According to real estate experts, rising rental costs are pushing many Dubai residents to purchase real estate in the emirate for the first time. One of the key reasons for the trend is that mortgage rates are now comparable to or frequently less expensive than the monthly rent for a home in Dubai. Another reason why people were eager to own their own houses was the inconvenience of having to renegotiate rent each year, first-time buyers told The National.
Developers are extending the payment deadlines. Mortgage-backed sales have decreased ever since successive 0.75 percent rate hikes in local mortgage rates. And since property values have also increased dramatically, this effectively means that end-user buyers feel it is becoming too expensive to consider purchasing a home or luxury villas for sale in Dubai.
Transferring a rental contract
The Law of Responsibilities Act states that after the immovable property has been transferred to the tenant, the landlord’s rights and obligations resulting from the rental agreement are passed to the new owner of the immovable property. As an illustration, it means that if you move into a rented flat as a tenant, the apartment is now yours and the rental agreement is instantly transferred to the new owner.
There is really no need to do that unless the new owner wants to sign a new rental agreement with you after purchasing the property. Such a topic might be discussed, for instance, if the new owner wishes to alter the conditions of the lease for you, such as raising the rent. The new owner of your unit merely needs to accept the situation or end the rental arrangement if you don’t want to sign a new contract. The standard cancellation period for an open-end rental agreement is three months. A fixed-term rental agreement, however, often can only be terminated for good cause, such as if the tenant has missed three months’ worth of rent payments.
Leases have fixed terms that are terminated when the landlord changes
When changing ownership of an immovable property, there is one exception to the usual rule that a fixed-term rental agreement may only be terminated for cause. Within three months of purchasing the immovable property, the buyer may terminate the rental arrangement with a three-month notice. For instance, even if the new owner of the property notifies the renter that he wants to end the rental agreement the day after buying the unit, the arrangement will still last for another three months.
The maximum length of the lease can then be nearly six months, depending on the new owner’s prior notice of his intention to terminate the rental agreement. If the new owner notifies the landlord of his intent to terminate the rental agreement one day before the end of the three-month period, the agreement will also last for another three months. The new owner of the immovable property loses the ability to cancel the contract on that basis and must again provide a valid reason if more than three months have passed after the immovable property changed hands.
Tenants in Dubai move into homes as mortgage rates remain stable despite rising rents
Rents have increased by about 20% in Dubai’s key communities over the past year, while haus & haus buyer registrations have reached an all-time high during the same time period. The two are undoubtedly connected.
The monthly mortgage payments are now either equivalent, or frequently less on the purchase side, which is the spark for a big percentage of residents weighing renting versus buying. The fact that more people are buying their first homes is another aspect. After living in the UAE for a while, many people want to settle down.
The annual rent for a three-bedroom villa in Sidra, Dubai Hills, ranges from Dh280,000 to Dh300,000. However, Mr. Bannan predicted that the mortgage payments for the homes, which have a Dh4.85 million valuation, would be less than Dh250,000.
“Naturally, residents who have the cash on hand for the initial down payment to move from renting to purchasing will only have this option”, he added.
Dubai Hills, Arabian Ranches, and Emirates Living are some of the most prestigious areas where first-time buyers are most interested in buying luxury villas for sale in Dubai.
Increasing Interest Rates
The properties in Dubai and the United Arab Emirates experienced its finest summer in more than ten years thanks to recent rate rises, which also maintained the pace of sales. However, builders are aware that they must still play a role, and newly delivered houses are an integral component of their strategy.
Recent real estate offers reveal definite trends. The developers are emphasizing longer payment plans and lower down payments, whether it’s in JVC or MBR City. End-user purchasers are gravitating toward new/ready homes or luxury villas for sale in Dubai rather than off plan properties. Finding an alternative to paying rent is their top priority right now. Ready-made houses are useful for that.
Does Dubai have a chance of Slowing Rent Gains?
According to the data that is available, including statistics from the summer, there are no indications of a citywide slowdown. In fact, several places that had experienced 10-15% growth during the previous 12 months are now experiencing quicker growth.
According to one estate agent, “there is obvious evidence that rent rises are extending from the center, which is made up of Dubai Marina, Downtown Dubai, and Business Bay, onto more locations in the city.” Even in some of the older buildings, non-freehold sections are experiencing noticeable rent increases.
The data from September should give a better idea of what to expect. When it comes to attracting end users, rent gains may prove to be in favor of the developers.