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Abu Dhabi, UAETuesday 20 November 2018

Homefront: 'Can my landlord charge a full year's rent for breaking a contract early?'

The Dubai resident was only one month into her tenancy when she was forced to cut short her time in the UAE

The UAE was ranked the second safest country to visit, after Iceland, in a Which? Travel index. Pawan Singh / The National
The UAE was ranked the second safest country to visit, after Iceland, in a Which? Travel index. Pawan Singh / The National

I was trying to setup a business in Dubai International Financial Centre. The regulator gave me a work visa in the hope I would be successful in getting the licence to operate the business. I then leased an apartment with a one-year tenancy agreement via an agent. However, I was unsuccessful in getting the licence and as such cannot operate from Dubai. This means the visa will now be cancelled. Obviously, this was not planned so I have given two months’ notice for the apartment as I have to leave Dubai. However the landlord’s representative is saying I need to pay for the whole year's rent. I have spoken to the agent, who I discussed the tenancy agreement with before signing and nothing of this sort was mentioned - just the standard two-month penalty. The agent says the landlord is acting illegally. The landlord's representative says that it was in the contract, which the letting agent did not pick up on or explain, and I must follow that. Is there anything I can do? AR, Dubai

You do not mention in your email if the property you have signed the tenancy agreement for is in the DIFC or in Dubai in general? I ask this because the DIFC does not necessarily follow the same rules as the rest of Dubai when it comes to rental laws. If the property is in the DIFC, you can seek independent advice from the DIFC lawyers who can advise further. In the meantime let me first tackle the tenancy contract part.

Given the details of your email, I assume you are confirming that there is a clause in the contract that states if you wish to break the contract, the landlord has the right to request the full year's rent. I have to admit that in the past, this wording was fairly common as job security was perhaps better or maybe tenants did not need to break the contract as much as they do today.

In any case, it was always at the discretion of the landlord to come to the aid of a tenant needing to break the contract. It appears this landlord is really mean by holding the contract given the circumstances but actually he’s not acting illegally. It is now down to pure negotiations between you and the landlord in order to get to the desired point of being allowed to break the contract with the minimum of cost or fuss.

The only solution I can see - assuming you cannot change the landlord's mind - would be to get the agent to help find another tenant to replace you. This way, the landlord will not be out of pocket or indeed suffer any void periods while another tenant is sought. If the property is in Dubai and not the DIFC, I would not necessarily recommend you spend time, money and effort to file a case at the Rental Dispute Settlement Committee because despite the fact it would seem ridiculous to pay for something you cannot use, as stated, the landlord has not broken any rules, given the content of the tenancy contract.

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Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 34 years in London and Dubai

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com