I just read on CNBC Arabia that Dubai government capped the rent increases during 2008 to 5%.

That is to control inflation or for something else ?

I don't know the exact reasons behind it, but I guess it's the government listenning to the voice of most tenants that keep complaining about landlord's behaviour of increasing rents every year!
They capped it to 15% in 2005, then 7% in 2006 and now 5%.
I'm sure there was talks about a 7% cap every 2 years, but I don't know if it has been substitued by this 5% per year.

However, this 5% increase cap for 2008 is definitely a government law from midnight today!

Rammah

Can someone provide some more details to exactly how this works please? I have tried to investigate what exactly this entails, but details seem quite vague.

I can't really see how the Government will police this, especially with my customers who are renting out their properties online, with their own specified rental prices.

I agree with these actions by the Government, but as said, cannot see how this legislation will work, especially with the online community.

I have had no personal contact with any representatives from the government, in any way shape or form, so as far as I can see, things with pretty much stay as they are.

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I think that it's about "renewals". So, if you have a new instruction, you probably can have an asking price of your choice. However, once you rent it, you cannot increase the rent on your tenants for more than 5% in the following rental term [year i suspect it to be].

Does it make sense?

Rammah

I see, yes that makes perfect sense, thank you Rammah. In that case I would imagine that it would be down to the tennant report any increases to the rent over that allowance, and then the authorities would take any actioned required, if the landlord had over stepped the mark!?

Although I would imagine most Landlords would adhere to these regulations, but the question is whether this is common knowledge between Landlords, and whether Dubai Govenment will do enough to enforce and ensure everyone is aware of this.

What action would they take to prevent a Landlord over increasing their rent?

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They are tough on irregularities there, so I doubt landlords will be trying their luck. But if they really didn't know, then that'll be an interesting issue...

The government may request to have it as a close in any selling contract. So, whenever someone is buying a new property in 2008, it'll be there for him to know about.

I think many landlords won't be renewing to their current tenants because of it, especially those who were giving cheap rates and were intending to increase it in 2008.... they'll end up looking for a new tenant [i guess].

It'll be interesting to see the effect of that...

Rammah

That's a good point, this could kick up all kinds of other issues. If a Landlord is simply hopping from tenant to tenant to improve his rate of return rather than just increasing the rent for the current tenant, then people will be forced out of their homes year upon year, and could create a lot of instability surely?

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Landlord cant hop a tenant without proper reasons like non payment of rentals or illegal activities.Govt has system to help tenants in this type of cases.
How ever ,I read in news papers that Landlords dont care about Govt set rent cap and hiked almost 25 % rents. but courts stopped them doing so and fined in return.