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Dubai: Dubai's mandatory rent cap on all properties is not the total solution the city's needs, according to a specialist in property law.
Lisa Dale, head of property at Dubai-based legal consultants Al Tamimi & Company, says the cap is a "stabilising factor" in Dubai's booming real estate sector, but called for a more flexible law that takes into account market rates for residential and commercial property.
"Combining a cap on rent increase with the publication of recommended ranges of rates per square foot for different types of property would help to ensure that landlords continue to get a fair rent for their property relative to the market," she said.
Dale highlighted several cases which require the type of variable policy used in UAE cities such as Umm Al Quwain.
"Cases have emerged in new shopping malls and commercial complexes where a developer will offer discounted rents during the first year of operation as an incentive to attract tenants to the development," she said.
"Landlords who signed such tenancies in 2006 cannot now apply for any increase in rents in 2007 to bring them in line with market rates." Dale also questioned whether the rent cap should be mandatory for all landlords and tenants or whether in some cases parties should be free to contract upon their own terms agreed between them.
The Rent Cap Law could act as a safety net for tenants if landlords demand too high a rent when discussing renewal of the tenancy, she suggested.
"The argument for this is particularly strong with regard to commercial property, where the parties often enjoy equal bargaining power," she said.
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