12 November, 2005

Rent Cap

The announcement that Sheikh Mohammed has ordered a 15% cap on rents over the next year is both good news and bad news. The good news is that finally some visible action is being taken to try to control the runaway inflation that is causing many individuals and companies to consider moving out of Dubai.

The bad news is that every property owner in the emirate will take this as an instruction to grab the 15% rise as soon as possible.

5 comments:

John B. Chilton said...

The article I read says the cap takes immediate effect. It's more likely that rents rushed up in anticipation that a cap was coming.

Expect to see a decline in maintenance and other ways that landlords can cut corners and stay in the zone of ambiguity about whether they are upholding their end of the bargain. Slow response, etc.

When renters have few alternatives you can charge high rents. When you can't charge high rents you can cut corners.

Longer term, now that Dubai has shown it has the propensity to cap rents what does that do to the incentive to build more rental property?

Keef said...

Well if I can build property to rent and can expect to raise the rent 15% per annum that still sounds like a pretty good investment to me!

Remember that rents were pretty stable up to a couple of years ago. No landlord ever dreamed of 15% hikes, but that didn't stop them building.

Anonymous said...

My sentiments exactly Keefieboy!

I didnt think the rents here could go any higher than the 44% avg. 2BDRM apt. increase that we've seen already - I thought the only way for the rents to go was down.

With the decree, they've now got the big go-ahead to take that increase to 60%!! What's worse is that they can increase it to 75% a year later!

I wonder if its all just a deliberate attempt to stimulate rents - What do you folks think?

Catamaran Cameraman said...

I'm rather interested in what this does to the previous law- as I understand it, a rise in rents was previously capped at 20 or 25%- but rents could only be raised every two years. So this actually allows for greater rises. Also, the real problem isn't so much legislation on caps as it is a lack of enforcement. Certainly, nobody I have spoken to believes the rent boards have been effective. Even if they do agree to hear your case and you do manage win against your landlord, the latter can still kick you out 2 or 3 months later with a flimsy excuse- or such is the popular perception, anyway. I'll believe there's progress when I see it.

Anonymous said...

Agree with 'n' - Will see it when I belive it, But still I expect nothing will change really 15 % is sill too high.

Post a Comment

NOTE: By making a post/comment on this blog you agree that you are solely responsible for its content and that you are up to date on the laws of the country you are posting from and that your post/comment abides by them.

To read the rules click here

If you would like to post content on this blog click here