Abu Dhabi to more than double expat rent tax for some tenants

Abu Dhabi is increasing a tax on expat rental contracts to up to 7.5 per cent, according to the utility that collects the charge.

Abu Dhabi Distribution Company (ADDC) said on its website that the municipality fee would be calculated as 5 per cent for all premises other than residential villas where it will be 7.5 per cent.

The previous rate was 3 per cent when the fee was introduced last year, meaning some tenants will pay more than double.

The associated law for an increase is already in place, although there has been no official announcement.

Read: Abu Dhabi plans increase to municipality tax

Payments are made each month as part of water and electricity bills but do not apply to Emiratis or company accommodation.

ADDC said the minimum monthly payment would be Dhs450 ($123).

Based on the changes an expatriate renting a villa in Khalifa City A for Dhs150,000 ($40,839) a year will pay Dhs937.5 ($255) a month compared to Dhs375 ($102) previously.

The increase comes at a bad time for landlords with Abu Dhabi rents and property prices already under pressure over the last year and a half due to the depressed job market and new supply.

A first quarter report by real estate firm Asteco showed apartment and villa rental rates were down 3 per cent and 2 per cent from the end of 2017 and 11 per cent and 9 per cent year-on-year.

Read: Abu Dhabi property slump continues in Q1 2018

Property listings site Bayut said rents fell by nearly a quarter in some areas compared to the same period in 2017.

Read: Revealed: Where Abu Dhabi property prices, rents rose and fell in Q1

Abu Dhabi has announced a series of reforms over the last two weeks to boost investment and growth including a Dhs50bn ($13.61bn) economic stimulus plan and cuts to taxes on hotels.

Read: Abu Dhabi crown prince approves Dhs50bn in economic stimulus

Read: Abu Dhabi cuts tourism and municipality fees at hotels