Question: I stay in a good building in a premium location in Dubai. But my property’s per square foot price is lower than that of neighbouring units. Our building was previously given a 5-star rating by the Dubai Land Department based on various parameters. In one of your recent articles, you said the building’s grade plays an important role in the recently upgraded rental index.
Isn’t it contradictory that the new rental index is more data-driven but the owners' association (OA) and building management company still need to manually ensure the grade is correct? Ideally, the grade should have been done after DLD inspections and the report should be embedded in the system without any manual actions required by the OA or management company. When you put manual actions in place, it will depend on how active your OA is, how good your management company is and how big the developer is.
You mentioned the building quality and facilities will lead to a better grade. We have a gym, swimming pool, a nice lobby, spacious apartments, lake views, parking and good maintenance.
Where can I find the latest building grade on the DLD website? What can we do to improve our building classification so that the grade can increase and its value appreciate? Which authorities in Dubai can guide us? Can an individual owner, OA member or management company challenge the existing grade? HS, Dubai
Answer: The grading of all buildings has been a very laborious task taken on by the DLD and was only completed towards the tail end of last year, after years and years of work.
If the building management doesn’t agree with the grade or classification of the tower, there will be further investigation and alteration is possible.
With reference to how a building can improve its grade, that will depend on many factors, the entrance lobby being the first one to tackle. Improvements and upgrades to the decor, change of materials and upgrades to the fabric of the building, common areas such as the facilities offered, the gym, the swimming pool, the spa (if any), the greenery or gardens, hard or soft landscaping, sustainability features such as solar panels and the installation of charging points for electric vehicles, among others, can help improve a grade.
To find out your tower’s grade, engage with the building management and/or the OA, they will have all the information. I suggest you use their channels to communicate with the DLD rather than trying to do this yourself.
Challenging a documented building grading certificate can be done by contacting the DLD, but it should be done by the OA or building management. The procedure will be explained at the DLD.
Q: In the past, the Dubai Rental Index took into consideration how close the tenant's current rent was to the standard range in the area and would not issue an increase if the amount was less than a few percentage points away from the minimum value.
It now looks like those margins have been foregone. If I input a current rent value that is Dh1,000 ($272) away from the minimum rental amount, I get a 5 per cent increase, pushing the rent well into that range.
This doesn't seem fair, as being above the maximum number of the range doesn’t lead to a rent decrease. What is the best way to avoid this scenario? HF, Dubai
A: The smart rental index is just that, smart. It was introduced at the start of this year because the previous index was too basic and didn’t take into consideration upgrades or other important factors, nor was it updated regularly enough.
While I cannot say the current index is perfect, it is more sophisticated. The biggest difference with this new version is that each tower is now graded from 1 star to 5 stars. This grade will determine how the index is weighted when it comes to the rental price at renewal.
What you describe is not valid in my opinion, because the current rent is the current rent and this cannot be changed, so when inputting the data for renewal, it is what it is.
I can also confirm that the index is under constant scrutiny by the DLD and if there are loopholes or issues that need addressing, it has a laser-focused team that deals with any issues, so there is no need to worry. The previous index was very weighted in favour of the tenant and, while the new index isn’t perfect, it’s a lot better than its predecessor.
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com
