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‘Key money’ only way out?

DUBAI — If there is anything like a ‘key money’ factor in the renting and subletting of flats and villas, then it is a kind of hush-hush operation nobody wants to talk about. Both parties to the transaction benefit and that’s it.

But, those who have been following the trend for a long time, say the ‘key money’ is no longer restricted to the ‘give and take’ of government-allotted accommodation to people of a particular income group alone but with just about any accommodation that is largely immune to frequent rent hikes.

“Demand and supply is the determinant and there are people willing to shell out ‘key money’ as long as it benefits them monetarily in the long run,” says a longtime resident of Dubai. “To the taker it’s like a bonus and could be in cash or in kind. To the giver it’s an investment which will prove profitable in the long run.”

That it should not be condoned is acknowledged but that it is largely tolerated is also common knowledge. Especially these days, when the grouse runs somewhat like this: do tenants have any protection or rights against annual rent increases? Should we continue to be manipulated by some landlords?

The private sector is responsible for providing housing to the expatriates. Expatriate housing represents 80 per cent of the total residential units in Dubai. But with the economic boom, the private sector wants to investment only in luxury housing resulting in decrease in the development of housing for low-income group. The increase in the number of middle-class and low-income expatriate population has led to an imbalance in the market — supply exceeds demand in luxury housing while demand exceeds supply in low-income group housing.

Coming back to the grouse: Is there any protection? The answer to that is, there is — take the dispute to the Dubai Municipality Rent Committee. The rent committee may intervene in his favour but the landlord might get his back by reneging on the contract the very next month.

In short, the tenant comes up against a wall, with the hike in rents also ripping rents in the family fabric with many a family head responding with the desperate: sending the wife and kids home, and then opting to live several to a room.

“Dubai is no longer the El Dorado that it once was, though the glitter has only increased over the years. Rents have been going through the roof in Dubai, Sharjah and Abu Dhabi. Taking bed and baggage to Ajman, Ras Al Khaimah, Fujairah and even Umm Al Quwain has only raised rents in those emirates too,” says Azad, a Pakistani employed in a showroom.

Azad shares bedspace in a room in a flat in Al Attar Shopping Mall, Karama. “Eight people to a room that is just 12x10 feet, one atop the other on bunker beds. It is the pits,” says Azad. “We are like cattle in a pen. The landlord is only interested in the rent. Imagine eight people to one toilet. You should see the chaos in the mornings.”

Azad’s ‘landlord’ is also an expatriate who rented the flat from a real estate agency to sublet it to as many as possible. Supply doesn’t match the demand and at the rate of Dh600 minimum for a single bedspace is a profitable deal. Not just in Karama, just about everywhere else too rents have been on the rise. A two-bedroom flat comes for no less than Dh30,000-plus. And salaries, those of the expatriates, haven’t kept pace.

The rapidly increasing population is largely to blame. Just over a million today and expected to double in the next seven to 10 years, rents in Dubai respond to the market for accommodation. Add to that the fact that there is no specific federal land or rental law in the UAE. Each emirate is left to establish its own rules.