It is one of the most big-ticket rental market interventions of the past few years with the temporary ban on rent increases for residential, commercial, and industrial rentals in Abu Dhabi. The measure aims to help businesses and residents stay financially stable in this time of instability and uncertainty in the regional market.
This is welcome news for tenants in the capital who can no longer be forced to increase rent and who will now have more certainty when renewing lease agreements. It will be a significant move for families of expatriates who have struggled with rising living and operating expenses over the past few years, as well as small business owners.
What Does the New Rent Freeze Mean?
In normal times, Abu Dhabi landlords are allowed to generally raise rents within certain regulatory limits during renewal of their landlords’ contracts. The new temporary decree however removes those increases and substitutes a rock-strict rent adjustment policy that pays an “0%.
This means that landlords will not be able to raise rents during the period of renewal of existing tenants. The freeze is to cover all residential apartments, villas, commercial offices, retail units and industrial properties in Abu Dhabi.
How Your Tenancy Renewal Is Protected?
The most important advantage for tenancies coming up for renewal this month is predictability. As an example, even on markets with low demand, they must renew to the same rental price as the one in the agreement they signed up for.
This safeguards families and individuals in knowing they have protection, and can plan accordingly. Tenants will not be hit with any extra rents during the freeze period, and can renew their leases without dreading big jumps at renewal, rather.
End of the “Vacancy Rent Hike”
The decree has closed one of the biggest loopholes that many tenants deemed to be in the legislation. Under the previous law, landlords were able to levy egregious charges on renters after they had left an apartment or house, and before the next renter signed a new lease.
The new regulations also apply to newly signed tenancy agreements on properties previously let, meaning that the new tenancy agreements will need to continue to comply with the former tenancy rental. This will not lead to sudden rent increases at the market and thus will keep rents more stable in those capital cities.
Relief for Expat Families
For foreign families in Abu Dhabi, housing expenses can be a major chunk of their monthly revenue, since it is the biggest cost in their living. In several of the more popular residential neighbourhoods, rents have been increasing over the last year and some worry about their forthcoming leases.
The rent freeze doesn’t last forever, but it does offer immediate financial help to families by preventing a sudden hike. This salary protection is especially vital for people who are also facing increased costs for transportation, education and living.
Benefits for Business Owners
The decree is not limited to residential units, but applies to commercial and industrial units as well. As business owners having office, warehouse, retail or restaurant leases renewed, they can go to work without any fear of an unexpected spate of rental costs to deal with.
COVID-19 has proven to be a difficult time in many respects, and maintaining the stability of your rental rates is one of them. This is a big opportunity to gain breathing room for many small and medium sized businesses.
What Tenants Should Do Next?
Tenants are encouraged to read through their current leases and ensure they have copies of all rental agreements. It’s a good idea for tenants to know that a temporary freeze means that renewals won’t include a rental increase during negotiations.
Disputes should be addressed by tenants in accordance with the relevant tenancy dispute channels and the tenancy provisions of the Abu Dhabi housing authorities, to ensure that tenants are aware of their rights and responsibilities under the temporary tenancy laws.
FAQs
Will rent freezes be in effect for existing rental renewal?
Yes. Tenancy contracts for the same premises that are being renewed during the period of the freeze should not include a rent increase.
Is rent frozen for businesses?
Yes. The measure encompasses residential, commercial and industrial properties throughout Abu Dhabi.
Is the policy applicable to new tenants?
Yes. Tenants of pre-existing rentals will need to sign new leases that abide by the temporary rental limits.
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