Rent caps

Also had a 6 month rental cheque bounce. If you e had that happen, you'd understand why a single cheque is preferred by Lls So what makes Dubai landlords so different to landlords in most other countries that they are unable to cope with monthly rent payments? If you were a LL in any country in the developed world, you'd be taking monthly rent payments, regardless of whether your tenant was an expat or a local. If you tried to enforce single-cheque payment, you'd be laughed at for your sheer cheek. The system of large lump sums paid in advance is a significant obstruction to the development and modernisation of the real estate market here. If you're not part of the solution - the solution being a general move towards monthly payments becoming the standard - then you're part of the problem. Completely agree rents do need to become monthly instead on 1 or 2 cheque payments. I recently had to go back to Oz and they tried that rubbish on me and I said is only pay monthly direct debit and they backed down, guess what I got a property! To me it's a complete joke to come up with so much money where both sides are not fully protected, yes it's not fair for a LL to deal with bounced chqs, but also tenants should be able to pay by direct debit. It's not right that someone is making interest of my money when a majority of LL's don't keep up with maintenance issues.

Also had a 6 month rental cheque bounce. If you e had that happen, you'd understand why a single cheque is preferred by Lls So what makes Dubai landlords so different to landlords in most other countries that they are unable to cope with monthly rent payments? If you were a LL in any country in the developed world, you'd be taking monthly rent payments, regardless of whether your tenant was an expat or a local. If you tried to enforce single-cheque payment, you'd be laughed at for your sheer cheek. The system of large lump sums paid in advance is a significant obstruction to the development and modernisation of the real estate market here. If you're not part of the solution - the solution being a general move towards monthly payments becoming the standard - then you're part of the problem. So surely it's easier if a one month cheque bounces, rather than a six month cheque. Less money to chase up and perhaps easier to enforce.

Also had a 6 month rental cheque bounce. If you e had that happen, you'd understand why a single cheque is preferred by Lls So what makes Dubai landlords so different to landlords in most other countries that they are unable to cope with monthly rent payments? If you were a LL in any country in the developed world, you'd be taking monthly rent payments, regardless of whether your tenant was an expat or a local. If you tried to enforce single-cheque payment, you'd be laughed at for your sheer cheek. The system of large lump sums paid in advance is a significant obstruction to the development and modernisation of the real estate market here. If you're not part of the solution - the solution being a general move towards monthly payments becoming the standard - then you're part of the problem.

Thanks Geordie, yes, the deposit should be held separately. There's no real property management here where managers go and check properties and are the intermediaries between ll & tenant. Our property manager carries out routine inspections 3/4 times a year to keep everything in order. If there any issues, she contacts us with quotes and we trust her enough to go by what she says. As it's a big company, the tenant trusts what the agent says too so there's no issue of the manager being on someone's side. I think this could be a great business here! But as with everything, there are some people that would make the job a nightmare!!!!!

One of the other things is that in most other countries the deposit is kept in a separate account and the LL isn't able to get his/her hands on it, unless there is some issue when the place is vacated. A Rancher you are probably one of the few LLs who it would be a pleasure to rent from. Unfortunately it is the others who give the likes of you a bad name. Mind the same can probably be said back in our own countries.

Sirocco, thanks for taking my comments onboard. We mostly hear about the bad Lls on here but most Lls must realise that it's in their own interest to keep their properties well maintained. We've had an apartment trashed as well as being left with an outstanding dewa bill that weren't covered by the deposit. Also had a 6 month rental cheque bounce. If you e had that happen, you'd understand why a single cheque is preferred by Lls. In other countries if you sign a lease for a year you have to honour the lease; you couldn't just stop paying rent if you had an issue with maintenance. The difference is there are simple mechanisms to try and get the matter sorted, unlike here. In our property overseas, we have just issued notice to the tenant to leave for various reasons. He can't go and demand that he be allowed to stay for another year because he doesn't want to be disrupted. A rental contract not being worth the paper it's written on (wrt to the specified length of the lease) is also unheard of in other countries. It's also in a ll's interest to keep a tenant, not only because of the agency fees but because a lot of wear and tear occurs as people move in and out so Lls want to minimise that too. Part of the problem, in the race to develop real estate in Dubai, was the almost complete absence of laws and regulations for the industry and that was a real oversight. edited by A Rancher on 23/12/2013 <em>edited by A Rancher on 23/12/2013</em>

