New rules for freehold rentals

[fcrs]

Dubai's huge rental market will be tightened up under regulations being considered by Dubai Land Department. Image used for illustrative purpose only
New rules for freehold rentals

By Robert Ditcham, Staff Reporter
Published: August 30, 2007, 23:16

Dubai: Freehold homeowners will have to take Land Department's permission before renting out premises from next year, a senior government official said.

Dubai's huge rental market will be tightened up under regulations being considered by Dubai Land Department, Gulf News has learnt. Under the planned initiative, homeowners wanting to lease out a property will first have to apply for a permit from the Land Department.

They will then have to officially register any subsequent rental contract that they draw up with a tenant. At that point the Land Department may impose restrictions on the terms of a lease, such as the number of tenants allowed per unit and who can occupy a unit.

The service, which will affect thousands of people in Dubai who rent out property, will be free of charge. "The idea is at an early stage and is not our number one priority right now. Eventually we want to create more regulation and transparency in the rental market, which will give confidence to tenants," said Mohammad Sultan Thani, director of development and marketing administration at the Land Department.

"It will also give us a better understanding of the market, such as the total number of properties being rented out," Thani said.

According to the Land Department, the scheme will only apply to a landlord renting out an entire unit and will not address the issue of subletting rooms within a unit occupied by the landlord. "This is a more complicated issue and will be addressed at a later stage," said Thani.

If introduced, the move will represent a shift in attention from regulating the sales market towards ensuring greater control and accountability in the rental market, which has so far been allowed to run free.

A leading official at the newly formed Real Estate Regulatory Authority (Rera), an organisation operating under the umbrella of the Land Department, recently told Gulf News that the organisation is finalising a model three-to-five-year tenancy agreement to help tenants tackle rising rental costs.

It will be a model tenancy agreement protecting the rights and privileges of the tenants. Marwan Bin Galita, chief executive of Rera, said one of the organisation's key tasks will be to regulate and authenticate rental agreements, as well as provide an advisory role on issues like the rent cap.

Timeline

2002 Dubai extends property market for foreign ownership

2004-07 More than 15,000 residents move to their homes

2006 The Dubai Government announces a new property registration law legalising freehold ownership by expatriates/foreigners

The government identifies freehold and leasehold areas where ownership could be granted to expatriates

The Dubai Land Department starts registering properties and offering title deeds to expatriates

2007 The government announces the Trust Account Law

The emirate sets up the Real Estate Regulatory Authority (Rera) to regulate the real estate market

Dubai brings about half of its 4,114 sq km of land into the emirate's strategic development plan

[DRP]

Thanks for the information, this is very interesting, but does anyone have any idea what (if any) kind of impact this will have on online rentals done directly between owner and renting individual?

[wayneis]

As the news article mentions

regulations being considered by Dubai Land Department

it would be too early to speculate on what may and what may not occur.

Every one is in agreement that the market needs cleaning up and this is just one more step. It would be usefull to be able to obtain uptodate and reliable figures on rental / Owner occupier and investment properties.

One problem we have in Dubai is that the Government Introduce Rules or Guide lines how ever it is not clear who enforces or will police the ruling's. A recent example would be the formation of RERA (Real Estate Regulatory Authority) where Marwan Bin Galita, chief executive of Rera has indicated that he did not want to police the market and would prefer market forces rather than stepping in and dictating what should or should not occur.

Mixed signalsare bheing sent and with such a complicated area it will be some time before we all know clearly what the guidelines , rules and regulations will be.

Unfortunatley at present much is speculation.