Rent controls needed to stop housing bubble

A local daily has said that the government of Dubai is "right to impose a new structure on landlords who might wish to increase their rental returns from their properties". The vast majority of Dubai residents live in rented accommodation, and if the government wishes to underpin a stable workforce in the emirate, people have to be able to afford accommodation. "There is widespread fear that the anticipated boom in Dubai will lead to another rental bubble which will cause rents to go up by large percentages. This is why it is good that the new rental rules establish clear parameters for any increases," said Dubai-based Gulf News in an editorial today. It continued, "But there are two points that need to be taken into consideration so that the new rules are not abused by landlords anxious to increase their income. First, the maximum permitted rise for a particular rent-band should be understood to be a maximum, and should not be treated by the landlords as an open invitation to go to the maximum every time. For example, the new rules say that if the rent is between 20 and 30 per cent less than the average for similar properties, than an increase of up to 10 per cent is allowed. This does not mean that every landlord has to rush to slam on a 10 per cent increase, they should look at it and see if lower increases might be more fitting". "Second, the averages need to be looked at very carefully. The date used to calculate these averages needs to be both complete and realistic, so the published averages command respect from both the property industry and the people at large." "It is important that the growing population of people committed to living in Dubai and contributing to the emirate's success know that they can afford reasonable housing. This is why rent controls remain important, in addition to being a useful control on inflation," the paper concluded.