I hear the plight of landlords like A Rancher who feel the current rules are not allowing Lls to charge the market rates, however in Dubai as we know, too many Lls take no responsibility whatsoever for their properties and yet try to milk their tenants for all they can. Nowhere in the developed world do tenants have to pay for maintenance, repairs, enhancements (!), new curtains, kitchen appliances, or shell out a whole year worth rent, thereby losing any leverage to address the above mentioned. They don't have to pay agency fees, lose their deposits 90% of the time or move house the very minute the market swings against them. Obviously there are exceptions but they are so rare in Dubai. I agree that as a LL the eviction rules, rental increase etc are so restrictive that it is hard to enjoy any up swing, however to ease on these rules, the Lls should also lobby for a fairer system for all, and yes that includes the tenants. The way things are going (low wages and inflated rents) we are heading for another 'correction' , so brace yourselves folks.

Thanks A Rancher x

Cymraes, I think these new figures might be incorporated into the rera calculator.

Is the Rent Calculator still the decider for rent increases? We're at the 90 day point this week .... Thanks

it is not sustainable to have a city where the average 2 bed in non-prime locations costs 50 - 70% of the income of a white collar worker It's recommended that accommodation costs should be no more than about 30% of monthly income. Of course, in Dubai - where relatively senior managers frequently only earn about 20k a month - that would equate to rents of about 72,000 AED per year for higher earners. Right now, that only gets you an apartment in the cheaper communities. One of the issues is that while fewer and fewer companies offer to cover rent for their staff, some of the few companies that do still do it are very large, and this distorts the perception of the market among landlords, who think that most expats just need to ask their company for a cheque of whatever size they require every year. And of course, the biggest single employer here - the government - pays rent for staff, as well as giving pay increases of up to 100%. The same could be said of any major city, but it is sustained because only the top earners or those with living costs supplemented by company or family live centrally Which is fine in most major cities, because they have sprawling suburbs and extensive mass-transit networks. It's possible to live *way* outside central London, or New York, or Tokyo, and still get to work in under an hour using public transport, most often the train. Here, you can't do that. If you move even just to Sharjah, you will be facing a hideous car commute - back before the last crash, it wasn't unusual for people to be spending 3 hours each way in their cars to and from Sharjah. And who wants to live like that? It would be wonderful if there was a proper train network here, so that people had a real choice about commuting that didn't involve having to drive. Imagine being able to live by the coast in Fujairah and get to Downtown Dubai in 45 minutes by train. But that'll never happen. <em>edited by Madge_Gustard on 22/12/2013</em>

, and should remember it is only expensive compared to the relatively low rents over the last three years. . One can also say the 2007/2008 rents were relatively high; 100k for a small 1 bedrom apt anyone ? The main thing that drives rental prices apart from supply is income. The vast majority of the city, and I am talking about white collar workers with families, do not earn enough to be able to afford a 100k 1 bedroom apt or a 130k 2 bedroom apt which is what rents were like in the summer of 2008. In the short run, people will take loans or use savings to not move for a year or 2 due to children's schools etc., but in the long run, it is not sustainable to have a city where the average 2 bed in non-prime locations costs 50 - 70% of the income of a white collar worker The same could be said of any major city, but it is sustained because only the top earners or those with living costs supplemented by company or family live centrally. Or buy if they can afford, to protect themselves from spiralling rents... Which is what many people did, but the market dropped... Markets are circular and rents, wages, interest rates, property prices etc will all correct themselves - of course there will be another recession at some point in the future, but it is not only tenants that need consideration, perhaps property investors more-so. Why do you say "investors more so"? Investors primary purpose is to make money, but the risk is there that investments can go down as well us up. It's not the tenants issue that some people over stretched themselves and bought properties at silly prices with stupid interest rates and now face having to cover the shortfall. I have properties in the UK and in over 10 years the rental price has increased by 12%. Here prices go up by more than that overnight, creating instability. Landlords want top dollar, companies are no longer providing the benefits or wages to sustain paying top dollar rents, people leave, landlords don't get tenants... Reminiscent of 2008/2009?

