As the rental market gets stronger we will see more and more landlord and tenant disputes appearing in Dubai. I thought I would share our latest issues with the blog and try and put some clarity on a few tenancy questions that are often asked of us.
Many landlords are seeing that the current rent they receive is less than the current market price and then try to either put the rate up or ask the tenant to leave so they can put in a new tenant at a better rate.
We saw this a lot in the peak of 2007/08 and since then new restrictions were put in place to safeguard the tenant. 5 years on these safeguards are once again being used by the tenant to protect themselves from rent hikes or eviction.
In a nutshell the following rules apply to the Dubai rental market.
1. A tenancy must be registered at Ejari
2. The tenant cannot sublet without consent.
3.Short term rentals will not be registered with Ejari and follow a different set of regulations ( call me if you want more information on short term).
At the end of the tenancy contract the following rules apply:
1. The tenant has a right to renew on the same terms.
2. If the landlord wishes to change anything in the contract then he should give 90 days notice to the tenant.
3. If the tenant rejects the new terms then the course of action for the landlord is the Rent Committee.
4. What is 'allowed' and 'not allowed' by the rent committee is very clear and both landlord and tenant should try and negotiate around the table before resorting to this.
If the landlord wishes to 'evict' the tenant he must either be selling the property or moving into it himself. The procedure to evict is as follows:
1. Serve a 12 month Legal Notice to the tenant. This has to be notarised by the court and sent by courier. It is quite an easy process and protects the landlord.
2. The landlord must state if he is selling or moving into the property on this notice. The text is standard at the court. Total cost for this if done in Dubai is about 500 dhs ( notary stamp 85dhs; translation 250 dhs plus 60 dhs ; courier 100 dhs.)
It is important that everything is done according to the regulations set out by RERA and the Lands Department of Dubai.
As property managers in Dubai our two biggest problems are always maintenance issues and negotiating the rent renewal.
It is important to follow the rules and then both landlord and tenant can co exist knowing that the correct procedures are in place.
Let us know if you need any advice on these matters by contacting the property mgt team.
I also found this on the net which is quite interesting:
(My Dubai tenancy contract is due for renewal for the second year this month. Until yesterday my landlord had not made any contact with me, but I spoke to his agent and he told me the landlord wants to increase the rent. In reply, I said that according to the law, the rent can only be increased after the completion of two years. Then the agent told me the landlord wants to sell his apartment, so will add a clause allowing potential buyers to view the apartment from inside. I would like to know whether he can insist on increasing the rent at the time of signing a first renewal and if I have to agree to accept the new clause of viewing in the new contract? Finally, if he sells the apartment in the next few months what will happen to my tenancy contract? MIK, Dubai You are correct in saying that a landlord cannot increase the rent in the first two years and it is worth noting that after that there are strict provisions that apply regarding permitted increases after this time. Rera, the Real Estate Regulatory Agency, collects data across the city and has an online calculator that shows the acceptable levels and landlords must comply with this. If rent is to be increased in accordance with the permitted limits, tenants must be given 90 days'notice. It is not standard to include a clause to allow strangers to visit someone's home and you are not obliged to accept this. Tenants are not obliged to show buyers around a property and if you are asked to do so and wish to assist, you should be given 24 hours' notice. Even a landlord does not have the right to enter a property without permission or a very good reason to do so. I do not recommend you accept any such agreement and if your landlord, or his agent, persists, you should contact Rera. If a property is sold, then the rental agreement and therefore the tenant, comes with it. If the landlord wants you to leave, then he needs to give you 12 months' notice by registered mail or notary public with reasons as to why he is evicting you, as per UAE Law number 33 of 2008, Article 25, Clause 2.)
There are a few points in here I don't agree with and the author does not seem to be taking into account the fact that Law 33 over rides or updates Law 26....
03 September, 2013
14 January, 2013
E&T Commercial Launched!
E&T
Commercial has officially launched! The new division of Edwards and Towers will
offer commercial sales & leasing, property management and investment advice
on commercial real estate in Dubai. We also provide valuations for accounts,
lending and dispute resolution. Do not hesitate to contact us if we can help
with your commercial real estate needs in any way.
So
at the start of a new year, where are we up to in the commercial market?
The
macroeconomic fundamentals for Dubai are improving. The Emirate’s population is
forecast to exceed 2 million for 2012, and GDP growth is anticipated to be in
the region of 4.5 - 5% throughout the year while inflation remains low. On the
back of these improvements, several large-scale commercial projects have been
announced including Mohammed Bin Rashid City, a, AED 10bn theme park in Jebel
Ali, an extension of the Madinat Jumeirah and the completion of the Business
Bay Canal. Significant questions surrounding the financial feasibility of some
of these projects exist, but it is clear that confidence has returned to the
sector.
The
office market, which has lagged behind other sectors since the 2008 crash, is
showing signs of improvement as more companies move into the Emirate to access
the growth that is developing here. The leasing deals we are currently doing
are supporting the fact that, in most areas of Dubai, rents have bottomed out
for office space. There have been increases in rents in prime areas such as
DIFC, Sheikh Zayed Road and Downtown Dubai. There is still a notable
discrepancy between rents for fitted offices and shell & core, with the
former usually commanding a premium in the region of AED 20 psf on average.
Furthermore, fitted space has a much shorter marketing period. Therefore as a
landlord, if you have access to a contractor at a reasonable rate, it is
advisable that you fit out your office prior to marketing; even if it is to a
basic standard; raised floors, suspended ceilings and provision of utilities.
This will significantly improve the results of your marketing.
The
retail market continues to perform strongly, benefitting from an improvement in
tourism and consumer confidence in Dubai. Rents are typically linked to the
sales of the tenant, and most retailers target a rent to sales ratio in the
region of 10%-20% in the bigger malls. This can mean rents are anywhere from
AED 300 psf to AED 2,000 psf (the latter being from tenants such as Jewellers,
who can generate high sales from a relatively small space). Retail rents and
values are set to continue their upward trend throughout 2013 as Dubai’s
economy continues to grow.
The
industrial market is fragmented in Dubai in terms of rental and capital
performance. Onshore, the average rents are in the region of AED 30-35 psf in
established areas such as Al Quoz and Al Qussais. Free Zone rents in areas such
as JAFZA are notably higher, more in the region of AED 40-50 psf. The latter
areas are set to see more growth based on the increasing levels of logistics
and trade in the Emirate, which is aligned to the overall economy.
2013
is set to be a positive year for commercial real estate in Dubai. We look
forward to working with you and assisting your commercial needs.
Simon
Kennedy BA MSc MRICS MBA
Director
– E&T Commercial
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