Tenants who have been living in properties for over two years may need to pay higher rents
The Real Estate Regulatory Authority (RERA) index for Dubai has been updated and is likely to impact tenants who have been living in properties for over two years, an expert has said. According to Richard Waind, CEO of Betterhomes, the RERA calculator was updated on March 1, bringing future renewals more in line with rents found today on the open market. The calculator tells landlords and tenants how much rent on renewal can increase based on a benchmark rent for each community.
The recent increase in the calculator is likely to impact those tenants who have been in situ for over two years and are now likely to see a larger rent increase on renewal than they would have prior to the revision. I expect this will mean some tenants may look to move, or downsize, while for other tenants this may mean they decide to take the plunge and buy a property.
Richard Waind, CEO of Betterhomes
He added that the segment that is likely to be the most impacted are those areas that have seen the greatest rise in rents in the last two years, so in particular central villa communities and waterfront apartment communities. Industry executives noted that the rents could go up between 10 to 20% in the near future due to the revision in certain areas.
However, Waind expects that the revision in the calculator could help bring down rents in the long term. “The previous calculator created a large disparity between renewal prices and the open market, which in turn meant there was little movement in the market. That lack of movement meant a lack of supply of property, especially in the most popular villa communities. An increase in renewal costs may get the market moving, creating potentially more supply of homes in these communities, bringing open market rents down slightly.”
