Yes, one can outsmart rising rent prices in Dubai

Yes, one can outsmart rising rent prices in Dubai
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Published August 12th, 2013 - 08:00 GMT via SyndiGate.info

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With Dubai’s property market rebounding after the lull following the global downturn, rents have ticked up steadily and considerably in the city.
With Dubai’s property market rebounding after the lull following the global downturn, rents have ticked up steadily and considerably in the city.

Rents have ticked up steadily and considerably in Dubai.

 If your rent has recently gone up, rest assured you’re not alone. With Dubai’s property market rebounding after the lull following the global downturn, rents have ticked up steadily and considerably in the city. While burgeoning rents are great news for current and aspiring property owners, it is not so for the multitude of renters who face rising costs and fewer concessions. So, if you’re wringing your hands over this budget-buster looming around the corner, what can you do?

Firstly, tenants need to brace themselves with the fact that conditions are different from what they were last year. Rents have crept up and it is more of a landlord-driven market today. This is surely a shift for renters who have been in the power position for a while now.

While rising rents may not necessarily be an indication of conditions found during the pre-recession peak, the evidence for the upward trend is difficult to miss. Our recently published Q2 report for 2013 revealed that the most searched rental price band in the UAE was between Dh80,000 and Dh100,000 while the Dh40,000-60,000 band secured only the 6th position — a clear indication of customer behaviour in response to changing market conditions. Interestingly this time last year, the Dh40,000-60,000 band was the third most popular price band.

The good news is that tenants have rights and there are definitive laws in place to ensure that landlords abide by RERA rules and don’t overcharge. Residents should get educated with the legal provisions available to them and stand up for their rights when faced with increases that violate the law, for instance, by questioning the landlord’s demands instead of simply opting to move out.

The rental rise cap established by a RERA decree in 2011 ranges from five per cent to 20 per cent of the rental value, depending on how far below market rent the property is priced at. While the increase can be made every year from the first renewal, landlords cannot declare increases on properties that are priced up to 25 per cent below the average similar rent. It’s also worth remembering that the average rental for a property should be determined by RERA’s Rent Index of the Emirate of Dubai. This index is updated every quarter, so visit the RERA website to determine what your average rent should be.

As for existing tenants, a landlord is required to give at least 90 days notice before making any change to lease terms, so ensure that you are given enough time to accommodate a possible rent hike or perhaps seek another property.

It also pays to be a proactive renter. If you’re happy in your apartment or villa and plan to stay awhile, try talking to your landlord and locking in a price for a 12 or 18-month lease. In the not-so-distant past, we’ve all heard of landlords giving away a month or two of free rent, throwing in a TV and even offering 12-cheque payments to attract tenants.

While these perks may not be available anymore, it wouldn’t hurt to ask for a concession on your rent especially if you have a track record of making regular payments; landlords usually look at overall credit worthiness and are eager to retain tenants who pay the rent on time, take good care of the property and abide by the lease term. Additionally, no matter how good a deal you will get by moving out, you will also incur costs that may be substantial — the cost of the physical move, down payments for electricity and telecommunications services — and perhaps costs of refurnishing the new space. So, factor in all costs before deciding to move out.

Also, look around. Many projects are being released so there are always opportunities to find sweet deals, even if it means you skip the waterfront communities where everyone wants to live and consider downtown areas.

When we looked to analyse communities in Dubai that have grown in popularity amongst residents, Dubailand which was ranked 15th this time last year has moved to seventh place. This could probably be due to projects in the development becoming complete and being released, driving interest in the area.

So, while increasing rents are a reality with the rental market swinging in favour of landlords, as a resident, you still have a few aces up your sleeve. Knowledge is power, so acquaint yourself with the laws in place to stay in control.

 

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