No rental increases permitted in 2008
According to Law No 27 of 2007, the landlords in Dubai will no longer be able to increase rents in tenancy agreements being made this year. A tenancy contract with a rent increase in 2007, remains valid for two years, and cannot by increased again until 2009. The decree explicitly states that - rent will be capped by 5 percent in 2008 and current for two years.
The rent cap would be effective beginning 2008, when new regulations to stabilize rents are being considered, announced Sultan Butti bin Mejren, the Director General, Land Department. “The Land Department is already looking forward to new regulations to stabilize rents. Several schemes and studies are being done to find solutions for high rents in 2009. The decree emphasizes that a rental contract signed in 2007 to 2008 should not be increased, which means, that no increase is allowed prior to completion of two years from the date of signing the contract.”
He however, agreed that the rent cap would become effective beginning 2008, when landlords, whose rents are lower than the market value, could protest through the Rent Committee at Dubai Municipality.
Marwan bin Ghalita, the Chief Executive of RERA, said that a new Electronic Registry System for all types of properties applicable to new and old rent contracts would be operational beginning this year. This would be of help in finding a rental data base, that would make the entire procedure transparent and efficient. He also expressed hope that all realty companies would abide by these new regulations.
Posted on 2/1/2008
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