Monday, September 04, 2006

Ajman cap rent increase by 20% in three years

Ajman residents have cautiously welcomed a recent decision to cap rent increases at 20 per cent every three years, but feel more is needed to ensure protection from exploitation. “Even if the government imposes a three-year ceiling on rent increases, the real estate agents can easily manipulate things,” said Yasmin, a housewife.

“They can ask the tenants to vacate, saying the property is sold to another agent. After tenants vacate, they can lease the same building for a higher rent. The cap would not affect such transactions.” She added that even before completing agreement periods, some tenants were evicted from their homes.

A good aspect of the new law, according to residents, is that no increase in rent shall go into force for first-time contracts that went into effect in the period from 1 January 2006 up to the date of issue of this decree.

Yasmin, like many other residents, felt that Ajman’s recent rent boom was fuelled by unnecessary speculation and artificial inflation from middlemen. Another resident, who did not wish to be named, said: “The agents create artificial shortages in the market. I know some vacant buildings in Ajman because there are no takers.The agents wait and then reduce the rent.” Another resident added: “If the building owners directly lease the building to the tenants without involving middlemen, the tenants would benefit. There are many agents, sub-agents and freelance brokers who make a quick buck from such deals.” “There was a time when the landlords would offer one month rent free as an incentive to attract tenants,” he added.

KB Devaraan, Financial Controller at HNS Group, claimed: “A number of real estate agents have come up in Ajman and now, in addition to paying high rent, customers have to bribe the clerk and other staff in the real estate company.They take people for a ride by demanding bribes.” According to him, the rent ceiling rules or other government regulations have not helped the average tenant.

“Some of these rules are just on paper. When affected tenants go to the municipality with complaints about arbitrary rent increase, they don’t get much help,” he claimed. Ajman has seen a rental boom in the past year as rising rents in Dubai and Sharjah pushed families out in search of other alternatives.

As Ajman’s hitherto-undeveloped property heats up, residents want more transparency and regulation of its market. The cost of renting has already seen the biggest jump in Ajman, with one-bedroom flats now going for Dh19,000, which is a 57 per cent increase.

[Article from Emirates Today on October 1, 2006]

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