Abu Dhabi: Tenants are demanding a ‘no rental increase for two years’ clause in new tenancy contracts after arbitrary hikes by landlords following removal of annual rent cap last year.
“My landlord has agreed not to increase rent for the next three years for the four-bedroom villa I have just taken in Muroor. And it is put in black and white in my lease contract,” said an Arab medical doctor who works for Mafraq Hospital.
His Dh180,000 rent will remain unchanged till May 2017.
No worry
“The ‘no rental increase’ clause means I don’t have to worry about rent increases for the next three years,” said the doctor who did not want to be named.
The five per cent cap was removed last year by a Federal decree, giving landlords sole authority to fix and review rents.
Many residents had complained of 25 to 50 per cent rent hikes after removal of th rent cap. Properties on the main island of Abu Dhabi and its periphery including apartments in the Mussafah Industrial area have witnessed arbitrary hikes in the last few months.
Now, with landlords enjoying the windfall of a regulation-free rental market, rent-wary tenants are negotiating for fixed rents for a minimum term of two to three years. Arumugham Kannan, an electrical engineer from India, is among them.
“My budget for a two-bedroom apartment was Dh80,000. But I am ready to cough up Dh95,000, because that is the current going rate for two bedroom apartments in the city. I cannot afford a five or 10 per cent increase in rent at least for the next two years,” said Kannan who has two school-going children.
He said he is currently in talks with landlords.
“My real estate agent told me some landlords will agree not to increase rent for two years provided I pay my annual rent in one cheque. I am seriously considering the option,” he said.
One cheque
According to real estate agents who spoke to XPRESS, some landlords are willing to include the clause in lease agreements if the client is ready to pay the full rent in one payment.
“Now the biggest fear for new tenants is an exorbitant increase in rents within a year of moving to the new apartment. That is why many are asking for a “No rent increase’ lease agreement,” said Abu Baqer, a real estate agent who has been in the market for more than a decade.
Abu Baqer claims he has helped at least half a dozen clients to successfully negotiate a “No rent hike’ for two years in their contracts. And all of them paid with one cheque.
Abdul Aziz Altaf, leasing manager of a real estate firm here, said some tenants are requesting a ‘No rent increase’ condition while signing lease agreements.
“I personally don’t think it is a good deal as far as we are concerned. There is a favourable climate in the market for us to readjust and realign rents on a yearly basis. But again, we will consider such requests on a case-by-case basis,” he said.
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