DUBAI // Tenants who know their rights are taking on landlords trying to impose illegal rent rises – and the tenants are winning.
Rents have risen by an average of 20 per cent since last year as Dubai’s property market recovers from the downturn. But Rera, the Real Estate Regulatory Agency, imposes strict rules on increases.
Landlords may raise rents for sitting tenants on a sliding scale, depending on how far the existing rent is below Rera’s geographic rent index. Rents that are less than 25 per cent below the index figure may not be raised at all.
Nizar, a Syrian national who has lived in Dubai for two years, paid Dh70,000 last year for his apartment in Dubai Marina. In January his landlord demanded Dh88,000, a rise of nearly 26 per cent.
“I got advice from my workmate who faced the same problem,” he said. “I sent an official letter through the public notary saying I would agree to pay the increase as per Rera law only.
“It worked. Now I’m paying Dh72,500. There is a government here so nobody can play around with us.”
Mohammed Bin Hammad, a senior director in Rera’s regulatory department, said tenants and landlords should try to negotiate first.
“If this fails, a tenant who has registered his tenancy agreement through Rera can send an official letter through a public notary indicating that he wishes to renew the contract as per the law,” he said.
“In case the landlord still refuses then a dispute case can be filed with the Rent Committee.”
Shahram Safai, a partner at Afridi & Angell legal consultants, said the landlord would need to approach the Rent Committee.
“In negotiations the tenant can say I will pay you the existing amount and the amount that is allowed by law and I will not move out because you don’t have the right to raise rent this much,” he said.
“If the landlord does not back down, the tenant can refuse to pay the higher amount. They can say they will not pay the illegal rent and can continue in possession on the existing rent or the maximum rent applicable.”
The rent-rise cap established by a Rera decree in 2011 ranges from 5 per cent to 20 per cent, depending on how far below market rent the property is.
Rent may be increased by 5 per cent where it is 26-35 per cent below average rents for the area, by 10 per cent if it is 36-45 per cent below, by 15 per cent if it is 46-55 per cent below and by 20 per cent if it is more than 55 per cent below.
Tenants can check average rents for their area on the Rera website. The index is updated three times a year. Decisions by Dubai Municipality’s Rent Committee are considered binding.
Legal experts said the law also gives tenants time. “A landlord is required to give at least 90 days’ notice before renewal for any change to rental terms, including rent,” said Alexis Waller, a partner at Clyde & Co.
“So if a tenant has not had 90 days’ notice of any intended rent hike they can argue this provision.”
Those who do not want to take on their landlord are looking further afield for solutions.
Shahnawaz Kalim, a car salesman who paid Dh34,000 for a one-bedroom in Al Nahda in 2011, could not afford the 30 per cent increase demanded by his landlord. Instead of a lengthy fight, he chose to move and found an apartment for Dh38,000 in Silicon Oasis.
“These rates are hard to digest,” he said. “Instead of focusing on my career, I’m surrounded by these issues. Half the time I’m worried what I will do next year.”
Rising rents will continue to push people away from the centre of Dubai, said Craig Plumb, head of research at the property management company Jones Lang Lasalle.
“Lease contracts are under the protection of the rent cap so people shouldn’t panic because if landlords are pushing for an exorbitant increase they should point out that by law this is not allowed,” he said.
“But people will also look at newer areas such as Dubailand where rents will be lower.”