The proposal is essentially about adding a provision in rental contracts that will require tenants to stay in their rented place for three years. While the DLD is still considering and reviewing the three-year rent freeze, it is important to know more about it if you are a tenant or landlord.
For the past few years, Dubai has seen a lot of property construction and developments. The supply for residential areas have increased, but the demand has slowed down. According to one study, rental prices have dropped by 11 percent compared to last year. This is true for apartment and house rent in Dubai.
If this trend continues, the real estate market in Dubai may suffer. Landlords would be forced to lower rental fees. Lower income means fewer people are encouraged to make new investments.
The three-year rent freeze is seen by the DLD to be one of the solutions to this current problem. It could benefit not just the landlords, but also the tenants.
With a three-year contract in place, the landlords are given the possibility to earn continuously for three years. In short, freezing rents allow landlords to have a guaranteed return of investment and consistent cash flow.
On the other hand, tenants would enjoy a fixed rental rate in three years. This helps tenants to avoid getting hit by constant rental raise and helps in budgeting.
Both landlords and tenants could save more time and money as they only need to renew contracts every three years.
Some experts argue that a three-year rent might not be needed as of now. While it is true that it may encourage financial stability for landlords and tenants, it could lead to other potential problems.
Take for example a studio for rent in Dubai. A couple may have an additional member to their family and thus, would need a bigger place to stay. The couple may be forced to leave their rented studio and look for another place. This can happen before their three-year contract expires.
A term of three years is actually a long time. There could be some unforeseen changes in a tenant’s life that could affect a contract. A three-year rent freeze could be seen as too inflexible for some tenants.
Moreover, landlords and tenants always have the option to negotiate and agree on terms and conditions. They can still prepare a contract that offers a win-win solution.
The DLD is in the process of reviewing the three-year rent freeze. Whether they approve it or not, it could have an impact on the real estate market.
If you wish to know more about Dubai’s real estate market or you’re looking for a place to stay, you would love speaking to Rocky Real Estate. With decades of experience, they have the necessary expertise to help you make the right decision in choosing a property for rent in Dubai. Call them today!