How Can Landlords Deal With The New Abu Dhabi Rent Cap
Now before I get lynched by all the tenants out there I am completely impartial as regards the landlord and tenant relationship. Brokers are often accused of working for landlords to keep rents high but I firmly believe that your client is the person who pays you, which in Abu Dhabi is the tenant (I wish it was the landlord). However, as I offer advice to tenants (I recommend tenants join the excellent Facebook group “Tenants of Abu Dhabi” www.facebook.com/groups/1724679061138226/) I also offer advice to landlords as well.
The main thing landlords will be trying to do is to keep their base rent rates as high as possible. If you can keep your rent at 100 and the market recovers then you can raise it to 5% to 105 (an increase of 5). If you rent is at 90 then you can raise it to 5% to 94.5 (an increase of 4.5). Foolish landlords might think about trying to keep their rents above market but know one thing:
If you keep your rents above market you won’t lease the unit, if you want to keep the highest base rents then you must either offer tenants something more or make it cheaper for them to rent. Here are ways you can do that:
Offer One Month Free: I have written another article on that here: https://www.linkedin.com/pulse/how-big-landlords-propping-up-abu-dhabi-rents-ben-crompton
Pay Their Tawtheeq Fee: This is often paid by the landlords anyway and it might seem small but if you can take costs away from tenants then you can add this onto the rent.
Don’t Charge any Administration Fees: Again is seems small but if you can roll these costs (if you usually charge any, or you Property Managers charges them) into the base rent that will allow you to make a bigger raise when the market recovers.
Pay the Broker Fees: This is the big one and I will write an article about this soon. Some of the larger landlords now such as Rilam and Aldar are paying the broker fees. Paying these fees yourself will potentially allow you to add 5% to the rent amount, but make sure the broker isn’t double charging.
Clean and Repaint: It seems obvious but if you want the best rents then make it attractive to the tenants so he will pay more. Clean and repaint before the tenant views.
The Abu Dhabi market has a great chance here to modernize and stop charging tenants “entry fees”, basically any fees except the rent. Landlords sometimes feel they can make extra money this way but the advanced real estate markets of the world don’t do this. They make it as easy as possible for tenants to take the unit by lowering “barriers to entry” such as all those little annoying charges.
And before any landlord tells me “that is how the Abu Dhabi market is” I would remind them of two things, first it is that way only because we allow it, not any feature on the Emirate or market itself and secondly Abu Dhabi is an immature market, do we really think we do things better here than in North America and Western Europe?
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