Dubai ruler issues new decree on rentals

A decree setting the maximum allowed increase in property rent values in Dubai during 2010 has been issued by the Dubai Ruler.

The decree, issued by Sheikh Mohammed bin Rashid Al Maktoum, who is also the Vice President and Prime Minister of the UAE, aims at ensuring the stability of Dubai's property market, according to a WAM News Agency report.

For properties rented in 2009 and before, the maximum increase in rent value shall be set as per the previous relevant similar decree for 2009.

The decree approves the Real Estate Regulatory Authority's (RERA) price index which shall be followed as the reference for setting any increase in rent values in 2010.

The new decree prevents any increase in rent values as long as they are less by a maximum of 25 per cent than the average rents of properties of similar specifications.

The maximum allowed rental increases shall be as follows: - 5 per cent increase if the rent value is 26 per cent to 35 per cent less than the average rent of properties of similar specifications.

-10 per cent increase if the rent value is 36 per cent to 45 per cent less than the average rent of properties of similar specifications.

15 per cent increase if the rent value is 46 per cent to 55 per cent less than the average rent of properties of similar specifications.

-20 per cent increase if the rent value is less by a percentage that is more than 55 per cent of the average rent of properties of similar specifications.

The decree goes into immediate effect and shall be published in the official gazette.

The decree also defines a new formula for lower rent values which allows a proportional increase in rents for 2009. According to the new formula, the increase in property rent will rise in proportion with the drop in 2008 rent value in the average annual rent for the same property.

Source: Trade Arabia News