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- If the landlord does not communicate any sort of price increase, would the contract be considered renewed automatically on the same rate agreed previously? What happens if I find out about any increase only upon the rent contract expiry?
In this case, the contract will be renewed at the same price agreed as per the previous lease agreement. All Dubai landlords should be familiar with Law No. 26 of 2007 which governs the relationship between the landlord and the tenant. According to RERA, the landlord should provide 90 days' notice prior to the expiry of the lease contract if there is any change in the rent price. The landlord and tenant should discuss the rent increase prior to the lease renewal date to avoid any surprises going forward. You can use the rent calculator on dubailand.gov.ae. If you and the landlord disagree on the increase, you should approach the Rental Dispute Settlement Centre.
- What is the scope of returns on investment in commercial properties?
It has been noticed that the sentiment of the entrepreneurs of Dubai with regard to the location of their organization indicates that they are looking forward to be more centrally located (e.g. Business Bay, DIFC, Downtown Dubai) so that they can have access to the new and old sides of Dubai equally. Additionally, more of them are looking forward to moving out of the rent system and proceeding towards owning the premises of their own enterprises. Looking at the current supply of ready properties in comparison to the demand, there is a shortage in the variety of ready options to fulfill client requirements. The same entrepreneurs do not look forward to a payment plan but are instead willing to purchase a ready property by making a full payment and occupying the premises even though an off-plan property would prove a cheaper option. Investors can, therefore, look forward to good returns in the future by investing in off-plan commercial projects.
- I am planning to buy a property for the first time. What should I consider to make the right decision? How do I know if an off-plan or ready property is the right choice for me? What are the steps that I should take to make a decision?
First and foremost, you should work out what you want from your investment. Are you looking for return through appreciation within a year or five years, or are you looking for good, steady return on investment through leasing over a longer period?
Please take note that off-plan properties come cheaper than ready properties, but they take some time before they can be completed.
By having a clear investment plan, it will save you a lot of time to choose the right location and the right property type for you.
- I have recently purchased an off-plan property by putting in an initial deposit of 10%. The developer is now asking me to pay the 4% oqood charge to register my unit. This was not applicable when purchasing off-plan unit earlier. What is the benefit of this and is it necessary for me to make this payment?
The Dubai Land Department (DLD) is charging a registration fee of 4% of the unit purchase price for the initial registration of sale also known as oqood. This will ensure that your property is registered in the DLD system. The aim of the DLD is to reduce speculation.
Earlier investors used to buy property by putting in a 10% deposit and flipping it. Dubai is looking for long-term investors rather than short-term ones to help stabilize the market and for property owners to benefit from what Dubai has to offer in the long term.
- Question of the Week: What are the necessary measures that I must take when investing in off- plan property?
It is important, prior to investing in an off-plan property, to know more about the developer's history, the competitive properties available, the market conditions and other vital factors so you can grab deals at a fraction of their intrinsic value.
Off-plan property is bought at today's price by paying just a small percentage of the total cost as deposit. The balance is settled over a period of time, which is one year or longer, in the form of installments until the property is completed.
The most important initial step is to ensure the developer is registered with the Dubai Land Department (DLD) and has a license for property development in Dubai. Make sure the developer has obtained the registration documents and escrow account details where payments shall be made, and the purchase agreement must include an agreed commencement date of construction and completion date.
If the property is to be furnished, ensure the details of the furniture package are attached with the sales agreement. Make sure that your unit is also registered with the DLD.
Source: Ashirwad Somani, Special to Freehold
The writer is Managing Director - Candour Real Estate
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