x Abu Dhabi, UAESunday 23 July 2017

Better regulation of the rental market

Reform is coming to an economic sector about which many people have horror stories: property agents. The new Tawtheeq system and other regulatory measures should bring some relief to those seeking a place to live.

Last December, a renter contacted a property agent about a flat in Abu Dhabi after she saw an advertisement on the internet. She paid a Dh5,000 deposit and the agent gave her a hand-written receipt. Later, after she asked him to expedite the process, he charged her another Dh5,000 to pay the rent in advance.

That was the last that the prospective tenant saw of the property agent, her money or the flat that she was supposed to be renting. According to the tenant's story, which was sent to The National recently, the agent assured her that this was a normal practice - he had just charged another possible tenant Dh5,000 as well.

It's one of those scenarios that other tenants will recognise. Agents sometimes charge apparently arbitrary fees for finding housing or pay-in-advance schemes, which can result in exorbitant and illegal charges. For people who are not familiar with the rental market, there is often little redress or opportunity to verify the fees.

Authorities are taking steps to curb these irregularities. As The National reported yesterday, Abu Dhabi Municipality has launched a service called Tawtheeq, or documentation, to register property agents. As we reported in April, the system will also be used to track rental contracts and conduct transactions over the internet. It's a welcome regulatory move, although the results remain to be seen as the Municipality is still developing rules under the new system.

For companies that are already registered, the new regulation is obviously good news to even the playing field. "These freelancers charge the same 5 per cent commission but have no overhead cost, no licence, no sponsor, no office," said Diana Stebbins, an agent at Global Star Real Estate.

And in the interests of tenants, licensed companies that have an established office are subject to more regulatory controls - for instance, they won't be able to abscond without a trace with a renter's money. Licensing can help to curb a number of unfair practices. Anecdotal evidence shows some landlords charging unfair fees for maintenance or capital improvements, failing to maintain basic health and safety standards, and evicting tenants without due notice.

The registration of freelance agents is an important step towards tenant protection on all of these counts. The next step will be enforcement.