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Abu Dhabi, UAEThursday 20 September 2018

Homefront: Is the tenant or the owner responsible for AC bills in Abu Dhabi?

An owner in the capital is confused by who should pay the utility bills for his apartment

Al Reef in Abu Dhabi will be affected by the water disruption. Ravindranath K / The National
Al Reef in Abu Dhabi will be affected by the water disruption. Ravindranath K / The National

I am renting out my apartment in Abu Dhabi and in the generic tenancy contract it states: "The tenant undertakes to pay all utility charges including Abu Dhabi Distribution Company, housing fees, telephone, internet gas charges, air-conditioning and district cooling and any other utility connected to the unit unless agreed otherwise. The tenant shall be responsible to pay the deposits for any and all utilities (where applicable) and provide copy of the receipts to the owner." Regarding the AC charges, the community management company has advised me, the owner, that it is customary for the tenant to pay only the air conditioning consumption charge and the owner pays the air conditioning capacity charge (for district cooling). So there are two bills to pay for AC: the consumption charge and the capacity charge. Shouldn't both bills be addressed to, and the responsibility of the tenant, as part of their bill for paying the utilities? GL, Abu Dhabi

This is a great question but unfortunately it does not come with a direct and clear answer. I actually agree with you that if you have stated in the contract that the tenant is responsible for all utility charges including everything you mentioned, then it is up to you as the landlord to follow this through.

It is true that some tenants do pay the capacity charge and some landlords pay this too, which is why I stated at the beginning of my reply that there is no clear cut answer. Nothing is set in stone that a specific person is the only one responsible for this charge.

The capacity charge is the levy that the utility company charge the customer/client to bring the actual service offered, in this case the AC. The consumption charge as we all know is the amount of AC used in any given period.

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In 2010, I rented a warehouse in Sharjah for 10 years to run an aluminium trading company. I signed a tenancy contract that ran until 2020 and paid the rent with post-dated cheques. Now my business is not doing well and I am unable to pay the rent. I have initiated procedures to close the company within three months. I asked the landlord to terminate the tenancy contract and return my cheques, but he refused and asked me to pay six months’ rent, or continue the contract. How do I terminate the contract? Can I file a case before the Sharjah Rent Committee? ZB, Sharjah

In situations like this, I would refer you initially to abide by what is written in your contract. I’m sure you have a provision for terminating the agreement early in which case this has to be adhered to. In the same way there ought to be a provision giving some sort of compensation to the landlord in the event of early termination. Obviously if your business is not doing well and you are unable to pay the rent, then it is clear that any separation/termination has to be concluded amicably. Under normal leases the owner is entitled to receive a penalty amount from the tenant but this amount, if not pre-determined by the contract, needs to be negotiated. Requesting six months rent as compensation by the landlord does seem a little high to me, I believe three to four months is fair given it is a 10-year lease but this is up to you to decide.

If ultimately you both cannot decide on an amicable settlement, you are entitled to file a case at the rental committee but the outcome is not guaranteed to go in your favour.

Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for over 30 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@kensington.ae

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