By Akanimo Sampson
A draft law seeking to freeze rents for three years in Dubai will bring more stability to the real estate market in the United Arab Emirate (UAE), experts say.
The proposed legislation will reduce disputes between tenants and landlords as it will provide a fair value of properties in Dubai, Dubai Land Department said.
According to the department, “we seek to create further stability in the market, as well as to make certain that landlords receive fair market value for their properties.”
If passed, the law will bring stability to the real estate market and boost tenant’s confidence leading to a continuously dynamic real estate industry in the emirate.
“Ultimately, the biggest benefit will be to tenants in a rising market. When rents are falling, it is relatively easy for tenants to move to obtain cheaper rents and this will inevitably put pressure on landlords to accommodate lower rents or risk having their property empty”, ICAEW economic advisor and Oxford Economics’ chief economist Scott Livermor told Arabian Business.
Livermor adds that investors may miss out on profits in the near-term but stressed ‘the benefits of increased certainty and potential longer-term benefits of more stability in the real estate market probably outweigh this.”
Chris Hobden, head of strategic consultancy, Chestertons MENA, believed that the proposed law will boost investor confidence and provide a clear picture for potential income for landlords.
“Tenants are currently protected by RERA’s rent cap, and the new law may offer landlords greater income security”, he said.
Reports said the new law would give a fair amount of equality to the rights of all parties, tenants and landlords.
It would also have provisions guaranteeing the right of tenant, and other provisions guaranteeing the right of landlord, enabling the latter to resort to the RDC Execution Judge if the tenant does not commit to paying his rent.
A notification will be issued to confirm that the law has been approved.
The draft law is applicable from the date a tenant signs a rental agreement contract.
Sultan Butti bin Mejren, Director-General of the Dubai Land Department, earlier that the real estate property owners may not increase the rent for residential properties before three years have elapsed since the date of signing the contract between them and tenants.