, and should remember it is only expensive compared to the relatively low rents over the last three years. . One can also say the 2007/2008 rents were relatively high; 100k for a small 1 bedrom apt anyone ? The main thing that drives rental prices apart from supply is income. The vast majority of the city, and I am talking about white collar workers with families, do not earn enough to be able to afford a 100k 1 bedroom apt or a 130k 2 bedroom apt which is what rents were like in the summer of 2008. In the short run, people will take loans or use savings to not move for a year or 2 due to children's schools etc., but in the long run, it is not sustainable to have a city where the average 2 bed in non-prime locations costs 50 - 70% of the income of a white collar worker The same could be said of any major city, but it is sustained because only the top earners or those with living costs supplemented by company or family live centrally. Or buy if they can afford, to protect themselves from spiralling rents... Which is what many people did, but the market dropped... Markets are circular and rents, wages, interest rates, property prices etc will all correct themselves - of course there will be another recession at some point in the future, but it is not only tenants that need consideration, perhaps property investors more-so.

Yes, but in how many other countries are the tenants expected to pay all the costs to rent, pay rent upfront and in some cases maintain the property for the LL ? I agree that it would be great for LL to bear more of the costs and for monthly payments to be the norm but surely people should be aware of the quirks rental market here before they make the decision to come? If someone is arriving having no idea that they will probably have to pay a year's rent upfront along with agents fees etc then they really should have done their homework. It may not seem fair but it's been this way for years so shouldn't be a surprise for anyone. I'm not saying that this means that things shouldn't change, and I hope they do change but it's not like it's something that has suddenly been sprung on all of us.

, and should remember it is only expensive compared to the relatively low rents over the last three years. . One can also say the 2007/2008 rents were relatively high; 100k for a small 1 bedrom apt anyone ? The main thing that drives rental prices apart from supply is income. The vast majority of the city, and I am talking about white collar workers with families, do not earn enough to be able to afford a 100k 1 bedroom apt or a 130k 2 bedroom apt which is what rents were like in the summer of 2008. In the short run, people will take loans or use savings to not move for a year or 2 due to children's schools etc., but in the long run, it is not sustainable to have a city where the average 2 bed in non-prime locations costs 50 - 70% of the income of a white collar worker

I agree, not many, but every country has its "quirks" - banks and companies offer rent loans to brand new movers to assist those that don't have sufficient savings. And until it's not affordable or accessible for the majority then it's unlikely to change. A lot of landlords accept quarterly or monthly payments - it's less common to find a property where only one cheque is accepted. Monthly cheques and landlords paying fees would allow greater movement for tenants and free up the market on both sides. <em>edited by ChilliChai on 22/12/2013</em>

Rental prices are not close to pre-2009 levels, but sale prices are almost there - I think we can expect rent prices to rise, and should remember it is only expensive compared to the relatively low rents over the last three years. There is fierce competition between potential tenants in some areas - the rental plus agent fees is clearly affordable to some. Dubai, like every other market, is unique - we might not like it but accommodation is still relatively inexpensive for the type of property available in relatively central locations. HK is a small island, NYC is a peninsular, London is sprawling but low-rise, Tokyo, Oslo etc... All have their justifications for extortionate rent and it is difficult to make a like for like comparison, but none of us would likely be expecting a brand new, spacious flat or villa with concierge, pools, gyms, parking, room for a maid in our home countries at an easily affordable price. I don't think Landlords need to "realise" or learn any lesson re tenants - it is a transient place where the downturn was quickly turned around and us now rapidly on its way up. It is very expensive to invest in property here and people are motivated to buy for many reasons, not just to make a quick buck, but everyone wants to see a return on investment. I'm not sure why you would assume with the cost of buying so high, that the majority of landlords see tenants as a meal ticket. Anyone that bought a mortgaged property between 2006 and 2009, of which there are many, will most likely be supplementing the repayment costs and possibly in negative equity. The return is more risky due to regulation and frequent law changes so owners can't necessarily take a long term view. Affordability is relative to where you have come from - Nationals where there is low tax may go to London and berate the high levels of tax and question how it is possible to live in a central location. Yes, but in how many other countries are the tenants expected to pay all the costs to rent, pay rent upfront and in some cases maintain the property for the LL ?

