Landlords are taking advantage of the growing trend of tenants opting for multiple check payments and negotiating higher rents. Many tenants are also pushing to be paid in 12 cheques, even if it means losing a couple of thousand dirhams.
This annual increase in rental rates is putting additional financial pressure on tenants struggling with stagnant wages. Experts have said brokers are also seeking higher commissions because the market is strong.
The upward trajectory of rent prices will continue to impact renters in 2024. If renters pay up front with a single check, they can save big on their rents. Industry executives have said landlords are in a position to demand higher rents as the number of checks increases.
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However, tenants can make the most of what they have been given by pushing for added value during negotiations. According to experts, these include solid maintenance contracts or air conditioning service. These tend to be paid by the owner over a longer period and are easier to negotiate, said Ainsley Duncombe, founder of Off-Market Listing (OML) Dubai.
Alex Pigaev, director of business development at Realiste, said landlords negotiating a larger rent increase with 12 check payments are becoming more common; However, people cannot increase their incomes as quickly as rents increase. “Consequently, we see that more remote areas are experiencing growth in the number of rental applications.”
Duncombe said an increasing number of landlords are asking for higher rents in compensation for more checks.
Although Dubai’s population is more liquid and has on average more disposable funds than the rest of the world, he added that multiple checks for rental contracts are increasingly becoming the norm because large corporate employers, who offer to pay rent with a single check, they are becoming fewer and far between.
“It’s fair to say that single check payments are more of a legacy of a bygone era. The unfortunate reality for tenants is that with an insufficient supply of listed properties and rising rental values, negotiating lower rents is very difficult and, in many cases, simply not realistic,” said Ainsley Duncombe of Off-Market Listing.
Rents will continue to rise
Market players expect rents to continue rising at a double-digit pace in 2024 due to high demand, driven by the city’s growing appeal as a haven for the wealthy and the influx of professionals, among other factors. Following a 23 percent increase in the first half of 2023, rents are expected to rise another 20 percent this year.
Pigaev said rental rates have increased in some areas by up to 30 percent in 2023 compared to 2022.
“Due to high prices, renters try to wait until the low season to rent vacation homes, which makes finding apartments difficult and expensive. High demand has caused brokers to ask for higher commissions because the market is strong. “Customers rarely ask for a single check, as not everyone is willing to pay the full amount up front,” he said.
Some financial institutions also take advantage of this to offer rental packages where tenants pay monthly and the landlord receives larger, less frequent installments.
Tenants become aware of Rera rules
Khaleej Times previously reported on how tenants are increasingly opting for multi-year leases, expecting rents to remain higher in the coming years and giving them peace of mind for years to come.
The Dubai Real Estate Regulatory Authority (Rera) has clear rules and guidelines governing fairness and transparency, especially when it comes to annual rent increases. “We are seeing more and more tenants educating themselves about their rights and challenging landlords when there is a deviation from legally permitted rent increases,” Duncombe added.
As rents rise, renters are much less likely to move house unnecessarily amid rising rents. However, they have become more demanding and are asking for more modifications to the property.
“If you talk to expats who have been in the city for a long time, many will remember moving almost every year. Nowadays, if the property is still running and the family has not outgrown the number of rooms, tenants will choose to stay in instead of being exposed to higher rents,” he said.
“Interestingly, as tenants stay in properties longer, it is becoming more common for them to request modifications to properties and upgrade rental properties in a way that was not done before. One of the most popular requests is wanting to wrap kitchens and bathrooms, as “I intend to stay at the property for a longer period.”
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