Renters in the capital are in for some changes as a five percent rent cap has been reintroduced.
The reinstatement of the measure after a three-year absence has raised questions on its timing given the current economic climate and downward pressures on residential rents.
A rent cap was first introduced in 2006 to manage soaring rent prices brought about by a shortage of accommodation.
It was originally introduced at seven percent, then cut down to five, until it was scrapped altogether in 2013 to normalise the market.
“A rent cap is the maximum amount that the landlord can increase the rent at the end of the lease term,” explains Alan Kaye, head of sales and leasing at District Real Estate.
“There are numerous arguments both ways for having or removing a rent cap.
“For tenants, there is certainty that your rent will not increase beyond five percent. But conversely, landlords become reluctant to reduce rents knowing that they can only increase them by five percent.”
Real estate experts maintain that rent caps are most applicable when rents are rising and not falling – and the Abu Dhabi rental market has witnessed a slowdown in recent months.
“In 2017 the trend towards rents falling will continue, especially as more mergers and redundancies are expected,” Alan continues.
“This will be particularly noticeable in three- and four-bedroom properties as many families return home with just the breadwinner staying. So expect prices of one-bedroom apartments to stabilise.”
“It does not mean that your rent will automatically increase by five percent next year.
The important thing to remember is to always negotiate your new lease contract irrespective of the original demand.”