Dubai is set to introduce long-term property rental contracts in a bid to stabilise rising rent prices, the head of the newly-created Real Estate Regulatory Authority (RERA) said on Tuesday.

Inflation in the UAE has rocketed over the last few years, mainly driven by high rental prices as property development failed to meet growing demand and landlords cash in on market conditions.

Standard Chartered raised its outlook for 2007 inflation on Aug. 6 in the UAE to 9.3 percent with Dubai rents rising 4 percent. It said a law capping rent increases was not protecting new tenants.

'We will be introducing long-term rental contracts by the beginning of 2008 to stabilise the market,' Marwan Ahmed bin Ghalita told Reuters in a phone interview on Tuesday.

The contracts are likely to be three or five years long and would be designed to give confidence to landlords and tenants, Ghalita said.

Dubai currently imposes a 7 percent rental cap rule, but when tenants change landlords have taken the opportunity to hike rents well above the existing benchmark.

Ghalita said he did not expect average rents in the emirate to rise more than 7 percent in 2007 and the cap was unlikely to change.

'If the market needs it, then we will introduce it. But the way we are looking at the market with Jumeirah Beach Residence and the Palm shoreline apartments coming into the market, we feel it will stabilise.'

The government is also drafting legislation preventing landlords from evicting tenants on short notice or without adequate cause, Ghalita said.

'They won't be able to do that,' he said, adding that the new law would also protect landlords from tenants who consistently failed to pay their rent.

The new regulator is due to be fully operational by year-end and will complete a comprehensive database outlining supply and demand conditions in the market by the end of 2008.

'Once we have the database, the rental market will be clearer and so will how much increment there will be each year,' Ghalita said. -Reuters