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How to Deal with Steep Rent Increase in the UAE

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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uae, dubai, Best Lawyers, Best Lawyers dubai, Best Lawyers uae, Ajman, Sharjah, Abu Dhabi

In the United Arab Emirates, rental contracts normally last one year and are difficult to terminate. Housing regulations favour both the landlord and the tenant, therefore if the owner decides to break the lease early, the tenant is protected. 

Understanding the rental procedure in the UAE

The rental process and rules are essentially the same in all seven emirate states, however, slight discrepancies exist when it comes to legalizing contracts and paying deposits. The UAE is noted for its high salary offerings; however, a large portion of these salaries is used to cover the high cost of living. 

Lease Agreements

Lease agreements between a landlord and a tenant must be registered with the proper official in each emirate. Lease contracts must be registered in order to connect the rental property's utility services. This includes water, electricity, natural gas, as well as telecommunications. 

Abu Dhabi

Landlords in Abu Dhabi must record leasing contracts in the city's tenancy contract registration, the Tawtheeq system. A housing fee of 3% of the annual rent will be levied over the course of 12 months after the lease contract has been recorded. 

Dubai

Lease agreements must be registered with ‘Ejari’, the RERA's online platform, by landlords in Dubai. Tenants are responsible for paying Dubai Municipality housing fees, which are calculated at 5% of the annual rental rates. 

Sharjah

The Sharjah Municipality in Sharjah is where lease contracts are registered. 

Steep Increase in Rents

If a landlord hikes the rent of a particular property and the tenant find it to be high, the same can be challenged in the emirates. The various emirates have their own rules and regulations dealing with this aspect and they are as follows: 

  1. Dubai 

The requirements of Decree No. 43 of 2013, governing the rent increase for real property in the emirates of Dubai, apply to the rental increase in Dubai.

The equivalent average rent shall be computed in accordance with the "Rental Index" approved by the Real Estate Regulatory Agency (RERA), according to the stated Decree (Article 3). RERA is a regulatory department of the Dubai Land Department (DLD) that governs the landlord-tenant relationship. The Rental Index is determined by RERA, which has sole authority to define the average rent and, as a result, the percentage increase in rent in Dubai.

According to the Decree, the highest rental increase allowed is a 20% increase over the rent index. In order for a 20% rental increase to be allowed, the property must be more than 40% below the average rent rate as assessed by the RERA index.

The tenancy agreements in Dubai are governed by Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (the 'Dubai Tenancy Law') and Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (the 'Amended Dubai Tenancy Law').

"RERA shall have the right to determine criteria relating to the percentage of Rent increase in the Emirate in keeping with the requirements of the prevailing economic condition in the Emirate," according to Article 10 of the Dubai Tenancy Law. 

  1. Abu Dhabi 

The Landlord and Tenant Law in Abu Dhabi permits a landlord to raise the rent by a maximum of 5% of the current rental sum. If the landlord raises the rent above this limit, the tenant may appeal to the Abu Dhabi Rent Committee for a rent ruling. The Landlord-Tenant Relationship in the Emirate of Abu Dhabi is governed by Abu Dhabi Law No. 20/2006.

"Article 16 of the abovementioned statute states that the Landlord may increase the rent by no more than 5% of the present rate on a yearly basis. Tenants, of course, have the right to file a complaint with the Rent Dispute Committee if they consider the increase is arbitrary or exceeds the statutory limit by more than 5%. 

  1. Sharjah 

Renters are protected from annual rental spikes under Sharjah's 2007 tenancy regulations, whereas tenants are protected from annual rent hikes under Sharjah's 2007 tenancy laws.

The law prohibits landlords from raising rent for the first three years after the tenancy contract is signed, and then for the next two years.

"The statute makes no provision for a percentage increase in rent. In the event of a dispute between the landlord and the tenant, the Rent Dispute Committee will set the rent, which will be based on market value. 

  1. Ajman 

The Landlord-Tenant Relationship in the Emirate of Ajman is addressed by Ajman Emiri Decree No. 2/2017.

"According to Article 6 of the abovementioned law, the landlord is prohibited from increasing the lease amount for a period of three years from the date of the lease contract or the last time the rent was increased."

Furthermore, if the Landlord wants to raise the rent, he must give written notice at least two months before the lease term expires, and the increase cannot be more than 20% of the current rent. The Landlord may independently ask the Rent Dispute Committee to increase the rent over 20%, and the committee may grant approval in rare situations.

 

Rental Disputes 

The landlord must give the tenant ninety days' notice before the tenancy expires, informing them of the rental increase. If the tenant is not given this statutory notice period, the landlord is not authorised to raise the rent.

Furthermore, subject to the applicable proportion of the increase, the rental increase should be justified. The tenant has the right to reject the rental increase if the landlord does not respect these conditions. If an amicable resolution is not possible, the tenant should file a complaint with the Rental Dispute Settlement Centre (RDSC).

If a real estate agent fails to follow the RERA rent calculator, a complaint can be filed with the Rental Dispute Centre (RDC) against the landlord and the real estate business. The RDC may summon the appropriate landlord and real estate firm based on the complaint and determine the rent of the apartment that is payable upon renewal of the tenancy contract.

This is in compliance with Article 13 of the Amended Dubai Tenancy Law, which states: "For the purposes of renewing a Lease Contract, the Landlord and Tenant may alter any of its conditions and reconsider increasing or decreasing the Rent prior to the expiry of the Tenancy Contract." If the Landlord and Tenant are unable to reach an agreement, the Tribunal may determine the reasonable Rent based on the criteria set forth in Article 9 of this article."

Therefore, the steep rental increase can be adjudicated and the landlord can be questioned for wrongful decisions. Hence, a steep rent increase can be addressed by the best lawyers in the UAE and thus a person can be protected from the unfair rental hikes.

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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