Registration of rental contracts with the Dubai Land Department (DLD) will soon become a pre-requisite to accessing other government services, according to a top property regulator.
The Land Department and its regulatory body — the Real Estate Regulatory Agency (Rera) — has been trying to implement the system through a registration portal — Ejari.com.
The move will help the government to monitor the property market and offer better insights through its rental index while ensuring all tenants pay their housing fees regularly. Currently, these contracts are processed by the landlords. The rental data fed into the system is used to calculate the housing fees that are included on utility bills.
Registration of residential and commercial lease contracts through Ejari is mandatory and failure to comply may lead to a penalty, Gulf News has learnt. A Dh160 fee is chargeable to register a lease agreement with Ejari. The fee is payable by either party to the agreement.
Check with landlord
"Landlords and tenants share an obligation to abide by the spirit as much as the letter of the law," said Marwan Bin Ghulaita, CEO of Rera. "We encourage all tenants to make sure their agreement with the landlord is registered."
The Ejari registration will be mandatory to obtain utility services. If the contract is not registered, transactions could be delayed at several government departments, principally the Dubai Economic Department and the Residence and Foreign Affairs Department.
"With the current e-link among government bodies, this would be the first step in most transactions," Bin Ghulaita added.
Trends indicated by the Ejari data will be reflected in the rental index and will have a crucial role in updating it. Information about rental levels in specific areas, the demographic base and the kinds of property formats in favour can also be found.
"The decision is effective on every new contract to be signed in 2012; however, Rera is prepared to allow individual tenants with existing contracts to wait until these are due for renewal before seeking registration," Bin Ghulaita added.
"This regulation was announced a year ago and notices were sent out to parties concerned that the new rule would be effective by 2012. The Department will not accept any contract unless it is registered with Ejari."
According to the Rera, the rule applies to landlords and tenants in Dubai, real estate companies entrusted with the management of realty projects on behalf of others, as well as official agents of owners of commercial complexes and shopping centres.
The application is user-friendly and one can register details easily, the Rera official added.
Faisal Mohammad, a Dubai resident, told Gulf News: "We feel this is a good step forward for the rental market. It will make the market more transparent and also clear up a lot of the grey areas regarding landlord and tenant relationships."
On the other hand, another resident, Mahera Alam, said: "Property owners need to start registering all tenancies so that they conform to the law, and not negatively affect tenants."
Bin Ghulaita said that with Ejari, both ends of a rental contract are uniformly served, providing protection to landlords and management companies, as well as to tenants. "The system also serves to establish clear payment terms to protect the interests of all parties when advance rental payments are made," he added.
The main benefits are by way of uniformity in the approach, which creates a standardisation of rental contracts, and its ease of use. However, Bin Ghulaita added: "In case of disputes, the data entered into the system would be recognised by the courts and considered eligible as evidence."
For Basem Jouni, Ejari will serve to maintain a trusted regulatory environment for the local real estate industry. "It's a good sign that legislation and systems are gradually catching up with what's been happening," he said.
Jouni said that it would be much better if all processes could be done online, without the need to visit the Rera office.