Property experts have forecast rents softening in Dubai’s residential market in 2015 and a significant decline next year. But ‘smart’ tenants, who know the law, can prevent landlords from seeking outrageous hike.
We know that if the landlord and tenant don’t mutually agree to a new rent prior to a contract renewal, the latter has the right to file a case with Dubai’s Rental Dispute Settlement Centre.
Remember, you will have to pay 3.5 per cent of your annual rent as non-refundable fees, besides having to visit the dispute centre, at least twice, before a judgment is passed.
Thereafter, the landlord is unlikely to heed to any of your requests of maintenance. You will then have to revisit the dispute centre to seek services by paying the 3.5 per cent fee again.
Emirates24|7 spoke to several real estate agents who confess that existing tenants who have talked and negotiated their rents with landlords have often been successful.
In January, Hadef & Partners, a UAE-based law firm, said that only 31 per cent of respondents to their survey had challenged the proposed rent contract termination, with over 84 per cent resorting to direct negotiation with the landlord. In any case, where a challenge was made over 64 per cent were successful, it said.
Though it may not always hold true, real estate agents admit the best time to negotiate with your landlord is on a weekday, and not weekends, as they seek to close the deal as early as possible as they are preoccupied with their daily work.
Whatsoever, keep in mind the following points to possibly thwart your landlord’s effort of any arbitrary rent hike.
# Ejari is mandatory
All tenancy contracts in Dubai have to be registered with Ejari. It costs Dh195, but the question is who pays? Real Estate Regulatory Agency (Rera) does not specify the party paying the fee, but generally in a strata tower the onus is on the tenant. Where a property management firm manages a tower they have to pay the fee. These companies, however, do recover the cost from the tenants. Documents required for registration includes tenancy contract, recent Dewa bill, title deed copy or affection plan, tenant’s passport, visa and Emirates ID copy.
# 90-day notice is must
A landlord has to give a 90-day notice if he/she wants to increase the rent and that too as per Rera rent index. No notice being served means a landlord cannot raise the rent at all. If there is no communication between the two parties, the contract is automatically renewed at the same rental price. Generally, agents, on behalf of the landlord, tend to give only a 30-day notice period to force tenants to accept the hike as moving out becomes difficult.
# Follow rent index
It is mandatory for the landlords to follow the rent index, but as mentioned the 90-day notice is mandatory. In case the notice has been served, either electronically or in writing, the landlord can increase the rent as indicated by the index.
Here is Dubai rent decree issued and this is what it says:
In order to control the arbitrary rent increases, Dubai government released a new rent decree in December 2013.
The Decree, No 43 of 2013 now sets a specific band for maximum rent increases that a landlord can demand at the time of renewing leases. The decree is applicable to private and public sector owned properties in Dubai, as well as within the free zones.
* No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property in the same residential area.
* If the rent value is between 11 per cent and 20 per cent less than the average rent of a similar property, the maximum rent increase shall be equal to 5 per cent of the rent value.
* If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the maximum rent increase shall be equal to 10 per cent of the rental value.
* If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property, the maximum rent increase shall be equal to 15 per cent of the rental value.
* If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the maximum rent increase applicable is of 20 per cent.
# Talk, negotiate with your landlord
So, before you head to the Rent Committee, try negotiating. Good tenants are likely to benefit as landlords try to seal the deal at a common price. Remind those asking for higher rent of the laws and regulations. Your knowledge on the laws can help you strike a deal because eviction isn’t that easy these days even though the landlord has given a 12-month notice but does not furnish the proof of sale.
# The last option
If you fail to mutually agree on a common price, either party is free to file a case with the Dubai Land Department’s Rental Dispute Settlement Centre. The cost of filing a case is 3.5 per cent of the annual rent, minimum being Dh500 to the maximum of Dh20,000.