ABU DHABI // The maximum annual rent increase in the capital will remain at five per cent, according to a government decision announced last night on the state news agency, WAM. The rent rise limit was announced as part of a new law issued by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. Additionally, tenancy contracts can now be issued for a maximum of five years instead of the previous four.
The executive office said the move was an attempt to stabilise the property market as many new flats and developments were expected to open in the emirate. While rents in Dubai dropped dramatically after the global financial crisis of the past year, prices in Abu Dhabi have remained stable or have increased slightly because of a lack of supply, according to a study of the rental market published by Landmark Real Estate in October.
Rent caps were in high demand before the financial turmoil caused a global burst in property prices. In May last year the Department of Planning and Economy released a report that found rents were increasing by as much as 17 per cent in one quarter of 2008. Rent made up almost half of a family's annual household expenditure. Despite the crisis and the general easing of flat prices, property analysts at the time called for the rent cap to stay at five per cent until the market settled.
In both Dubai and Abu Dhabi, landlords cannot increase prices by more than five per cent a year for the period of the tenant's agreement. In Dubai, they are barred from increasing rents at all for the first two years. In addition to the caps, job losses are behind declining rent prices, analysts have said. newsdesk@thenational.ae
