Homefront: 'I've cut my tenant's rent amid Covid-19. Do I have to stick with this rate?'
The Dubai landlord has lowered the rent twice this year – once in January and again during the pandemic
My tenant renewed the lease on my villa in January at a reduced rental rate compared to last year. He has now asked for a further discount on the next rent cheque because he receive a cut in salary due to the coronavirus pandemic. I have agreed to the discount but my question is this: will the rent for this year be adjusted for the discount or will it stand as unchanged based on the tenancy contract/Ejari? I'm asking this from a negotiation point of view – the discount was given due to exceptional circumstances and I don't want it to be a starting point when the lease expires In January next year. KM, Dubai
When it comes to contracts and negotiations these are always about what both parties agree upon. Generally speaking rental prices were lower this year compared to last year, so it was right that you agreed on a reduction in rent for the renewal in January.
Now that we have exceptional circumstances, you were also correct to offer a further discount from your agreed rate given your tenant's salary cut.
That said, it is your decision to allow this. Therefore, as long as the agreed reduction is understood in terms of its duration, then it should not affect your Ejari contract at all. I am not aware of the finer details, as in how much reduction you’ve given or for how long, but both parties are aware that this extra reduction is to alleviate the tenant's present situation.
Going forward, there is hope that the tenant will have his full salary returned as the situation eases, or perhaps he might even change jobs with a higher salary than before. If this happens, the agreed January renewal amount should be reached once more.
You are within your rights to commence any future negotiations based on the agreed renewal amount from January and not from the extra discounted amount.
Remember, a contract is an agreement between both parties, so if next year your tenant doesn’t agree with the terms, he is free to vacate.
Therefore, what happens right now is irrelevant as it is the final agreement that will determine whether you renew again with this tenant or need to find someone else to move in next year.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years in London and Dubai
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to firstname.lastname@example.org
Updated: June 3, 2020 09:38 AM