The Rent Committee is Dubai's answer to the increasing problems for tenants faced with rent demands above the official rent cap or eviction demands (most likely due to the landlord wishing to sidestep the rent cap and rent out the property to a new tenant at a higher rent).
Some Greens apartments have been sold to third parties who are trying to impose 60% rent increases on the tenants by refusing to renew leases and instead only offering a new lease at inflated rent. Tenants in Greens apartments that are still owned by Emaar are being offered the same rent (in accordance with the rent cap law) but a slightly modified lease that removes the right to renew.
The law is apparently clear; any new landlord takes over the obligations of the lease, including the obligation to renew the lease if requested by the tenant. He must do this at a rent that is in accordance with the rent cap law (i.e. no rent increase if your rent increased last year). The law also requires that the renewal be on the same terms.
To file a complaint requires a trip to the Rent Committee. This is located in Deira at the Dubai Municipality building next to the creek. It's a big cube shaped building with "Dubai Municipality" in big letters visible from streets away. You cannot miss it.
The first step is to go to the counter, and they will advise that you get a ticket from the machine by the door. When you number is called, you will go to a small numbered room where you can talk to an advisor who will recommend whether to proceed or not. The advice from him regarding Emaar's new lease is that the lease must be offered on the same terms and that you should lodge a complaint if it is not. Apparently he said that many people have already done so.
The next steps are a little confused. You will require passport copies, both the old lease and the new one (if not available because your landlord won't supply one, put that information in your claim). You will then have to go to another counter to get an Arabic version of your complaint typed. It helps if you prepare a brief summary of what you want in English if you do not write Arabic. Keep it short and to the point, e.g.
1. The landlord has increased the rent beyond the rent cap and I wish to have the rent cap applied.
2. The landlord has changed the terms and conditions of the new lease and I wish to have the lease renewed with the original terms and conditions.
Have some cash with you as this Arabic translation costs 25 AED.
Next you have to visit another desk for the data to be entered to the computer system. You will then have to take your papers to the cashier desk and pay 3.5% of the current annual rent (you can use credit card at some marked windows). Get a photocopy of the receipt and the complaint form (the Arabic one you had translated) as you'll need these for the next step.
Finally, you need to visit a couple more rooms to get various signatures and stamps and then you will be allocated a date to turn up at the hearing.
The process is a little convoluted, but if you turn up early there are not too many people around and the staff are helpful in advising you where to go for each step.
If you win your complaint, the landlord will have to repay the fees you paid back to you.
The Dubai Government has provided the rent committee to provide some protection for tenants' rights and to help fight the damaging inflationary spiral that rent rises and bogus evictions are causing. While the process is not hassle-free, it only takes a couple of hours. You cannot complain about the system if you are unwilling to use the protections provided. Time will tell, but hopefully those Greens tenants who seek to use the protection of the rent committee will achieve a just outcome.
Tuesday, August 14, 2007
Sunday, August 5, 2007
From Rent Committee General Secretary - "Tenants can stay in rented homes for at least 3 years"
The Dubai Rent Committee has cleared air, and announced that landlords who wish to move back into their homes that have been rented out, cannot do so, until the tenants completes three years of contract.
Despite the fact that the standard rental contracts last one year, unless the agreement signed by both parties state otherwise, the rent committee would still stand in support of the leaseholder.
The General Secretary of the Committee, Mohammad Ahmad Al Shaikh, said the tenants have the right to stay in the property, due to the money invested in furnishing the house.
"It is no doubt, the prerogative of the house owners to live in their own house. But, in case, they have decided to let out the house for rent, they should understand that it is for a minimum of three years, though the contract is signed only for a year," Al Shaikh said.
Many landlords are said to have approached the rent committee as the tenants are refusing to vacate the property. But, according to Al Shaikh, the case will move in favour of landlord, only if, the contract clearly states that the house will have to be vacated after a year.
In the meanwhile, the landlords have branded the rule as "absurd" and "against the basic principles of ownership laws", as it prevents them from moving into their own house, but, the tenants have welcomed the policy.
As per the guidelines issued by the rent committee, the landlords who wished to move back into their own homes, could do so, provided, they do not rent our their house again.
