Are landlords in Dubai drawing more flak than they deserve?

Are landlords in Dubai drawing more flak than they deserve?Zubin Firozi

One of the core drivers of quality living in the world is where you live and how much you pay as rent. It is an emotive subject because home, after all, is where the heart is. So any disruption on this front — such as a dramatic increase in rent — tends to lead to strong reactions.

The bad guys in this scenario, particularly in Dubai, are frequently seen as the landlords. They are considered shadowy figures, rolling in dirhams due to leasing multiple properties.

As someone who works in the real estate industry, I believe this stereotype is unfair. It is not a case of defending landlords as much as trying to see the situation from all sides.

We must remember that a landlord is an investor who puts money into a property to make a living. The tenant is the end user or the consumer and, as with most sectors, tends to have broader rights. For instance, if you buy something in a mall you have more rights than the factory that made the product. So, landlords are on the back foot the moment they lease their property.

When it comes to renting, there are laws in Dubai that protect a landlord's interests, but enforcing them is a rather tedious process. Take for example a situation where a tenant has not renewed the lease and absconded. Legally, the landlord has not been given back possession of the property by the tenant, so the landlord can't just break open the door and take over. In such scenarios, a notice has to be sent through the public notary first and if it is undelivered, publish a newspaper article about the situation. Then, the landlord has to go to the rent committee and file a case.

After all this, the judge could request another round of due process before permitting entry into the property, which comes much later. This can take up a lot of time — up to a year sometimes — which obviously eats into the landlord's rental revenues.

If a tenant simply does not pay rent, the landlord has to give 30 days to allow things to be sorted before legal action can be taken. The landlord is without income during this period. Most investors have their own mortgage payments and other bills that need to be met, but they are basically stuck at this point.

A few years ago, when many people unfortunately lost their jobs due to the recession, there were a lot of bounced cheques and many tenants suddenly left the country. For many landlords this was a really tough period as well, as they tried to get their properties back officially. Being able to move forward was not easy. Landlords have since told us they would like to see the legal route streamlined.

But what about the recent rent hikes? While there are landlords who try to circumvent the law in Dubai by grossly and suddenly raising a tenant's yearly amount, the vast majority stick to the permitted increase, which must be in line with the Real Estate Regulatory Agency's rental index and not exceed 20 per cent. There is also a well-publicised rent calculator that is followed closely.

Some people might feel their rent has gone up arbitrarily, but if you set up house when the market was slow a few years ago it could seem like you are experiencing a sudden jump. However, it is really just a reflection of the current market. So the idea that landlords are allowed to increase rents as much as they like, whenever they like, is simply not true.

Even legal professionals tend to be more in favour of the tenant than the landlord, which is understandable as it stems from the government's desire to create a healthy leasing market. Dubai's new Rental Dispute Settlement Centre has also eased the overall situation and settled many cases amicably. The centre is much stronger and better structured these days, offering a wider application of the law.

The government has been adding and regularly amending laws since 2006 to improve the situation for everyone concerned. Industry experts agree that creating greater awareness about these regulations is key to a thriving rental market.

And that is not always easy. The website is a great source of information, but perhaps distributing booklets that explain in layman's terms real estate terminology and the rights of each stakeholder would be useful.

For any large city to do well, it needs landlords to be able to increase rents in a managed way so tenants don't get taken advantage of. But go too far with rent control, and investors will become disincentivised. So it is a delicate balance.

What a landlord expects from tenants are timely payments, maintenance of the property to a reasonable standard and to not use it illegally — such as by sharing or subletting. The main issues that come up from the tenants' side are sudden rent increases and eviction.

I believe a reasonable attitude from both sides, proper information dissemination and transparency are the ways to move forward. And it means no one needs to be painted a villain.

Find out the budget-friendly places to live in Dubai

Source: Zubin Firozi, Special to Property Weekly

The writer is Head of Property Management at Better Homes


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