lower than Rera’s price guideline for any given district; or if the rents were determined before 2008 and are considerably lower than Rera’s price index.

What the law failed to clarify was how much landlords are allowed to raise rents that meet either one of the conditions above. Indeed, without guidelines set by the government, landlords can view the new law as a license to increase rents determined before 2008 exponentially.

Yesterday, Rera released guidelines on how much landlords can increase their rents, provided they meet the law’s conditions. According to a report in The National, the following is the breakdown: If the rent is 46 percent to 56 percent below the rate in the index, it may be raised by 15 percent. If it is 36 percent to 45 percent lower, then the tenant can be asked to pay 10 percent more. Rents 26 percent to 35 percent lower may be increased by 5 percent.

Therefore, if your rent is AED50,000 a year, and it falls 46 to 56 percent below Rera’s rental index, then your landlord has a right to increase your rent by 15 percent, or AED7,500.

The new law is meant to “maintain a proper balance and regulated relationship between landlords or lessors and tenants,” said Mohammed Khalifa bin Hammad, the director of Rera’s real estate relationships regulatory department. “In the past years, some property units were rented at very low values in comparison to the market rate.”

“The new decree has been issued to balance the rental market and make landlords who have rented their properties against very low rents entitled to a proportional increase in rents at different averages,” he added.

Rental caps in the past only applied to contracts that were renewed, and not to new contracts. There are no guidelines regarding new contracts.

So, what do you think? Will the law make your life any easier?

Tags: 2009, new rent law, Real Estate Regulator Agency (Rera), Sheikh Mohammed bin Rashid Al Maktoum

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12 Comments

Ron Saldanha on January 23, 2009 11:17 am

So if it falls under the 60-90 % mark, and im paying 42.. so thast a 30% on the 60.. but do they take the lowest? or say your rent can be 90? becuse dubai does have old and new buildings mixed up all over.
chris on January 24, 2009 8:04 am

If the old rent is 50% less than RERA’s Index, and the Landlord increases it by 15% – isn’t it obvious that the new rent is still going to be 35% less than the index – or, as the Landlord would argue – still permit him to effect more increases in rent until it reaches the Index ?
dubai on January 25, 2009 7:31 am

we all respect this low, but why dont the skh keep a cap to the maintance fee ofthe devoloper ????????????????

why r they allowed to rise more then the rent r we buying properties to make money for the devolopers or for our invesments
Joe Akkawi on January 25, 2009 8:16 am

Another failure to provide a full rounded law strikes again by the RERA. There is currently no indication of what each area’s index is basically allowing landlords to speculate and cost based on what they deem is the price of the area. It’s quite shocking that this “index” is no where to be found.

This law is also not fair towards people who are paying more than an area’s index. Wouldn’t it make sense to force a rent drop if I’m paying 35% more rent than the index? Only by going both ways can RERA establish our trust in their new laws.
Karim on January 25, 2009 8:20 am

When I got into my flat on Sh. Zayed Rd. in 2001 the landlord was posting banners advertising 2 bedroom flats for 45 K AED. Already it was a quite old building with quite average finish. Today I am already paying double that and as per the new law it will shoot up again…. to put all buildings on par withim an area is not being logical…
Glodny Krolik on January 25, 2009 8:32 am

I am wondering how things will go for folks in the Gardens.
Malek Moubasher on January 25, 2009 9:02 am

Can anybody tell me where i can get this reputable index?
a merchant on January 25, 2009 10:21 am

older land had bought or built their propperties when the real estate prices were very low so they are getting fair returns on their investments.the new law should be more transperen to ths extent.
Meera on January 25, 2009 1:06 pm

This new law doesnot differentiate between old or new buildings. I’m living in a reasonably old building (15-18 years old) and does not have proper maintenance and security. It cannot be compared with the new building next to me – 24 hrs security, gym, s/pool etc (also large enough). Authorities are not addressing on the root cause but still working on symptoms which is really painful to the tenents to deal with. Let us see the real market condition after April 2009 (after the academic year starts) most of the families will leave Dubai for betterment.
Meera
Binu on January 26, 2009 6:50 am

It is a indirect way of increasing rent. I am paying 30000 for a studio flat which has totally no maintenance. Real Estate Staff takes 12% of rent as bribe to continue the renewal. There should be clarification of old buildings.
Garib Sheikh on January 27, 2009 8:33 pm

It is a disgusting way of guiding landlords to raise their rents. Where do RERA get the index from? 2008 rent average? It is high time everyone realises that Dubai is not New York. The 2002 rent level is what it should be. Like it or not we can see the rents tumbling down to that level this year. One need not be an economic genius to see the writing on the wall.
Irina on February 10, 2009 5:34 pm

I have another question, i’m paying at the moment rent 84,000 for a studio, the prices are faliing down, it’s now in this area 45.000, are there some rules, how to reduce the rent with my landlord???