The committee says that in case the landlord wishes to move back to their own house, their intention behind doing so, should be proven, and the landlord should ensure that the tenants are provided with sufficient notice period.
Any landlords violating these conditions will have to bear the consequences, the rent committee said.
Original story: http://www.estatesdubai.com/2007/07/tenants-permitted-to-stay-for-three.html
Despite the fact that the standard rental contracts last one year, unless the agreement signed by both parties state otherwise, the rent committee would still stand in support of the leaseholder.
The General Secretary of the Committee, Mohammad Ahmad Al Shaikh, said the tenants have the right to stay in the property, due to the money invested in furnishing the house.
"It is no doubt, the prerogative of the house owners to live in their own house. But, in case, they have decided to let out the house for rent, they should understand that it is for a minimum of three years, though the contract is signed only for a year," Al Shaikh said.
Many landlords are said to have approached the rent committee as the tenants are refusing to vacate the property. But, according to Al Shaikh, the case will move in favour of landlord, only if, the contract clearly states that the house will have to be vacated after a year.
In the meanwhile, the landlords have branded the rule as "absurd" and "against the basic principles of ownership laws", as it prevents them from moving into their own house, but, the tenants have welcomed the policy.
As per the guidelines issued by the rent committee, the landlords who wished to move back into their own homes, could do so, provided, they do not rent our their house again.
The committee says that in case the landlord wishes to move back to their own house, their intention behind doing so, should be proven, and the landlord should ensure that the tenants are provided with sufficient notice period.
Any landlords violating these conditions will have to bear the consequences, the rent committee said.
Original story: http://www.estatesdubai.com/2007/07/tenants-permitted-to-stay-for-three.html
Thursday, April 5, 2007
Anyone got a new landlord yet?
We're aware that some people have opted to purchase their apartments. But for those who confirmed over a month ago that they would not, we're not aware of anyone being contacted regarding their new landlord yet.
Considering that EMAAR originally wanted tenants to purchase in just two weeks, it seems rather strange that after a month of the apartments "being offered for sale on the open market" they are yet to inform tenants of their new landlords (if indeed the apartments have been sold).
And if the apartments have not been sold yet, it does rather cast doubt on EMAAR's claims to have purchasers lined up and chomping at the bit to buy.
Maybe the urgency by EMAAR was just designed to pressure tenants into buying? EMAAR presumably knows that a tenanted property, with the tenant on well below market rent, is not worth anywhere near what a similar apartment with 'vacant possession' would be (since it cannot be occupied or rented out at market rate). So what better way to maximize revenue than to cajole the current occupant into buying something he can currently rent at half the price?
And if you believe in property for long term growth, why not put money down on a new 2-bed for delivery in 2009, which would cost less than a 1-bed in the Greens now? That 2-bed is certainly going to be worth more than the Greens 1-bed once it is built.
Meanwhile, EMAAR's share price in the past couple of weeks has hit new lows, dropping to well below 11 dirhams.
Considering that EMAAR originally wanted tenants to purchase in just two weeks, it seems rather strange that after a month of the apartments "being offered for sale on the open market" they are yet to inform tenants of their new landlords (if indeed the apartments have been sold).
And if the apartments have not been sold yet, it does rather cast doubt on EMAAR's claims to have purchasers lined up and chomping at the bit to buy.
Maybe the urgency by EMAAR was just designed to pressure tenants into buying? EMAAR presumably knows that a tenanted property, with the tenant on well below market rent, is not worth anywhere near what a similar apartment with 'vacant possession' would be (since it cannot be occupied or rented out at market rate). So what better way to maximize revenue than to cajole the current occupant into buying something he can currently rent at half the price?
And if you believe in property for long term growth, why not put money down on a new 2-bed for delivery in 2009, which would cost less than a 1-bed in the Greens now? That 2-bed is certainly going to be worth more than the Greens 1-bed once it is built.
Meanwhile, EMAAR's share price in the past couple of weeks has hit new lows, dropping to well below 11 dirhams.
