The maximum a landlord can hike rent is 20 per cent, according to an important clause in the new decree issued by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and ruler of Dubai.
Using a series of "mini rent caps" through a rent slab, the index prevents rent from rising too high.
For example, if the rent is 36 per cent to 45 per cent below the average market rate for properties with similar specifications in similar areas, the rent can only be increased by a maximum of 10 per cent, according to the decree.
If the rent is equal to or up to 25 per cent less than the average market rate for properties with similar specifications in similar areas, then there will be no increase in rent.
However, it is worth noting that the index was compiled using figures from the second half of 2008, and since then, rents have dropped much further. The index states that the average rent for a two-bed apartment in Mirdif falls somewhere between Dh120,000 to Dh130,000.
But currently, tenants in two-bed apartments in Mirdif are paying around Dh90,000.
Marwan Bin Galita, chief executive of Real Estate Regulatory Authority (Rera) has been very clear when saying the rental index should only be used as a guideline, with plans to update it every six months. With the decree now in effect, however, it is even more important that Rera keeps a closer eye on rental rates across Dubai, especially as they are set to fall further in 2009.
For this reason, some industry experts say the rental index should be updated regularly.
"It may be wise to update the rental index on a weekly basis as the market rates are still fluctuating - a rent cap at this stage may be slightly premature," Ryan Mahoney, managing director of Better Homes, added.
Rera issued a statement yesterday saying there will be no increase in rent for new contracts signed in 2008 for residential and non-residential properties.
However, the rent will neither have increased nor decreased as it is a new contract.
"There will be absolutely no increase in property rent values for new residential or non-residential tenancy contracts signed for the first time in 2008. Any contract that was renewed in 2008 is subject to increase," Rera said in a statement to media.
Interestingly, according to Rera's website, 3,400 people, around 85.8 per cent of those polled, say there should be a rent cap law in Dubai.
• 27,000 homes delivered in Dubai in 2008
• 32,000 homes to be delivered in Dubai this year
• 30,000 families moved into freehold homes in Dubai so far
• 1.6m Dubai population in 2008
Source: Gulf News
Using a series of "mini rent caps" through a rent slab, the index prevents rent from rising too high.
For example, if the rent is 36 per cent to 45 per cent below the average market rate for properties with similar specifications in similar areas, the rent can only be increased by a maximum of 10 per cent, according to the decree.
If the rent is equal to or up to 25 per cent less than the average market rate for properties with similar specifications in similar areas, then there will be no increase in rent.
However, it is worth noting that the index was compiled using figures from the second half of 2008, and since then, rents have dropped much further. The index states that the average rent for a two-bed apartment in Mirdif falls somewhere between Dh120,000 to Dh130,000.
But currently, tenants in two-bed apartments in Mirdif are paying around Dh90,000.
Marwan Bin Galita, chief executive of Real Estate Regulatory Authority (Rera) has been very clear when saying the rental index should only be used as a guideline, with plans to update it every six months. With the decree now in effect, however, it is even more important that Rera keeps a closer eye on rental rates across Dubai, especially as they are set to fall further in 2009.
For this reason, some industry experts say the rental index should be updated regularly.
"It may be wise to update the rental index on a weekly basis as the market rates are still fluctuating - a rent cap at this stage may be slightly premature," Ryan Mahoney, managing director of Better Homes, added.
Rera issued a statement yesterday saying there will be no increase in rent for new contracts signed in 2008 for residential and non-residential properties.
However, the rent will neither have increased nor decreased as it is a new contract.
"There will be absolutely no increase in property rent values for new residential or non-residential tenancy contracts signed for the first time in 2008. Any contract that was renewed in 2008 is subject to increase," Rera said in a statement to media.
Interestingly, according to Rera's website, 3,400 people, around 85.8 per cent of those polled, say there should be a rent cap law in Dubai.
• 27,000 homes delivered in Dubai in 2008
• 32,000 homes to be delivered in Dubai this year
• 30,000 families moved into freehold homes in Dubai so far
• 1.6m Dubai population in 2008
Source: Gulf News
