Owner's Profile

Staff Writer, TLR

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


UAE, Dubai, tenants, financial, rental, industry, landlords, property, eviction notice, termination, professionals, penalties, hotspots

Tenants in Dubai are discovering that renewing their current rental contracts makes greater financial sense. However, landlords demand more. A 90-day notice is standard procedure in Dubai's property rental industry. But landlords are issuing 12-month notices now.
Property sellers/landlords are issuing these longer warnings as they face record demand for developed property in Dubai. These property sellers/landlords want to ensure that when an agreement is struck with the new buyer/tenant, the latter does not have to wait for the property to be vacated.
There are further reasons for these extensive notices. Existing renters realise that renewing their lease rather than looking for a new house may better fit their finances, as Dubai rentals in premium and mid-tier neighbourhoods have increased by 20% or more on average over the previous year. Most real estate professionals expect this to continue far into next year as the city's population grows.
However, landlords confront a difficult scenario when it comes to renewals. Even if they want a significant increase for renewal, the new lease would most likely be less than what they might obtain by having a new tenant. 
Richard Waind, Group Managing Director at Betterhomes LLC said, “Landlords are aware that tenants who are on lower rents are staying put, even with the RERA calculated rent increases, it can still be cheaper than renting a new apartment with all the increases. Therefore, landlords sometimes provide 12-month notice for tenants to ensure everything is clear well in advance of the normal 90-day notice period (for them to vacate).”
Much has evolved since the start of the year. At the time, the vast majority of tenants in Dubai were looking for new houses rather than extending their present leases. By this time, more houses had been delivered, whether in upmarket Dubai Hills or the emerging residential hotspots of MBR City or Damac Hills. The same was true at JVC and Al Furjan's mid-market stores.
However, the supply of new residences is considerably behind the demand that pervades all of Dubai's residential areas.

The 12-month notifications have another use. the property market in Dubai continues to witness a steady influx of end-user purchases. they want to move into their new homes right away. This is why homes promoted as 'unoccupied on transfer' command a reasonable premium.
"End-user buyers must execute the transfer while the renters are in place," said Richard Waind of Betterhomes LLC. "And either negotiate a lease termination with the renter or, in the worst-case scenario, serve a 12-month notice as a new owner and wait a year to take ownership of the property."

It wasn't just the temperature that soared over the previous summer. By July, rent increases had begun to ramp up dramatically, forcing renters to reconsider their options. That's when the rush to renew began.

In addition, in time, demand for property in Dubai remained strong from June through the end of August. They also desired fast delivery of freshly purchased residences for their stays.
"Today, less than 30% of available villas are vacant on transfer (VOT)," Waind remarked. "Because VOT villas sell at a premium, many landlords today serve notice on their tenants to quit and then try to sell." 
"Landlords can only file eviction notices on renters for three reasons: to sell, to move in themselves or their immediate family, or to perform major and necessary improvements." We are witnessing landlords seeking to serve notice to increase rents, but we warn them that they face RERA penalties and sanctions."

The fundamental cause of this issue is the high demand for developed property in Dubai. However, with increased demand comes more difficulty for both tenants and landlords. Tenants recognise that renewing their lease rather than hunting for a new home may be a better financial match.
However, landlords face a tricky scenario when it comes to extensions. Even if they desire a substantial raise for renewal, the renewed lease will almost certainly be less than what they might get from a new tenant.

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