Wednesday, March 14, 2007
Emaar Annual General Meeting descends into shouting match
After Emaar chairman Mohammad Al Abbar announced a palty 20 fils (down from 40fils last year) stock dividend, angry shareholders refused several times to vote for the payout. Many investors who had bought Emaar shares on margin (borrowing money to buy the stock in the hope of the share price appreciating) were desperate for cash to offset their losses.
Big barney at Emaar AGM
Al Abbar said the company thinks it is more important to invest in the long-term future of the company.
"I criticise most of the companies in other Arab countries, because they only work for today," he said, adding that Emaar needs to have adequate capital to seize opportunities in countries such as India.
In other words, quite possibly money is running short and the prospect of profits in Dubai is deteriorating and forcing the company to focus elsewhere.
No 'working for today' for Emaar of course. They allow at least a couple of weeks for residents to make important decisions like purchasing the property they're living in!!!
The markets don't seem happy judging by the Emaar share price which dropped more than 5%. Emaar stock in the last two years has proven itself a spectacularly successful way to lose 75% of your investment. Hopefully its property offerings won't fair so badly.
Meanwhile in the US, the traditional leader of the global economic cycle, the property market is being rocked further by the implosion of the sub-prime lending market.
US stocks fall heavily again on mortgage lender fears
With many Dubai mortgage lenders now offering 97% mortgages, and a huge supply of property likely to hit the market this year, the chance of similar conditions to the US emerging here seems all too likely.
Big barney at Emaar AGM
Al Abbar said the company thinks it is more important to invest in the long-term future of the company.
"I criticise most of the companies in other Arab countries, because they only work for today," he said, adding that Emaar needs to have adequate capital to seize opportunities in countries such as India.
In other words, quite possibly money is running short and the prospect of profits in Dubai is deteriorating and forcing the company to focus elsewhere.
No 'working for today' for Emaar of course. They allow at least a couple of weeks for residents to make important decisions like purchasing the property they're living in!!!
The markets don't seem happy judging by the Emaar share price which dropped more than 5%. Emaar stock in the last two years has proven itself a spectacularly successful way to lose 75% of your investment. Hopefully its property offerings won't fair so badly.
Meanwhile in the US, the traditional leader of the global economic cycle, the property market is being rocked further by the implosion of the sub-prime lending market.
US stocks fall heavily again on mortgage lender fears
With many Dubai mortgage lenders now offering 97% mortgages, and a huge supply of property likely to hit the market this year, the chance of similar conditions to the US emerging here seems all too likely.
Saturday, March 10, 2007
Revaluation of the UAE Dirham getting closer?
From the UAEinteract site:
The UAE will not revalue its currency ahead of other GCC states, the Central Bank governor said yesterday. The continued decline of the dollar has weakened Gulf currencies, which are pegged to the greenback.
Sultan Nasser Al Suwaidi said Gulf states will discuss whether to revalue their currencies at the April meeting of central bank governors. "We will not act unilaterally," Al Suwaidi said. "But if [the governors] come to the conclusion that we should go in this direction or that direction, we will go along."
Gulf nations pegged their currencies to the dollar in 2003 under a plan to unite under a single currency by 2010. However, with questions of a possible delay to the union, and with the dollar falling 10 per cent against the euro last year, speculation of a Gulf-wide currency revaluation has risen in recent weeks.
Last month, investors betting on revaluation drove the UAE dirham and the Kuwaiti dinar to record highs.
The UAE Central Bank maintains that inflation is due to rent and property price rises and will subside this year as more supply comes to market. That's not what Emaar and the various well connected property developers are saying - in public the sales shill is just the same - that property will continue to rise in price impressively forever. They'd have a job shifting the stuff otherwise of course...
But they cannot both be right. For a central bank to put its inflation hopes on the supply/demand balance of property shifting towards the end of 2007 smacks of ostriches sticking their heads in the sand. And if the prices don't stabilize this year, what next? Do they have a plan B?
If the UAE wants long term stability and to establish itself as a business-friendly environment, the first step is to set an inflation target of 2-3% and stick to it. But we may well find in April that the other GCC countries take the decision that Dubai really needs and revalue the GCC currencies anyway.
