Registration of residential and commercial rental contracts in Dubai is mandatory through the Ejari, e-registration portal, and failure to comply with the law, by any party to the contract, may lead to imposition of penalty, a senior Real Estate Regulatory Agency (Rera) official said.
"Law No. 26 of 2007 concerning regulating the relation between tenants and landlords of property makes it mandatory to register lease contracts with Rera and this should be carried out through its Ejari system. There is no exception for commercial or residential contracts," Mohammad Khalifa Ahmed bin Hammad, Director of the Real Estate Relationship Regulating Department, Rera, told Emirates Business.
"The end goal is registration of all existing and future rental agreements, but a procedure exists for penalising failure to comply with the law and register with Ejari."
Nonetheless, Rera is prepared to allow individual tenants only with existing contracts to wait until these are due for renewal before seeking registration, Bin Hammad said.
How does registration under Ejari protect the parties to an agreement?
In offering transparency and validity for the terms and conditions of rental contracts, Ejari registration guarantees the rights of all parties to a lease/rental agreement. Once the agreement is registered its validity is automatically accepted by all government agencies linked to the system. In case of dispute, the data entered into the system would be recognised by the courts and considered eligible as evidence. The details and full history of the agreement are now accessible and available to be used to equitably resolve any dispute.
In a wider sense, the full roll-out of Ejari registration across the rental sector in Dubai offers a different kind of protection and the possibility of macro or strategic market regulation.
Comprehensive Ejari coverage will extend the quantitative and qualitative data available to Dubai planners, policymakers and indeed property companies and other investors and open up new options to regulate and control aspects of rental property supply and prices.
At a purely administrative and convenience level, it offers landlords, for example, a readymade rental management system, which should improve efficiency across the sector. Besides, the Ejari system has been fine-tuned following consultation across the sector and full implementation is being phased in, beginning with property management companies who manage 60 per cent of the property in Dubai.
The end goal is registration of all existing and future rental agreements. Rera is, nevertheless, prepared to allow individual tenants only with existing contracts to wait until these are due for renewal before seeking Ejari registration. In such cases, invariably the landlord or his agent – who has the primary obligation – will undertake the procedure.
Will data collected through Ejari be used in calculating the rent index?
The rental database that will become available through Ejari will inevitably be utilised by the government and the private sector. And this can only be positive. Certainly, the trendlines shown by the data collected will be reflected in the rental index and will have a crucial role to play in updating it. It does not stop there of course. The information about details such as rental levels in specific areas and for certain unit types and the demographics of use will prove invaluable to government planners and private sector investors alike.
Have you taken any legal action or penalised anyone for failure to register under Ejari?
The point should be made that law and compulsory registration through Ejari were introduced not to penalise sections of the real estate sector, but to be of benefit to all of it. This was the overriding concern in framing the legislation and in developing the system and remains so now we have reached implementation. Rera's objective is to regulate the market, not penalise companies and individuals. Compliance with the law is mandatory and we have not seen any reluctance from any quarter to do so.
The message seems to have got through that Ejari is wholly beneficial and registration is progressing satisfactorily. We have seen this in the first phase focus on property management companies and even in niche sectors such as commercial and retail leases.
Nevertheless, a procedure exists for penalising failure to comply with the law and register with Ejari. It is a staggered process, which fits in with our objectives and entails first, a warning being issued, second, formal notice of proceedings to act, third, final notice. It is only if after a final notice has been issued and there is still a failure to take action that Rera would impose a fine according to its fixed schedule.
Landlords and tenants share an obligation to abide by the spirit as much as the letter of the law. So, while we would encourage all tenants to check to make sure their agreement with the landlord is registered and that they deal only with licensed lease management companies, equally, we would ask agents to exceed the basic requirements in providing the best possible service to tenants. If tenants become aware that the agents they have dealt with have failed to meet the requirement to register their lease contract, we encourage them to report this through our website firstname.lastname@example.org.
How much is the fee for registering with Ejari and who has to bear the cost?
A Dh160 fee is chargeable to register a rental/lease agreement with Ejari. The fee is payable by either party to the agreement.
Is it mandatory by law to register all commercial or residential contracts through Ejari?
Law No. 26 makes it mandatory to register lease contracts with Rera and according to the agency's regulations this should be carried out through its Ejari system. There is no exception for commercial or residential contracts. Nevertheless, special arrangements exist for commercial and retail property leases. Rera has an arrangement with the Department for Economic Development (DED), which issues licences for commercial property lessors and property management companies.
Since there is an electronic link between Rera and the DED, in practice, there is pre-registration of commercial leases. With retail property leases, bulk registration is carried out through its professional association. We have tried to make registration, simple, easy and trouble-free.
Is there a cut-off date for registration of 2010 contracts or contracts still valid for 2010, but entered in 2009?
There is no cut-off date for registration, which is mandatory for all active and new commercial and residential contracts.
Individuals have some leeway in as much as these are allowed to wait to register until their contracts are due for renewal. At this time, there will be every likelihood the landlord would have taken the responsibility for registering the new contract with Ejari.
System ensures transparency
The Ejari software was developed and the system formally introduced in order to fully regulate the relationship between landlords and tenants in Dubai in accordance with Law 26 of 2007 concerning regulating the relation between tenants and landlords of property in Dubai. The objective in enacting the provisions of the law was to make this relationship transparent and ensure all parties to a rental agreement are aware of their rights and obligations.
Effectively, it establishes a sound, rigorous and well-defined procedure within which rental agreements are made, officially recognised as a matter of course, and if necessary, the terms enforced.
Tenants can enter into a contractual arrangement to rent a property confident that Ejari registration of that agreement means it has been authorised by Rera and will, therefore, be recognised by the courts and all the government agencies and departments linked in to the system.