The renewal of my tenancy contract is coming up and because so many friends of mine are being caught out or duped by their landlords into paying more than they should, I want to know the truth. So what is the law when it comes to landlords raising rent? SS, Dubai
With rents in Dubai on an upwards curve, it is important that tenants and landlords know their rights as per the law. There appears to be some sharp practices being used by landlords and their agents when it comes to renewal time. The first thing not to do when a landlord says he wants a raise in the rent is to panic. There are processes in place to protect both landlord and tenant; it is just a matter of where to look for help.
At this crucial time, it is important to maintain calm and to engage with your landlord, preferably face to face, to see if there is a compromise that can be reached. One solution could be to ask your landlord to visit the Land Department website (dubailand.gov.ae) and to click on the Rera section then look at the rental increase calculator. This will show whether an increase is justifiable or not.
The rent cap decree was passed in 2010 to ensure the stability of the rental property market and to regulate the relations between tenant and landlord by charting a legal framework.
The Rent Cap Law (Decree of 2010) states: there will be no increase if the current rent falls below 25 per cent of the average rent for a similar property.
However, if the current rent value is 26 to 35 per cent less than the average rent for similar properties, the maximum increase is equal to 5 per cent of such value.
If the current rent value was 36 to 45 per cent less than the average, then the maximum rent increase is 10 per cent.
For 46 to 55 per cent less than the average rent, the maximum increase is 15 per cent and for 55 per cent, it's 20 per cent.
For the purpose of this decree, the rent value for similar properties means in accordance with the "Rent index of the emirate of Dubai" approved by Rera.
It is now a legal requirement to register all tenancy contracts in Dubai at Ejari. The main responsibility lies with the landlord to do this but tenants can now register too. The documents required are passport copies of both landlord and tenant, title deed or Oqood (pre-title registration) the tenancy contract and a fee of Dh195 if done in person. Any future disputes will be easily handled when registered at Ejari.
In the past, the law contained a two-year protection against any increase in rent for the first two years of a tenancy. The amended law now states that the rent can increase every year provided it falls in accordance with the 2009 rent cap and the index of rental values.
Any renewal of tenancy or amendments to the tenancy contract at the end of the term must be made at least 90 days before the expiry date, unless the tenancy contract provides otherwise.
If a landlord wishes to sell their property, they may terminate the contract by giving the tenant 12 months' notice, but this notice must be sent either through a notary public in Dubai or registered mail.
If they wish to recover the property for personal use, they will not be able to relet it for a period of two years for residential, and three years for non-residential properties. Previously, the delay was just one year.
In the event of a premature termination by a tenant, the tenant can claim the remainder of the rent by mutual agreement with the landlord. In the event no agreement can be reached, the rent committee can grant some compensation to the landlord and refund the remainder amount to the tenant.
If a stalemate is reached regarding any increases of the rent, then the last resort will be to file a case at the rent committee. This attracts a fee of 3.5 per cent of the annual rent.
Mario Volpi is the managing director of Prestige Real Estate in Dubai and has worked in the property industry in London and Dubai for the past 29 years. Send any property questions to firstname.lastname@example.org