His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, issued the decree to set the formula to be used for the rent index.
Shaikh Mohammed first introduced the system in January 2009 with the base that a property’s rent must be at least a quarter below similar properties before it can be increased. It is used in conjunction with an index of the Real Estate Regulatory Agency or RERA.
“For properties rented in 2009 or earlier, the maximum increase in rent shall be as per the previous decree for 2009,” a statement issued by official news agency Wam said.
“The decree approves the (RERA) price index, which shall be followed as the reference for setting any increase in rent values in 2010.”
The decree is aimed at ensuring stability in Dubai’s property market and creating legislation that promotes landlord-tenant relationships.
The statement said it was also part of Shaikh Mohammed’s interest in protecting the economic and social well-being of all national and expatriate tenants by preventing increases not based on legal references that ensure the rights of tenants and landlords alike.
Arnel G. Ramos, a Dubai resident, said the guide for rent increases would help tenants. “Expatriates are really having difficulty in paying rent,” he said. “We hope landlords and building owners follow this guideline religiously.
Ali Zaidi, CEO, Centurion Real Estate, said the continuation of policy was of benefit to the market. “Rent will come down further in 2010 because of heavy inventory coming up next year,” he said.
“Because of inventory, people will have choice and they will move,” he said. “Rent came down drastically in 2009 and in my opinion it will further go down in the new year.”
Christina Cabading, president of BSEL Infrastructure Realty, said maintaining the formula would be a positive for the real estate market. “It is a confidence-building move by the government,” she said.
RERA’s price index issued early this year attracted some criticism from tenants for the high prices based on the peak rent values of 2008. It was revised in May to better reflect rent realities.
The index, found in the form of a ‘Rental Increase Calculator’ on the RERA website www.rpdubai.ae, allowed some tenants the possibility of negotiating for up to 50 per cent of their rent.
RERA is expected to introduce a price index in early 2010 to help benchmark property values in the emirate.
Mahmoud Hesham Al Burai, RERA Director of Development, earlier told Khaleej Times the property price index would work along the same principles as the rental index.
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