Rental prices are not close to pre-2009 levels, but sale prices are almost there - I think we can expect rent prices to rise, and should remember it is only expensive compared to the relatively low rents over the last three years. There is fierce competition between potential tenants in some areas - the rental plus agent fees is clearly affordable to some. Dubai, like every other market, is unique - we might not like it but accommodation is still relatively inexpensive for the type of property available in relatively central locations. HK is a small island, NYC is a peninsular, London is sprawling but low-rise, Tokyo, Oslo etc... All have their justifications for extortionate rent and it is difficult to make a like for like comparison, but none of us would likely be expecting a brand new, spacious flat or villa with concierge, pools, gyms, parking, room for a maid in our home countries at an easily affordable price. I don't think Landlords need to "realise" or learn any lesson re tenants - it is a transient place where the downturn was quickly turned around and us now rapidly on its way up. It is very expensive to invest in property here and people are motivated to buy for many reasons, not just to make a quick buck, but everyone wants to see a return on investment. I'm not sure why you would assume with the cost of buying so high, that the majority of landlords see tenants as a meal ticket. Anyone that bought a mortgaged property between 2006 and 2009, of which there are many, will most likely be supplementing the repayment costs and possibly in negative equity. The return is more risky due to regulation and frequent law changes so owners can't necessarily take a long term view. Affordability is relative to where you have come from - Nationals where there is low tax may go to London and berate the high levels of tax and question how it is possible to live in a central location.

What many people are expected to do is arrive as new expats fresh off the plane, and then go and get a bank loan for their rent (in how many other countries could you arrive one day and take a big bank loan the next, before you'd even earned a single month's salary?) So they've then got a stark choice - either spend their first year living like a hermit as they try and save enough to pay their next year's rent in one cheque while they're paying off this year's rent loan, or simply roll the debt over. And since it's near-impossible for most people to pay a rent loan *and* save more than they're paying out in loan repayments in order to cover themselves for next year's rent *and* save a worthwhile amount for themselves *and* enjoy a reasonable standard of living here, rolled-over loans are extremely common among expats. One of the reasons given for the change to the Dubai rent laws is so that Dubai can "remain competitive". Well, the two biggest things that could be done to make the Dubai rental market competitive would be to give all tenants the full legal right to pay rent monthly on rolling contracts, and to make landlords pay the agent commission. The sooner landlords stop viewing tenants as guaranteed meal tickets for a year, the better. "Like" and totally agree <em>edited by Geordie expat on 22/12/2013</em>

What many people are expected to do is arrive as new expats fresh off the plane, and then go and get a bank loan for their rent (in how many other countries could you arrive one day and take a big bank loan the next, before you'd even earned a single month's salary?) So they've then got a stark choice - either spend their first year living like a hermit as they try and save enough to pay their next year's rent in one cheque while they're paying off this year's rent loan, or simply roll the debt over. And since it's near-impossible for most people to pay a rent loan *and* save more than they're paying out in loan repayments in order to cover themselves for next year's rent *and* save a worthwhile amount for themselves *and* enjoy a reasonable standard of living here, rolled-over loans are extremely common among expats. One of the reasons given for the change to the Dubai rent laws is so that Dubai can "remain competitive". Well, the two biggest things that could be done to make the Dubai rental market competitive would be to give all tenants the full legal right to pay rent monthly on rolling contracts, and to make landlords pay the agent commission. The sooner landlords stop viewing tenants as guaranteed meal tickets for a year, the better.

as you say the rent is payable monthly, so therefore more affordable Just imagine, in the developed world, going to your employer and saying "My rent will cost me X amount in total this year. Can you give me that much now so that I can pay the whole lot to my landlord in advance?" Can you imagine what your employer would say? Equally, try going to a bank to borrow a year's rent. You would be turned down flat, because rent is a regular monthly living expense to be paid out of monthly income. And yet here... Can anyone on here honestly say that over the space of one year they could pay their rent, survive and at the same time save enough to pay the following years rent upfront?

