Dubai's rent freeze draft law will add stability to market, say experts.New law has the potential to provide landlords with more clarity on future income and, in turn,
Dubai , Dubai
18 April 2021, 12:00 AM
30 April 2021, 12:00 AM
Dubai Land Department (DLD) has stated that a new draft law will lock the rent for three years from the date a tenant signs a rental agreement contract. This follows a prediction by the DLD’s Director General in early January this year, after the DLD’s recommended clauses for the new law were accepted.
No date has been set for when this law will come into force, but an official announcement will be made following the law’s publication in the official gazette.
According to reports, the draft law has been designed to ensure properties are valued fairly and to minimise disputes between renters and owners.
This new law providing for a rent freeze is intended to create stability in Dubai’s real estate market, both for tenants, by alleviating any worries about increasing rents, and for landlords, whose disappointment at not being able to increase rents should be balanced by the fact that their property is less likely to end up vacant. The DLD anticipates that this law will stimulate and encourage investments in Dubai and increase the occupancy rate of real estate properties in the Emirate.
Scott Livermore, ICAEW economic advisor and chief economist at Oxford Economics, told Arabian Business: “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.
Whether free zones are covered in the draft law remains to be seen. Although it is not certain, property experts believe the rent freeze will apply only to residential properties, not commercial ones. By extension, they believe malls will likely not be subject to the three-year freeze either.