Thursday, January 03, 2008

Dubai rents to be capped by 5% in 2008

The Vice President and Prime Minister of UAE and Ruler of Dubai, H.H. Shekh Mohammad bin Rashid Al Maktoum, has issued a decree on 27th December 2007, lowering the annual rent cap in Dubai by 5% from the existing 7%, beginning 1st January, 2008. This rent cap would be implemented by the RERA (Real Estate Regulatory Authority) and the Dubai Land Department (DLD) in 2008.

This new rent cap would be applicable to new tenants, whose rents were not increased last year. However, for those tenants, who have had a rental increase in 2007, there will be no new increase.

At present, Ras Al Khaimah and Fujairah have both had a rent cap of 15%, while Abu Dhabi maintained 7% rent cap.

This move by the Dubai government has been much appreciated by the residents, realty developers and brokers, as strong demand and lack of adequate supply, had increased rents tremendously during recent past, which is a cause of concern among residents in Dubai.

The RERA Chief Executive, Marwan bin Ghalita, has warned that any increase beyond the proposed cap, is in violation of the rule, and in such a case, tenants should not agree to sign the contract.

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