Priced out of a home in UAE

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Many tenants who are having to find new homes as Dubai MunicipalityDubai Municipality enforces the one-villa-one-family rule will have to pay double their existing rent.

Tenants sharing houses are receiving eviction notices - and some will have trouble securing alternative accommodation as the delayed delivery of residential projects has led to a shortage of properties. Those who have been sharing villas in contravention of the rules for two or more years pay much less than than present market rates. Currently, two and three-bedroom apartments are on the market for the same rent as five-bedroom villas were two years ago - and with the rent split fewer ways living costs will in some cases double, warn estate agents. "Many people living in rented accommodation will have to undergo a major reorganisation of their finances and find alternative housing to move into," says Liz O'Connor, Head of Leasing at Better Homes.

"Older residents of Dubai are shocked at how much rents have increased since they were last looking for a property."

Some four-bedroom flats at Jumeirah Beach Residence are on the market for Dh400,000 a year - twice the amount demanded 12 months ago. And agents believe rents will continue to shoot up as supply is not keeping pace with demand.

"Rents are dictated by supply and demand," adds O'Connor. "Until more stock starts being handed over rents will continue to increase regardless of the rules pertaining to sharing villas

"Many people in the industry speculate that there is sufficient stock coming on line and have been saying this for some time, but I think one of the biggest concerns is that many developments are not being handed over on schedule. Much of the stock we expected to be handed over this year has not appeared and as a result there is a shortage of both villas and apartments."

Many tenants who are being evicted are wondering who will fill new villas when they do become available. It remains to be seen whether couples are willing to move from an apartment to a villa knowing that their rent will greatly increase.

Peter Penhall, CEO of the real estate portal Gowealthy.com, says: "Dubai can sometimes be late delivering so if 75,000 units were down for this year just 50,000 will be delivered. In the short term rents will rise but the market will soften in the medium term.

"But as the major areas such as Business Bay come on stream they will bring in a lot of companies that will need people to run them and they will need housing, so demand will remain constant, keeping prices rising."

The municipality has told those living in shared villas who do not move out within a month that their utilities will be switched off and they will be fined Dh50,000.

The Government said the ruling allowing only one family to live in each villa was not new but was passed two years ago.

It applies not only to labourers who have put up partition walls and are sharing rooms but to young single professionals who cannot afford to live on their own.

Middle-income earners with salaries of between Dh20,000 and Dh30,000 a month are being hit hardest as housing allowances in this bracket are not often enough to cover a one-bedroom apartment, or even a studio.

The municipality said the ruling was brought in to ease pressure on water and electricity supplies, which became stretched if too many people lived in a villa.

Omar bin Abdul Rahman, head of the municipality's Building Inspection Department, says: "When families share accommodation it is in violation of our rules because they often use dangerous materials to partition rooms and too much water and electricity is being used, which could overload the system. We put adverts in newspapers about this so even if people have not yet had a notice they must move out and they should be worried because they will either receive a notice from their landlord or during our checks."

Although some real estate and leasing agents are concerned about the plight of young professionals, a number believe both landlords and tenants are to blame. Penhall says: "A lot of tenants go to lesser-known agents who are not as credible as some of the larger companies and are now facing problems. A minority broke the rules and now that's affecting a wider spread of people."

Australian John Fredericks, 29, moved in to a villa in Umm Suqeim with four friends last month and has now been told to leave.

He said: "The rule that has been brought in under the guise of hygiene is forcing me to move from sharing a five-bedroom villa with four other corporate professionals to a three-bedroom apartment on the Palm Jumeirah for which I'll have to splash out half my salary, instead of the third I am paying now. It won't be any more hygienic on the Palm but will just waste more of my income and make me seriously question whether I would be better saying goodbye to Dubai."

Penhall advises everyone in an apartment to ensure their names are on the documents so the landlord knows who is living there, which should avoid problems as everyone is aware of the situation from the outset.

"The advice we give is to sign a lease with every tenants' name on it," he says. "It's a shame people can't share villas but a minority has been trying to work the system."

There has been publicity about fines being handed out if people do not leave. Although most reports say the penalties will be imposed on landlords, this will not always be the case. Bin Abdul Rahman adds: "It depends who is violating the rules. If the contract says a villa is for families and single people move in, the tenants are liable. But if landlords knowingly allow groups of people to share they will be responsible for the fine."

Money worries

British expat Emily Smith, 24 a marketing executive, has been sharing a villa in Jumeirah with friends for the past two-and-a-half years but has been told she must move out.

"I don't see what the difference is between sharing a villa or an apartment especially because we are not living with lots of people, just four in a four-bedroom place," she said.

"We have been told to be out next month and although we may still get a refund we are worried it will not come through.

"I can't afford to rent a new place until I have the refund and even then it won't be enough to cover a room in an apartment, so unless I get a pay rise I'll struggle to afford to stay in Dubai. I came here to save and if I'm not doing that it doesn't make much sense, especially when my mortgage in the UK is less than what my new rent will be."

By Aimee Greaves

© Emirates Business 24/7 2008