DUBAI // The property rent index in Dubai will for the first time include details of “extras” such as gyms, pools and gardens.
The updated index, which comes into force next week, will allow tenants to check the rent on homes with added amenities, such as a sea view, against others in the same area.
“Owners will have the right to update the system with building details such as swimming pools, gardens, gyms, concierge, size, the building’s services and specific location,” said Marwan bin Ghalita, chief executive of Rera, Dubai’s Real Estate Regulatory Authority.
The new index will be effective from January 1 until April, when it will be updated again.
Property analysts said it would lead to a more balanced market.
“Tenants can go online and look at what services and amenities are being offered and get what they pay for,” said Ian Albert, regional director of Colliers International.
“And you can be rewarded as a landlord by putting up what facilities are on offer.”
Mr Albert said that under the existing system landlords had no incentive to offer added facilities that were not reflected by the rent they could charge, which was capped.
Revised rent-cap rules were announced last weekend. Owners can increase rents by 5 per cent if they are 11 to 20 per cent below market rate; by 10 per cent if they are 21 to 30 per cent below; and by 15 per cent if they are 31 to 40 per cent below.
A maximum 20 per cent rise is allowed for rents more than 40 per cent below market rate.
Under the previous rules, rents had to be 25 per cent below market rate before a rent increase was triggered.
Tenants fear that a combination of the new rules and the updated index mean they will pay more pay.
“I am quite concerned this will push up the rents,” said Shelagh Estment, who rents a three-bedroom villa in the Springs for Dh150,000.
“My villa is opposite the pool and this will be in the landlord’s favour now.”
Pushpaka Shirantha, who rents a two-bed apartment in Al Ghusais for Dh48,000, said: “People are afraid that landlords will be unreasonable when it comes to setting prices.
“This means that it could be similar to 2007 to 2008 and will create a huge problem for tenants. My renewal is coming in March. It is going to be a disaster.”
However, landlords welcomed the updated index and said it would be helpful in leasing homes.
“In some communities, a rental of a two bedroom could be far different from a two bed in the same area because of the size of the apartment and the view,” said one landlord, who owns properties in The Greens.
“Now this would be more useful and give us better clarity on how much to charge.”
Property analysts said the new index would help tenants and landlords.
“The market used to be more tenant-centric before,” said Mr Albert. “There is definitely a greater deal of balance.”
Mr Ghalita also welcomed the revised rent cap.
“The new law will help in protecting the rights of all parties. It will draw a clear road map for both parties on how to deal with the rent increase of a property and give tenants time to plan their finances.
“Rera’s mandate is to create a great real estate environment to protect and attract investors. By introducing this rent mechanism, a high level of transparency is guaranteed in the sector and no ad hoc increases will be applied to rents.”
He said the index, which was updated every four months, was based on regular surveys and data.
“The update is done based on four methods of data collection from several sources.”
It relies on inputs from Ejari, which keeps a record of the number of leases registered with the agency, field surveys and follow ups of homes available for rent.
This is tracked through listings in newspapers and websites.
Rera also collects data for the index through meetings with property agencies and landlords to compare and study the differences in rental values.
pkannan@thenational.ae