The UAE will not revalue its currency ahead of other GCC states, the Central Bank governor said yesterday. The continued decline of the dollar has weakened Gulf currencies, which are pegged to the greenback.
Sultan Nasser Al Suwaidi said Gulf states will discuss whether to revalue their currencies at the April meeting of central bank governors. "We will not act unilaterally," Al Suwaidi said. "But if [the governors] come to the conclusion that we should go in this direction or that direction, we will go along."
Gulf nations pegged their currencies to the dollar in 2003 under a plan to unite under a single currency by 2010. However, with questions of a possible delay to the union, and with the dollar falling 10 per cent against the euro last year, speculation of a Gulf-wide currency revaluation has risen in recent weeks.
Last month, investors betting on revaluation drove the UAE dirham and the Kuwaiti dinar to record highs.
The UAE Central Bank maintains that inflation is due to rent and property price rises and will subside this year as more supply comes to market. That's not what Emaar and the various well connected property developers are saying - in public the sales shill is just the same - that property will continue to rise in price impressively forever. They'd have a job shifting the stuff otherwise of course...
But they cannot both be right. For a central bank to put its inflation hopes on the supply/demand balance of property shifting towards the end of 2007 smacks of ostriches sticking their heads in the sand. And if the prices don't stabilize this year, what next? Do they have a plan B?
If the UAE wants long term stability and to establish itself as a business-friendly environment, the first step is to set an inflation target of 2-3% and stick to it. But we may well find in April that the other GCC countries take the decision that Dubai really needs and revalue the GCC currencies anyway.
Sunday, March 4, 2007
Potential buyers beware! - understand your rights before you buy our homes
Those tenants who cannot or choose not to purchase their Greens apartments now face the prospect of their homes being put on the open market. If the apartment is sold promptly as Emaar clearly intends, you can expect notification shortly of who your new landlord is.
It is important that tenants in the Greens apartments that Emaar is selling understand their rights. Due to the rent cap laws, the new owner will almost certainly want the tenant out at the earliest possible opportunity in order to either take possession for himself, or rent to a new tenant at the market rate. But this is exactly the kind of act that the Rent Committee was set up to prevent. While we have been unable to get Emaar or Hamptons to state on the record what their understanding of the laws are, the reason may well be because they'd rather potential purchasers not know.
Here is an article demonstrating the protection that the Rent Committee can offer tenants not just against eviction, but even against having their tenancy limited via the proliferation of 'one year' clauses:
The rent committee steps in to protect a tenant in the Springs
Tenants (and potential purchasers) take note: the rent committee is not a toothless talking shop, but wields real power to protect tenants rights. It can not only prevent rent increases above the government's rent cap limit, but can prevent evictions and can even stop the landlord trying to impose a new lease agreement that gives him possession after one year.
Since the vast majority of Greens tenants wish to stay put, it is important for potential purchasers of our apartments to understand what they are buying: a property with a sitting tenant who will do whatever he or she can to stay put, with the protection of the rent committee. Most tenants will resist any attempts at eviction, unlawful rent increases or changes in the terms of their leases that require them to vacate the property after one year.
Potential landlords beware! Emaar is selling you an apartment at market rate, but you have a sitting tenant who might enjoy capped rent and tenancy protection for years to come. It doesn't look such a good investment now does it? Especially when for a similar price you could buy an empty apartment somewhere else and get 40-50% more income immediately, and just the same capital growth.
It is important that tenants in the Greens apartments that Emaar is selling understand their rights. Due to the rent cap laws, the new owner will almost certainly want the tenant out at the earliest possible opportunity in order to either take possession for himself, or rent to a new tenant at the market rate. But this is exactly the kind of act that the Rent Committee was set up to prevent. While we have been unable to get Emaar or Hamptons to state on the record what their understanding of the laws are, the reason may well be because they'd rather potential purchasers not know.
Here is an article demonstrating the protection that the Rent Committee can offer tenants not just against eviction, but even against having their tenancy limited via the proliferation of 'one year' clauses:
The rent committee steps in to protect a tenant in the Springs
Tenants (and potential purchasers) take note: the rent committee is not a toothless talking shop, but wields real power to protect tenants rights. It can not only prevent rent increases above the government's rent cap limit, but can prevent evictions and can even stop the landlord trying to impose a new lease agreement that gives him possession after one year.
