Dubai’s residential property market relies heavily on the rental segment with industry executives estimating around 80 per cent of the Emirate’s residents live in rented units.
Hence, rentals are a hot and one of the most-discussed topics among the residents. Any decline in the rental is always welcomed by the tenants and vice-versa. In addition, tenants and landlords come face-to-face on a number of issues including rent calculation, maintenance of the apartment, deduction of the security deposit and, most importantly, an increase in rentals.
Phillip Caraiscos, Chief Asset Management Officer at real estate consultancy CORE, responds to queries on these highly-debated topics. See the excerpts below.
What’s the RERA rent calculator? How is it calculated? And how can tenants use it?
The RERA rental index acts as a tool that helps users find out the average market rent (by unit type) of any area and calculate the potential changes in rent. It is calculated from the data available from Ejari for different property types and is periodically updated. The tenants can use it to check if the asking rent by the landlord falls within the rental index range for that area.
If a tenant has been offered an apartment for rent higher than the rent average, how can he/she contest it?
In the case of a new lease, the rents are generally a factor of the market, and the tenant can negotiate the rent and mutually agree with the landlord. However, on renewals, the rental increases should be in line with the rental index. Any further disagreement, the tenant can approach the Rental Dispute Settlement Centre for dispute resolution.
Can you explain the process of the Rental Dispute Settlement Centre? If a tenant has a dispute with the landlord over something, how does it work? How long does it take for its settlement?
In case the tenant has a dispute with the landlord, it is suggested first that the tenant communicates and resolves the issue with the landlord. If upon disagreement, the tenant can then approach Rental Dispute Resolution Centre. It has a streamlined process for disputes such as unpaid rents and security deposits which usually takes a few weeks for resolution.
What does the law say about the maintenance of a rented apartment? For instance, painting or other minor repair work?
Either major or minor, maintenance works of a rented apartment is the responsibility of the landlord unless both the parties agree otherwise. However, typically, the rental contracts mention that minor maintenance costs (typically less than Dh500) are to be incurred by the tenant. Repainting at the end of the term is also a form of maintenance work and it is the landlord’s responsibility unless the agreement says otherwise.
When and how often can rents be increased in Dubai? Is it true that landlords can’t increase rents in the first three years?
The rental increases can be applied at the end of each lease term if an increase is applicable as per the RERA rental index. Although lease terms can vary, typical residential lease terms are at one year while commercial lease terms are one year onwards. In case a rental increase is applicable as per the RERA rental index, it is at the discretion of the landlord to increase the rent or not and he/she needs to inform the tenant 90 days before the expiry of the lease term or unless agreed otherwise.
Given the existing laws, no. It is not true that landlords cannot increase rent in the first three years.
When should a tenant be informed about a rent hike? Can tenants contest the rent hike? If so, how and under what circumstances?
The tenant should be given a 90-day notice in case of a rental hike applicable in line with the RERA rental index. The tenants can contest the rent hike if the asking rent is not within the rental index range.
What amount can be deducted from security deposits? We often hear of tenants complaining about landlords deducting huge amounts from their deposits given in good faith. Can landlords, for instance, charge from the deposit for deep cleaning or painting an apartment?
The landlord can deduct from the security deposit in case of unpaid rents and deductions agreed to in the lease contract such as standard cost for repainting and deep cleaning etc.
If a landlord wants a tenant to leave, what is the process? Can the landlord ask the tenant to move out before the end of the contract?
The landlord must give 12 months prior notice if he/she wants the tenant to vacate. Below are the excerpts from the Law 26 of 2007 on the conditions of eviction.
According to Article (25), landlord may demand eviction of tenant prior to the expiry of tenancy period in the following cases:
a. If the tenant fails to pay rent value, or part thereof, within thirty (30) days of the landlord’s notification for payment.
b. If the tenant subleases the property, or part thereof, without the landlord’s written approval and in such case eviction shall be applicable to the subtenant, and his right to refer to the tenant for compensation shall be reserved.
c. If the tenant uses, or allows others to use, the property for illegal or immoral activities.
d. If a tenant causes changes that endanger the safety of the property in a way that it cannot be restored to its original condition or if he causes damage to the property intentionally or due to his gross negligence to take proper precautions or if he allows others to cause such damage.
e. If the tenant uses the property for purposes other than the purpose it was leased for or if he uses the property in a way that violates planning, building and land using regulations.
f. If the property is in danger of collapse, provided that the landlord must prove such condition by a technical report attested by Dubai Municipality.
g. If the tenant fails to observe legal obligations or tenancy contract conditions within (30) days from the date of notification by the landlord to abide by such obligations or conditions.
Landlord may demand eviction of tenant upon expiry of tenancy contract in the following cases:
a. If development requirements in the Emirate require demolition and reconstruction of the property in accordance with government authorities' instructions.
b. If the property requires renovation or comprehensive maintenance which cannot be executed while the tenant is occupying the property, provided that a technical report attested by Dubai Municipality is to be submitted to this effect.
c. If the landlord wishes to demolish the property for reconstruction or to add new constructions that prevent the tenant from benefiting from the leased property, provided that necessary licences are obtained.
d. If the landlord wishes to recover the property for use by him personally or by his next of kin of first degree.
However, in all above mentioned four cases, the landlord must notify the tenant with the reasons for eviction at least ninety (90) days prior to the expiry date of the tenancy contract.
News Source: Khaleej Times