CEO of property portal Gowealthy.com, Peter Penhall, junked industry concerns that the index would let landlords to bypass the 5 per cent rent limit. Dubai's Real Estate Regulatory Agency (Rera) plans to set up an index setting a range of suitable rents for properties across the city in an exertion to manage rocketing rental prices that are contributing record inflation.
The authority intends the index to have separate prices for studio, one-, two- and three-bedroom apartments and villas in each community that will help landlords and tenants benchmark their rents against Rera's guidelines..
A media report on Monday claimed the index would give landlords "the necessary tools for them to try and violate it [the rent cap]", citing an unnamed property analyst..
“The index will bring equality into the rental market, which is still a very immature market," Penhall said."Some tenants are currently being taken for a ride in terms of paying excessively high rent, and a rental index will stabilise prices, and bring a form of regulation and equality.".
Penhall did concede tenants with lease agreements signed before rental prices shot up could face higher rents when their leases expired.“There will be adjustment both ways - when leases expire some tenants will face severe increases but on the other hand, some will be paying a fairer price for their property..
"There is currently a wide range of rental prices, depending on when you signed your lease and whether it was before the 15% rent cap [in 2006] or the 5% rent cap,” he added..
Penhall said the index would only be a benchmark to give an indication of a fair price for that area and would not be a strict law.Dubai does not currently have a property index, which means that tenants pay often very different rates for the same types of properties as rents for new arrivals have risen rapidly in recent years..
Marwan Bin Galita, chief executive at Rera, said on Sunday that by 2009 all new properties and rental contracts for commercial and residential units would be incorporated into a full database of rental agreements in Dubai..
Bin Galita said there is enough housing supply in the Dubai market, but the land is being held by greedy investors and real estate agents."There is enough supply in the Dubai market but because of greedy real estate agents or greedy investors, they are keeping the ground," he said..
UAE Central Bank Governor Sultan Nasser Al-Suweidi has previously said rents are the main driver of inflation the second-largest Arab economy, which hit a 19-year high of 9.3% last year..
EFG-Hermes said earlier this year that the rental cap would have limited impact on curbing inflation because a shortage of housing was the main driver behind rental increases.