Since the vast majority of Greens tenants wish to stay put, it is important for potential purchasers of our apartments to understand what they are buying: a property with a sitting tenant who will do whatever he or she can to stay put, with the protection of the rent committee. Most tenants will resist any attempts at eviction, unlawful rent increases or changes in the terms of their leases that require them to vacate the property after one year.
Potential landlords beware! Emaar is selling you an apartment at market rate, but you have a sitting tenant who might enjoy capped rent and tenancy protection for years to come. It doesn't look such a good investment now does it? Especially when for a similar price you could buy an empty apartment somewhere else and get 40-50% more income immediately, and just the same capital growth.
Thursday, March 1, 2007
If you're worried about eviction by new landlord, you can leave now!
Some of us met with Jeevan J D'Mello of EMAAR regarding feedback on our previous requests. It seemed that despite the job title of 'Director' he was not actually a company director, more a manager, lacking the authority required to negotiate deals and sign off agreements on behalf of his company without recourse to his bosses (who *are* actual company directors presumably). Anyhow, we appreciated him meeting us even if he wasn't really allowed to do anything except repeat the EMAAR PR releases.
He did at one point generously state that if tenants were worried about having a new landlord who might evict them, EMAAR would (probably) accept them terminating their tenancy now, with a refund of outstanding rent. In other words, if you are worried about eviction and higher rents from a new landlord in a few months time, you always have the option of facing that now instead. What a deal!
Regardless, we pushed EMAAR to try to get some movement on the points at issue. In particular:
1. That EMAAR extend the leases of existing tenants who wish to, such that any new owner would be bound to accommodate the tenant for at least the duration of their current tenancy plus one year
Amazingly, despite Hamptons being self-styled property 'experts' and EMAAR being the country's largest property developer and 30% owned by the Dubai Government, both claimed not to know with certainty what the rent laws actually were! And these are the 'experts'!? By this evidence, Dubai has some way to go in terms of legal development and business competence. Despite assuring us that they think you would have to be offered at least another year, they would not put it in writing and said that despite their understanding of the laws "there are no guarantees". Indeed.
Despite insisting that they have a waiting list of investors interested in capital growth not evictions, Mr D'Mellow stated absolutely that his bosses would not permit any lease changes to provide any more security (such as a year lease extension) to tenants other than what the law provides for (which they were unsure of anyway). The Rent Cap Laws aimed to stabilize rents, yet average rents in Dubai continue to climb at double digit rates. Despite the Dubai Government's stated aims to stabilize costs in Dubai and stem rampant inflation, it appears the 30% Dubai Government shareholding in EMAAR has not been used to influence EMAAR's decision towards preserving a large amount of reasonably priced rental accommodation in the Emirate.
2. That EMAAR offer more incentives, more time and more flexible payment plans for those who might be interested in buying.
It seems that only a tiny minority of affected tenants will actually buy. The few who do buy will largely do so through having succumbed to the "buy now or else" bullying tactics employed by EMAAR. After all, if people wanted to buy apartments at market rate, there are plenty of those for sale in Dubai already. Far too many in fact, with more coming on stream all the time.
Mr D'Mello agreed to raise the point regarding further small discounts with his directors, but since EMAAR is about to start its 'closing down' style sale imminently, it seems that they are more interested in money now regardless of who it comes from than in repaying the loyalty of customers with several years standing.
On a lighter note, Mr D'Mello assured us that the reason for the snap sale is nothing to do with any impending shock to the market in the next couple of months that EMAAR management have got wind of (think floating currency and massive interest rate hikes to fight inflation or the potential for Iranian military responses against US interests in the region). But then again, EMAAR also stated that the decision to sell was based on requests from tenants and just a couple of weeks ago that there were no plans to dump Lakes stock into the market in a similar fashion to the Greens sale.
So in the end, it's every tenant's choice. EMAAR is not going to change its mind and you must pin your hopes on a successful visit to the Rent Committee if you don't plan on buying, because it's pretty clear the new buyer will see you as a liability not an asset and do whatever they can to get you out as soon as the law allows.
