Along with food and clothing, shelter is an essential human need. And thanks to an aggressive growth strategy over the last four decades, the UAE has been able to provide adequate accommodation for both its citizens and its large, fluid expatriate population. Yet, the supply of rental housing has not always been in synch with the demand, which in turn has caused havoc with rental prices.
The trick has been to find a balance so as to have a healthy property market that offers both worthwhile returns for investors, and fair and affordable rents for tenants. It stands to reason that when supply is low, rents are high, and vice versa. But both landlords and tenants deserve protection in law from dramatic rises or drops in the market.
Yesterday's report in The National, about Dubai tenants who have successfully challenged unreasonably large rental increases, is a welcome indication that the restrictions imposed by the Real Estate Regulatory Agency (Rera) are working. It is also a sign of the transparency in the market provided by Rera's geographic rent index - a database that allows tenants to compare the price they are being asked to pay with the average price for similar premises in the same neighbourhood. When proposed increases are outside of the 5 per cent to 20 per cent allowed by law (depending on how far below market rent the property is), tenants in Dubai now have recourse to challenge the decision.
In Abu Dhabi, the market and the legislative framework are different, but the intent is similar. According to its mission statement, the municipality of Abu Dhabi's Tatheeq project has been tasked with regulating the real estate market "through effective and accurate data collection of all properties and tenancy contracts". No doubt its effectiveness is being put to the test during the influx of people as a consequence of the new requirement for all government employees to live in the emirate.
The bottom line is that consumers, and the property market itself, are entitled to a responsible level of protection through regulation. And with transparency in rental rates, tenants have more tools for protecting themselves. It is in nobody's interest for rents to become unaffordable, or for the market to bubble towards future problems.
Read more: http://www.thenational.ae/thenationalconversation/editorial/rental-regulation-benefits-everyone#ixzz2QHzxsEgH