Sunday, May 29, 2005

Dubai Rents Committee chair: "The new property law will leave rents to be determined by the market forces" :: Gulf News
A new law streamlining relations between landlords and tenants will be issued soon, said Saeed Mohammad Al Gandi, Chairman of the Rents Committee at Dubai Municipality, yesterday. "The new property law will leave rents to be determined by the market forces," Al Gandi told Gulf News yesterday.
Early this month, the Rents Committee warned landlords that they have no right to turn off utilities of tenants involved in disputes. Al Gandi said it has come to the notice of the committee that some landlords have done this to force their tenants to move out.
Why would landlords want to force tenants to move out? There are at least two possibilities:

1. The tenants have not abided by the contract, or the contract has expired. And the landlord has decided the best remedy is to reclaim the apartment so it can be rented to new tenants.

2. The landlord wants to break the contract (perhaps because market rents have risen above the contracted rate).

The role of a government arbiter is to determine which of these two applies. That is not an easy task and disagreements will persist whatever the determination of the facts is.

Setting aside the difficult arbitration problem, if it is the tenant who has violated the contract, or has no contract, then the job of a government arbiter is to enforce the contract in a timely fashion. One of the tools is eviction. When landlords resort to turning off the utilities, it could be because the government has failed to enforce the contract.

As market rents rise significantly, the landlord's incentive to break the contract rises. (This incentive will be magnified if there are government rules on the minimum number of months over which monthly rent will apply.)

Warning landlords they have no right to turn off the utilities is no deterrent. Penalties are required to create the offset to an break the contract in a period of rising market rents.

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