x Abu Dhabi, UAEWednesday 17 January 2018

Dubai to regulate school land rents

Controls are intended to limit tuition fee increases after some schools report rent rises of more than 100 per cent in a year.

The Dubai Government is planning to regulate the rent paid by private schools to limit the fee increases imposed on parents. About three-quarters of private schools in Dubai rent their land. With rents having risen rapidly in recent years, some have raised tuition fees to compensate.

The Knowledge and Human Development Authority (KHDA), which oversees Dubai schools, said yesterday it was working with Rera, the property regulator, on an index to regulate "appropriate" rent levels for schools and other educational institutions. One private school provider, Global Education Management System (Gems), reported in January that rent at one of its schools in Al Wasl had increased by 479 per cent between 2004 and 2008.

"Over the last five years the costs of operating a school have soared in this region," said Richard Forbes, the company's director of communications and marketing. "Gems has experienced rent increases in some schools in the range of 106 per cent to 213 per cent. "Indeed some schools have seen rent increases of over 100 per cent in one year alone." The new official index will set rent guidelines for schools, universities and training institutions.

However, the KHDA has not set a date for putting the controls into practice, nor could it confirm how many schools would be affected. Mohammad Darwish, the head of licensing at the KHDA, said in a statement that the index would benefit all concerned through "its impact on school tuition fees". The KHDA also said schools would be able to take out long-term leases for their land, and that private schools and their investors would benefit from knowing that they would not face "unjustified" rent increases.

Mr Forbes said rent was a key component of schools' operating costs, and so had a significant impact on their fees. He added that caps on tuition fee increases had also been difficult for Gems schools. "Rent increases typically should impact tuition fees. "However, given the fact that our tuition fees increases have been restricted over the last five years to 27 per cent [average across all Gems schools] compared to our operating cost increases, which have been 57 per cent over the same period, schools have been hugely challenged to continue to deliver quality education to parents and students, as well as reward their teachers appropriately."

He added that Gems was pleased about the planned rent controls. "We welcome this announcement from the KHDA and Rera," he said. "We see this as the first step in a series of initiatives that will be required to resolve the historical issues of operating in a price-regulated education sector where none of our costs are regulated." Not all schools that rent land will be affected by the index. Some Dubai schools already have long-term leases, with fixed annual increases.

Clive Pierrepont, director of communications and marketing at Taaleem, the second-biggest private school provider in Dubai, said his firm supported the move to regulate rents. However, he said the move would not affect his company, since all Taaleem schools had long-term leases. "I think it will help a minority of private schools fighting against unjust rent increases and that's for the benefit of everybody," he said.