Any company that offers you a job in Dubai must, by law, make provision for accommodation. This may take the form of housing that is actually provided and paid for by your employer, or your monthly salary will contain a stated amount to cover the costs of renting or even buying accommodation suitable for your needs in Dubai or any other part of the United Arab Emirates.
Finding a place to live and meeting the upfront costs of a lease on an apartment or a villa should not prove a major obstacle, provided you are realistic in looking for something you really can afford, rather than something you have seen which suits your aspirations and idea of an exciting Gulf lifestyle. You may quickly find that these two are not one and the same.
So how do I know what I can afford?
A lot, of course, depends on your monthly salary. It also depends on your personal situation. Do you, for example, have a partner who can also work and generate extra income, or will you be the sole provider?
My straight up advice for the newcomer? In your first year in Dubai, err on the side of caution in every financial obligation you get yourself into. How does this apply to renting? No matter what your personal circumstances, allocate no more than 20% of household income to the rent budget. In number terms, if your monthly salary in AED 25000 (a modest enough sum these days, no matter what it converts to in your home currency), AED 5000 per month or AED 60000 per year is your budget.
Be strict and don’t allow financial creep to shift you into looking at places that are AED 70K or 80K per year simply because the monthly “extra” seems not too much. Yes, that extra AED 10K per annum will only be an extra AED 840 per month, but as we will see, there are other costs that you have to factor in and we’ll talk about these a little later.
Where can I find a place for AED ‘insert amount here’?
You can actually do some valuable research before you even arrive in Dubai; or before you’ve even negotiated a salary with your employer, or accepted an offer. The one-stop-shop for the Dubai housing market is the website dubizzle.com. This link will take you straight to the apartments for rent. There are filters on the left hand side of the page that you can set which will eliminate all the places that are outside of your budget and your needs (number of bedrooms, area, etc). I strongly recommend you do this; otherwise, trawling through page after page of properties that you can’t afford can be a depressing business. Remember that everybody has a limit.
The good news is that as of the time of writing this, there seems to be a good range of apartments in decent areas available in our target budget range of AED 60K per annum.
Other costs to keep in mind
So you’ve had a look through your budget range on Dubizzle and you’ve noted that some apartments are listed as “commission free”. What gives? In almost all cases of negotiating a rental agreement, you will go through a registered Real Estate agency, which means that the agent who shows you a range of properties and eventually arranges the lease for you, expects to be paid for this service.
Typically that amounts to 5% of the annual rent, plus the agent will also take a 5% (refundable) security deposit, so expect to pay out AED 6000 to the agent for our AED 60K example apartment.
Then there’s power and water. You need to open an account with the Dubai Electricity and Water Authority (DEWA) – the renting agent will tell you what you need to have by way of documentation.
You need to pay a security deposit of AED 1000, which is refundable when you leave the UAE and have no further business with DEWA. There will also be a monthly bill, which includes a Housing Tax; this is calculated as follows. The tax is 5% of your annual rental and 1/12th of this sum is added to each monthly DEWA bill. On our example of the AED 60K apartment, the tax will be AED 3000 for the year and AED 500 will be added to each monthly bill on top of the actual cost of the electricity and water you have used for the month.
DEWA makes sure that its customers pay their bills promptly by quickly disconnecting power and water if the bill goes unpaid for a very short time beyond the date due.
So back to “commission free”. Yes, it means that you don’t have to pay the agent, but someone is paying him or her and if it’s the property owner, you can pretty much bet that the extra month you don’t have to shell out upfront has been built in to the annual rent. You may be quite happy with this arrangement as it saves you costs at the “front end” of the deal.
Apartments come unfurnished in most cases. With the possible exception of wardrobes, which may or may not be built-in, you’ll also have to supply all furnishings and electrical or gas appliances. These, of course, are your property and you will take them with you, or dispose of them on the local second-hand market when the time comes for you to relocate to your homeland. But bear in mind that furnishing an apartment, including appliances can easily see off AED 30 – 40K.
Your employer may have a loan-scheme that will help cover this, or you may need to dip into your pocket, but whatever way you choose to account for these extra costs, you can see that in year one of a tenancy agreement, while the actual apartment may be costing only 20% of your household income, the accompanying costs of commission, security deposit, monthly utility bills and accounting for your one-off cost of furnishing the space can easily push the total cost up to 35%. Nor does it matter if your actual monthly budget is 2 or 3 times the amount I have used as an example: the extras listed will take your monthly costs in the first year close to that 30 – 35% of monthly income just the same.
Yes, you can afford to rent, but play it safe
I also assume that the financial package negotiated with your prospective employer will contain an adequate proportion that you can apply to rental housing without compromising your savings goals. For that reason, I strongly recommend that you play it safe in making your rental choices and decisions by following the above guidelines in the first year or two at least of your time in Dubai and the United Arab Emirates.