Rent Caps in Gcc Essay

682 Words Nov 12th, 2015 3 Pages
RENT CAPS IN GCC

Rent caps are basically price control imposed in housing by government rules and policies. When there is a huge demand for housing the rent used to increase considerably. The people could not afford this sudden increase in the price. Hence, there was government intervention in form of rules and regulations stating that rents could not be increased more than a certain amount/percentage. Rent caps are based on the argument that housing is inelastic i.e. increase in demand will not increase the supply in short period of time. When the demand for housing rises the rent used to increase without any constraints. So, the government introduced rent caps to regulate the increase in price of housing rents. Rent
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This resulted in houses in Dubai being empty (not rented) and real estate market in Dubai was largely affected. The government recognised this and imposed rent caps in Dubai to attract tenants and restore its real estate value. UAE uses difference between actual rent and average market rents used for deciding the maximum rent increase. Hence, in UAE rent cap changes according to the area of the property and depends on the actual rent. The rent cap in UAE is regulated by RERA Law no. 26, Law no. 33 and Decree no. 43 of 2013. According to this maximum of 20 percentage can be increased in rent if the rent is more than 40 percentage less than the average rent value of similar housing in the area and the rent cannot be increased if the rent is up to 10 percentage less than the average rent value of similar housing in the area. In Qatar, rents can be increased 20 percentage annually if the monthly rent is less than QR 3,000 to 5 percentage annually if monthly rent is more than QR 10,000. This increase can only become effective from the date it is notified to the tenant. This regulates the price of housing and tenants may not move to some other place where rents are much lower. If the tenants move out of the country there is shortage of labour which will in turn affect the economy.
The rent cap may also result in conflicts between the landlord and tenant as landlords get minimum profits or incur losses and tenants who resent to inadequate maintenance of the

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