In all my posts about rent, I've always said I wanted a system that was fair and my very first comment in this thread was that this new systems is more fair than the old system. I hope this new system works better for everyone. I also find this law fairer like you AR.

as you say the rent is payable monthly, so therefore more affordable Just imagine, in the developed world, going to your employer and saying "My rent will cost me X amount in total this year. Can you give me that much now so that I can pay the whole lot to my landlord in advance?" Can you imagine what your employer would say? Equally, try going to a bank to borrow a year's rent. You would be turned down flat, because rent is a regular monthly living expense to be paid out of monthly income. And yet here...

In other countries if a tenant signs a contract for a year, the tenant can't just leave at any point and is responsible for paying the rent until a new tenant is found. This is not unique to Dubai. Of course it's not unique to Dubai but paying a year's rent upfront into the LL pocket is very very unique to Dubai. I have a flat in Switzerland and we signed a 3 year contract with the tenant. He pays his rent monthly and the bank holds a bond & security in the event of conflict which neither of us can touch unless a notary is involved. THAT IS FAIR! Also unlike here most tenants do get their deposits back, unless something very serious has happened to the place. Unlike here where some, and I am just saying some, LLs seem to feel the deposit is theirs to keep.

Also whenever I have rented back in the UK. I have never had to pay agency fees, it's always the LL who pays the fees, this makes the LL less likely to keep on wanting to change tenants, even for a higher rent. The higher the rent, the more the fees !! The longest contract I ever signed was for 6 months, with an option to stay on if I wanted to and as you say the rent is payable monthly, so therefore more affordable. <em>edited by Geordie expat on 22/12/2013</em>

In other countries if a tenant signs a contract for a year, the tenant can't just leave at any point and is responsible for paying the rent until a new tenant is found. This is not unique to Dubai. Of course it's not unique to Dubai but paying a year's rent upfront into the LL pocket is very very unique to Dubai. I have a flat in Switzerland and we signed a 3 year contract with the tenant. He pays his rent monthly and the bank holds a bond & security in the event of conflict which neither of us can touch unless a notary is involved. THAT IS FAIR!

But typically, tenants *don't* sign a year's contract. They have rolling contracts with monthly rent payments - you know, that they can pay out of their salary each month. Because in the real world, people simply can't afford to pay a year's rent in advance. And landlords here *do* feel entitled to earn a year's rent out of every tenant, regardless of how badly they treat them or whatever circumstances befall that tenant which force them to leave. It's unfair and it's wrong. <em>edited by Madge_Gustard on 22/12/2013</em>

In other countries if a tenant signs a contract for a year, the tenant can't just leave at any point and is responsible for paying the rent until a new tenant is found. This is not unique to Dubai.

Without a limit Dubai will again see a mass exodus. A fair number of people I know are leaving at the end of the academic year as they are struggling with school fees and high rents Absolutely. It's inevitable. Landlord still seem to be of the mindset that all expats have their rent covered by their employer, and they really don't seem to understand that we don't all have a magic orifice out of which we can pull a single rent cheque for hundreds of thousands of dirhams. When saving money in Dubai becomes all about saving for next year's rent cheque, there's no point staying here. Places with a more mature housing market have found their level And it's not just about the level of the rent, of course - it's everything associated with renting. The Dubai rental market isn't free and open, because there is very little real mobility. Once you've signed that one-year contract you're locked in with virtually no leverage; in a proper rental market you'd be able to deal with bad landlords by upping and go somewhere else quickly with few financial penalties, but in Dubai you have to be willing to forfeit your entire year's rent if necessary (and pay another socking great commission to an estate agent), so of course tenants end up unable to move until the end of the contract, and landlords develop the sense of entitlement to earning a year's rent out of every tenant regardless of how badly they treat them.

In all my posts about rent, I've always said I wanted a system that was fair and my very first comment in this thread was that this new systems is more fair than the old system. I hope this new system works better for everyone.