Landlords beat rent cap

DUBAI — Landlords are finding innovative ways of circumventing Dubai’s 7 per cent rent cap, which came into effect last January, by imposing additional charges on tenants for using facilities such as car parking.

By Lucia Dore (Assistant Editor, Business)

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Published: Thu 4 Oct 2007, 8:38 AM

Last updated: Sun 5 Apr 2015, 4:43 AM

One Dubai-based real estate company recently sent a note to its tenants stating: “As per the company policy, effective 1st October 2007, all tenants of Al Rostamani Real Estate will be charged for the car parking spaces occupied at our properties. The annual charges for each parking space will be Dh3,000.”

One of the tenants hit by the charges at the Seagull building in the Al Qusais area of Dubai, Osama Osman, said: “The step is a new creative way to bypass the decision (to impose a rent cap) to limit rent hikes in Dubai.” He said that each tenant had received a hand-delivered letter by the company’s security staff.

Typically, facilities such as car parking have been included in the annual rent. The practice of charging has left tenants concerned that the use of other amenities, such as a swimming pool or gym could also incur charges.

Osman said: “Will we expect a letter one day asking us to pay for annual charges against using the elevator, swimming pool or even for using the reception lobby?”

Commenting on these charges, an official at the recently formed Real Estate Regulatory Agency (RERA), part of the Dubai Land Department, said: “RERA rental regulation will start at the beginning of the year and all tenant rights will be registered within the contract with us. For now they can object to paying the amount and they have the right to do so.”

The Rent Committee at Dubai Municipality will continue to hear tenants’ complaints but these are expected to diminish as the rights of tenants and landlords are more clearly laid down in standard rental contracts approved by RERA.

In August RERA CEO Marwan bin Ghalita said: “We will introduce standard rental forms, with some flexibility to add different things, and certify all kinds of rental agreements.”

If the policy of charging for additional facilities were to become widespread it could undermine the government’s attempt to curb inflation, the main reason for introducing a rent cap in the first place.

Inflation is running at an annual rate of nearly 10 per cent, of which housing costs are a significant contributor.

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