UAE Property: ‘Is the new Dubai rent index more tenant-friendly?’

Question: After the publication of the new Dubai rental index in January, rental values were aligned with market prices. However, a few weeks ago, I noticed a sudden rent drop of 22 per cent for properties I had saved exact numbers before. These include one-bedroom apartments in Downtown and Dubai Marina. Given how the rent drop is uniform for all towers, I'm certain that it's not due to the underlying data. The new values show a range much lower than current prices, even if we look at renewed contracts . This is a tricky situation for landlords as the index proves unreliable and will prevent many from aligning their rents with fair prices. What steps can we take to urge the Dubai Land Department to fix the index? KA, Dubai Answer: To understand how the current rental index comes up with data, one first needs to understand the matrix used to generate these numbers. The previous rental index was too rudimentary and did not take into consideration important factors such as the building grading, in terms of quality of materials used or facilities, etc. It relied on old data and calculated the average rent based on old rental contract figures. The new rental index is much more sophisticated and uses artificial intelligence to gather data, not just from old contracts but new ones, too. Building classification, a very important factor, is now a major component of the new data, and most landlords had underestimated it. By this, I mean that most landlords perhaps think the building housing their unit is better graded than it actually is. Therefore, AI has, in some cases, downgraded the numbers after taking into consideration the building quality and facilities. This, coupled with using up-to-date rental contract information makes the index more accurate. The only way to drive up rent numbers is for an upgrade in the classification of the buildings. Owners’ associations and building management companies need to get together to ensure the grading of their building is correct. The fact that your data shows a 22 per cent drop for two areas is a coincidence. I can assure you that the DLD has introduced this improved index to rebalance the scales more for an equilibrium between tenants and landlords, whereas the old index was in favour of tenants alone. This new index will take time to get used to but rest assured that it is a much better version than the previous one. Q: My tenant defaulted on his rent payment but promised to settle the outstanding amount within a month. However, this went on for more than six months and the tenant did not pay. We asked him to vacate the apartment with immediate effect. He refused and said he would vacate the property in five months when his contract ends. We hired a lawyer and sent the tenant a notarised eviction notice. The tenant ignored this notice and the 30 days’ notice expired. We instructed our lawyer to file a case against the tenant at the Dubai Rental Dispute Centre to evict him. When the judge questioned the tenant about the eight-month arrears in rent payment, he asked for more time. The judge ruled the case in our favour and told the tenant that he had 15 days to appeal or vacate the property. After 15 days, the tenant neither submitted an appeal nor vacated the property. Our lawyer filed a claim for rental dues and expenses incurred with the Dubai courts. The judge instructed the tenant to settle all costs incurred and vacate the property by December 25, last year. He said we could repossess the property if the tenant did not vacate by then. On December 25, we forced open our apartment and took over possession. The property was in a very bad state, with the cost of repairs estimated at more than Dh7,000. The tenant has not handed over the keys or paid the rent due. The lawyer said the court has put a travel ban on the tenant and frozen his bank account. However, he added that the Dubai government had passed a law a year ago that a tenant cannot be jailed for non-payment of rent. What can we do to recover our costs? The tenant has stopped communicating with us. AP, Dubai A: You have done all you can to collect what is owed and now you are left with a large financial hole to fill, potentially without any compensation. I presume you hold the tenant’s rental deposit that could be used to repair the damage. I suggest you file another case to get satisfaction, given the tenant’s lack of action, despite all the judgments. This last judge will lose his patience and potentially move to fine the individual or perhaps impose an even harsher penalty. You should finalise this with your current lawyer. In the end, there is a possibility that you may never get compensated, in which case you can take comfort that this period is finally over and put it all down to experience. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com