Renters complain of new charges

Outrageous charges for would-be renters could be a thing of the past in the capital, thanks to regulations under development by the municipality.

ABU DHABI, UAE - July 5, 2011-  Munther Al Bakri, director of Gavity Real Estate, stands in front of residential buildings in Abu Dhabi.  Freelance real estate agents have been levying outrageous charges on residents and the municipality is cracking down on the practice.   (Andrew Henderson / The National)
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ABU DHABI // Flat hunting in the capital has never been easy.

Prices are coming down - by an average of nine per cent in the year's second quarter - but those gains are offset by a variety of fees charged by property agents.

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Fees are not a new phenomenon, but the glut of flats on the market and the sheer number of agents in town are prompting some agents to find new ways to make money.

A Canadian flat hunter said she had been asked by several agents to pay a Dh2,000 fee for a rent quotation, which her company requires.

"It is a nightmare and may be enough to keep me living where I am now, putting up with having to search for parking for an hour or not moving my car on weekends, because there would be no parking when I came back," she said.

A Dutch national said she and her husband paid Dh7,000 in commission to an agent, far more than the customary five per cent charged by property companies.

"They just sort of weigh you down," said C W, who eventually settled on a flat in the Tourist Club area.

"You say you want a one-bedroom with a balcony, and they show you a two-bedroom with no balcony. You get so frustrated that you agree to pay whatever they want."

Neither woman wished to be identified.

The agents see it differently.

Joshi Chacko, a freelance agent, said he often charged a viewing fee of between Dh50 and Dh100.

"It's not for everyone," said Mr Chacko. "It's just to make sure no one wastes my time if they do not plan to rent for many months."

Levying fees, even high ones, was not illegal, according to Ali Al Hashimi, of the municipality. Property agents primarily operate independently, and the capital does not have an equivalent to Dubai's Real Estate Regulatory Authority (Rera), which manages the industry there.

Another freelance agent said he usually charged 5 per cent commission, unless the rent was less than Dh75,000.

"I have heard about companies charging fees, but we don't do it," said Munther Al Bakri, the director of Gravity Real Estate.

"Our clients wouldn't accept such fees, but honestly and personally, I don't blame people for trying," Mr Al Bakri said. "Nowadays, it's an open market and there are many, many agencies. There's huge competition, and they have to find a way to make money."

Bilal Patel, a manager at Al Motamaiz Real Estate, which does not charge any fees, said the practice was not widespread but had been increasing this year.

"Ninety-five per cent of the agents only charge the five per cent commission, but it's increasing because renters are coming in and saying, 'Show me 10 flats' and then they don't take any of them," he said. "When people have to pay to see, they will be wise in their choices."

The big picture is that a new municipal initiative called Tawtheeq, which aims to regulate the real estate market by collecting data on all properties and tenancy contracts, will eventually see the emirate setting industry standards.

"There are no laws now on what fees real estate industry professionals charge, but once Tawtheeq is operating, we will be able to control and regulate what fees they charge," said Mr Al Hashimi, the project manager for Tawtheeq.

Once in place, the initiative will simplify the process of finding and leasing property by creating a searchable database of all leasable properties in the capital. Tawtheeq, set up by Executive Council decree, also aims to strengthen the relationship between tenant and property owner.

A common database will also help to keep accurate and up-to-date statistics on vacancies and rental prices. Many agents and companies said they would welcome industry regulation.

"There are no rules, no standardisation," Mr Al Bakri said. "We approve of the regulations, because if there are standards, things can be measured, and we believe we are going to excel.

"As long as general rules don't apply, customers and agents are at a disadvantage."

For residents, government oversight had been a long time coming.

"Everyone complains about the goings-on," the Canadian flat hunter said. "There's no government control ... It's highway robbery."

The first phase of Tawtheeq - registering properties on the online system - is expected to be completed in October. Use of the programme is expected to begin next year.