x Abu Dhabi, UAEFriday 19 January 2018

Tenants should welcome rent index change

The new property index will mean that tenants pay for what they get

Location, location, location is the familiar mantra of estate agents around the world. To that, one can add, especially in a city of high-rises like Dubai, that views matter: many will happily pay more money so that they can wake up and look out at the sea. Add to that such facilities as gyms, swimming pools or tennis courts, all of which Dubai’s denizens covet and will pay for in higher rents.

So far, however, such “extras” have not been covered by the city’s property rent index. From next week, they will be. The index will now show how much such amenities affect the rent.

Tenants reading this may – as some did in The National’s story yesterday – express concern that this will be used by landlords as a pretext to raise rents. When, last weekend, revised rent-cap rules were announced, many felt that landlords would take the opportunity to significantly raise their rents. Many, in fact, were concerned that they may have to leave their homes and communities.

There will, certainly, be those who do move because they cannot afford a revised rent. Yet, on the whole, this move is beneficial for tenants. Here’s why: the new property rent index will allow landlords to charge the right price. If they put in extras like gyms or if their properties are in a prime location, they will benefit from being able to charge a better price.

But that system works both ways: those landlords whose properties lack amenities, or which are situated in areas with construction work, or that are not well-maintained, will no longer be able to charge top dirham.

Dubai’s rental market is big, the biggest of the seven emirates. In a large market, transparency helps tenants, because while desirable properties rise in price, undesirable properties fall, giving landlords an incentive to maintain and improve their buildings. The more signals the market has to gauge the property’s value, the better the price will reflect what people are willing to pay.

That’s why, despite initial appearances, this rent index will actually help tenants. The index will be beneficial for both tenants and landlords as it helps them to figure out how to arrive at a fair price, and to compare like with like. While in the short-term there may be some price rises, in the medium-term, tenants will pay a fairer price for the places they live.