Such uncertainty and instability has become part of the Dubai experience, and it's something we all have to factor in when making decisions about our future. As inflation rages, the calculations most of us made to justify coming here increasingly don't add up. Those who came a few years ago have seen costs double or triple since then. Many companies will be doing the same calculations and looking for more stable cost bases elsewhere.
The problem for Dubai is that on the one hand it is trying to convince real estate investors that property prices and rent receipts will rise impressively forever, while on the other hand telling international companies that costs will stabilize. There is an obvious contradiction, but at this point it's difficult to see which argument is going to give out first.
He did at one point generously state that if tenants were worried about having a new landlord who might evict them, EMAAR would (probably) accept them terminating their tenancy now, with a refund of outstanding rent. In other words, if you are worried about eviction and higher rents from a new landlord in a few months time, you always have the option of facing that now instead. What a deal!
Regardless, we pushed EMAAR to try to get some movement on the points at issue. In particular:
1. That EMAAR extend the leases of existing tenants who wish to, such that any new owner would be bound to accommodate the tenant for at least the duration of their current tenancy plus one year
Amazingly, despite Hamptons being self-styled property 'experts' and EMAAR being the country's largest property developer and 30% owned by the Dubai Government, both claimed not to know with certainty what the rent laws actually were! And these are the 'experts'!? By this evidence, Dubai has some way to go in terms of legal development and business competence. Despite assuring us that they think you would have to be offered at least another year, they would not put it in writing and said that despite their understanding of the laws "there are no guarantees". Indeed.
Despite insisting that they have a waiting list of investors interested in capital growth not evictions, Mr D'Mellow stated absolutely that his bosses would not permit any lease changes to provide any more security (such as a year lease extension) to tenants other than what the law provides for (which they were unsure of anyway). The Rent Cap Laws aimed to stabilize rents, yet average rents in Dubai continue to climb at double digit rates. Despite the Dubai Government's stated aims to stabilize costs in Dubai and stem rampant inflation, it appears the 30% Dubai Government shareholding in EMAAR has not been used to influence EMAAR's decision towards preserving a large amount of reasonably priced rental accommodation in the Emirate.
2. That EMAAR offer more incentives, more time and more flexible payment plans for those who might be interested in buying.
It seems that only a tiny minority of affected tenants will actually buy. The few who do buy will largely do so through having succumbed to the "buy now or else" bullying tactics employed by EMAAR. After all, if people wanted to buy apartments at market rate, there are plenty of those for sale in Dubai already. Far too many in fact, with more coming on stream all the time.
Mr D'Mello agreed to raise the point regarding further small discounts with his directors, but since EMAAR is about to start its 'closing down' style sale imminently, it seems that they are more interested in money now regardless of who it comes from than in repaying the loyalty of customers with several years standing.
On a lighter note, Mr D'Mello assured us that the reason for the snap sale is nothing to do with any impending shock to the market in the next couple of months that EMAAR management have got wind of (think floating currency and massive interest rate hikes to fight inflation or the potential for Iranian military responses against US interests in the region). But then again, EMAAR also stated that the decision to sell was based on requests from tenants and just a couple of weeks ago that there were no plans to dump Lakes stock into the market in a similar fashion to the Greens sale.
So in the end, it's every tenant's choice. EMAAR is not going to change its mind and you must pin your hopes on a successful visit to the Rent Committee if you don't plan on buying, because it's pretty clear the new buyer will see you as a liability not an asset and do whatever they can to get you out as soon as the law allows.
Such uncertainty and instability has become part of the Dubai experience, and it's something we all have to factor in when making decisions about our future. As inflation rages, the calculations most of us made to justify coming here increasingly don't add up. Those who came a few years ago have seen costs double or triple since then. Many companies will be doing the same calculations and looking for more stable cost bases elsewhere.
The problem for Dubai is that on the one hand it is trying to convince real estate investors that property prices and rent receipts will rise impressively forever, while on the other hand telling international companies that costs will stabilize. There is an obvious contradiction, but at this point it's difficult to see which argument is going to give out first.
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