ABU DHABI // A lack of clarity over the decision to remove the annual rent cap in Abu Dhabi may open the door to abuse by landlords, lawyers said.
Following the Executive Council's decision last week to abolish a 5 per cent cap, lawyers have echoed concerns that tenants may be getting the worst end of the deal.
Some suggested guidelines be released to ensure the rights of tenants and landlords.
Saeed Al Ghailani, a prominent Emirati lawyer from Dubai, is sure that not all property owners will raise their prices, but he believes a significant number will.
“This could be abused and lead to unjustifiable increases,” he said. “There needs to be a law to govern the relationship between the two parties. Otherwise, I foresee a large number of rent disputes in future.”
For now, Ben Crompton, a former lawyer and managing partner of Crompton Partners estate agents, said the pinch would be felt mostly by tenants who rented their places at the bottom of the market in 2011 and last year; tenants who have been in their homes for many years; and tenants who got a great early deal.
Mr Al Ghailani said the decision had left many tenants fearful as their leases ended.
“When I pick a house, I do my own changes to it, make sure it’s close to the children’s school and close to work,” he said. “To have to move at the end of the year after getting used to all that is not what people need. We should not leave the door open for abuse. We need to take limited-income families into account.”
He said a cap would be best for all parties and suggested it be raised to 10 per cent to allow the property market to flourish.
“There should be a law to place a limit on owners,” he said.
Ahmed Al Zaabi, a Federal National Council member and a lawyer in Dubai, agreed.
“A limit should be set,” he said. “Demand on good rents is always high, so prices will naturally rise.
“The question is to where. A limit needs to be set for this as it could cause huge problems.”
He suggested that Abu Dhabi follow a system similar to that in Dubai, where the land department sets the value of properties so that each area is governed by a range.
“The decision should be revised,” he said. “The Government needs to set a cap, that is always better.”
The rent cap was first introduced in 2006 and was set at 7 per cent. In 2010 it was reduced to 5 per cent.
The Executive Council was unavailable for comment.
osalem@thenational.ae
