'Dubai should consider removing rent cap'

22.11.2014
There is little doubt that any move to abolish the cap would cause short-term difficulties for some tenants in Dubai, but the long-term benefits in the form of more investment in the market should prevail.
“Rent control, along with laws protecting tenants against eviction, involves partial expropriation of property rights. It limits the owner’s rights to use and to profit from the use of his property.”
That's the foreword to a paper by economists Milton Friedman and George Stigler, written just under 70 years ago. The market they were referring to — the post-war US — may be far removed from 21st century Dubai, but the complaint about the imposition of a rent cap is the same. In a free market, supply and demand should determine the cost of rent, and keeping prices artificially low serves no-one, Arabian Business reported.
Dubai’s cap — which limited rent rises to 7% every year — was introduced in 2007, in a bid to protect tenants as the housing market shot out of control. However, it puts off potential investors who are rightly concerned that the returns on their investment are being kept artificially low. With fewer investors in the market that, in turn, discourages developers from building more houses.

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Lease process (Rent out)

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership

1 day

Ad placement:

  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.

Up to 2 days

Signing of the lease agreement

Expenses of the seller:

None

Additional services:

Property management

Lease process (Rent)

1 hour

Contract of the lessee and agency.

Up to 5 days

Real estate search.

Selection of optimal options.

Up to 2 days

Signing of the lease agreement

Expenses of the lessee:

-5% agency commission of the annual contract price

Additional services:

None

Purchase process

1 hour

Contract of the tenant and agency.

~ 2 weeks secondary

~ 3 weeks new building

Property Selection

Selection of optimal options

1 Week

Registration of the contract of purchase / sale

Customer charges:

  • 2% from purchase at transaction
  • 4% - registration of the transaction at registration

Additional services:

Property management

Sales Process

1 hour

Contract of the lessee and agency.

Required documents:

  • copy of the passport
  • copy of the certificate of ownership

1 day

Ad placement:

  • 20 real estate portals;
  • client base of the agency;
  • profile exhibitions, etc.

Up to 2 days

Signing of the lease agreement

Expenses of the seller:

None

Additional services:

None

the management process

1 hour

Contract of the owner and agency

1 year

Rendering of management services

1 day

Reporting

Expenses of the owner:

5% of the annual rental price

Additional services:

None

Investment Process

1 hour

Contract of the tenant and agency.

From 3 days

Selection of optimal investment options

1 Week

Registration of the contract of purchase / sale

Expenses of the investor:

  • 2% when investing in the secondary market
  • 0% when investing in a new building
  • 4% - registration

Additional services:

Property management