There are two laws that need to be referenced when looking up matters on Dubai tenancy; law no. 26 of 2007 and law no. 33 of 2008. This addresses everything from eviction, landlord & tenant obligations and rent disputes.
In Dubai to evict a tenant upon expiration of a contract, a landlord must give a tenant a 12-month written notice sent through registered mail. If however, the landlord wishes for the tenant to leave before the expiration of his/her contract he also must submit the notice via the notary public or registered mail, and state one of the reasons as mentioned in Article 25, clause 1 – these include reasons such as a tenant not paying the rent due or if the tenant is caught subletting the property.
When it comes to rental price increases, there have been different decrees issued since 2007 by RERA, the Real Estate Regulatory Authority. The most recent being decree no. 23 of 2013, issued to regulate the rental value by putting different percentage increase caps based on the difference of a property’s current price on a tenant’s contract compared to actual market price. The percentage increase that applies for a particular unit can be checked through the Rent Increase calculator on the RERA website. It’s important to note that these percentage increase caps only apply to properties that are already being rented out. Therefore brand new properties can be put on the rental market for any price the landlord sees fit.
The Dubai Rental Market is governed predominantly by two laws, that must always be read alongside one another. To better understand this we will refer to the Tenancy Law as the combination of the following two laws:
The above laws govern the relationship between landlords & tenants for both residential and commercial properties. The main points that the Tenancy Law addresses are as follows:
Since 2007 the Dubai rental market has witnessed various fluctuations, which led to a few decrees being passed to regulate the rent prices. Such decrees include Decree No. (1) of 2009 and Decree No. (2) of 2011 on the Rental value in the Emirate of Dubai. Each decree that was issued specified a new maximum rent increase percentage of property units, which the Real Estate Regulatory Agency “RERA” have named The Rent Index.
The latest decree on regulating the Rental Value in the Emirate of Dubai is Dubai Decree No. 43 for 2013, which specifies the following:
The percentage of maximum increase for a rental property in the Emirate of Dubai shall be determined upon renewing the tenancy contract as follows:
It must be noted at this stage, that due to the changing trends in the real estate market coupled with macroeconomic factors such as the increasing influx of expats, and with Dubai Expo 2020 right around the corner, the Dubai property law will be expected to develop and evolve for the betterment of all parties including developer, agents, landlords and tenants and the overall health of the country’s economy.
The procedure for rental contracts starts at the moment the landlord and the tenant agree to form a contractual relationship between each other.
This occurs when the parties agree on:
For commercial properties, it is advisable for the parties to sign Tenancy Contracts that are more than one year in duration so as to allow for enough time to complete any necessary fit outs required, and so the time invested in set-up of business operations may truly be enjoyed by the occupant for an extended period.
The tenancy contract should also state:
Once the initial terms are agreed upon, the parties will then sign a Tenancy Contract.
The authority that is responsible for regulating the Tenancy Contracts is RERA. In addition, article 4 of the Tenancy Law requires Tenancy Contracts to be drawn up in writing and registered with RERA as the law forbids the Rent Dispute Settlement Committee “RDSC” and other government entities from considering any matter arising from a Tenancy Contract that has not been registered with RERA.
Hence, RERA has developed the Ejari system. Ejari is a web-based Tenancy Contract registration system. Moreover, only landlords and property management companies and real estate agencies can register through this system. An Ejari registration fee of 195 dhs is payable by the landlord. If the landlord does not perform the Ejari registration, he may be liable for a fine.
The birth of Ejari has allowed for:
Helps RERA clearly understand rent fluctuations so as to produce an accurate rent index for each area in Dubai.
Landlords must provide:
The topic of eviction is arguably the most inquired and debated subject when it comes to Tenancy Contracts. This classic dispute arises usually because the landlord wants the tenant to vacate his property either before or on the expiry of the contract against the tenant’s will. The RDSC is full of rent dispute cases dealing with eviction of tenants both from residential and commercial properties.
This is why it is important to understand the cases in which a tenant can be evicted and when the landlord does not have the right to evict the tenant.
Although the difference in the wording of the sub-articles is subtle, the conditions associated with each one are completely different.
This article provides that the landlord may demand eviction of a tenant prior to expiry of tenancy contract in the following cases:
And for the purpose of this clause (1) of this Article the landlord must notify the tenant through the Notary Public or by registered mail.
This article states that a landlord may demand eviction of tenant upon expiry of tenancy contract limited to the following cases:
And for the purpose of clause (2) of this Article, landlord must notify tenant with reasons for eviction at least twelve months prior to the determined date of eviction subject that such notice be sent through the Notary Public or by registered mail.
This article states that if the landlord wishes to evict the tenant under Article 25(2)(c), then he shall not rent the property to others for at least two years for residential properties and three years for non-residential properties from date of recovery of the property. If the landlord does not abide by this condition, the tenant shall have the right to apply to the RDSC to be compensated as a result of his eviction from the property premises. It’s important to note that it is practically difficult for the tenant to apply to the RDSC to get compensated as it is a costly matter which may not yield a large compensation to the tenant unless in circumstances where the tenant rented out a large office and has expended a great deal for fit out purposes.
From January 1st, 2008 the rental cap was set at 5%. This meant that landlords could not increase the rent higher than 5% of the existing rental agreement for a period of 2 full years starting from the period of the commencement of the lease. However, based on the latest decree No. 43 for 2013, different rent caps now exist according to the current contractual rent value of the property. Unless otherwise agreed, landlords are not at liberty to demand any increase in rent during the tenancy period and, on renewal.
The law makes it clear that any increase in rent, if not mutually agreed, shall be in accordance with the rental increase calculator maintained by the Real Estate Regulatory Authority. Although this was not previously the case, the law does allow the landlord to increase the rent after one year if the rent calculator allows. The rent calculator can also be found on the Dubai Land Department’s website http://dubailand.gov.ae. In any case, all notices for increase in rent must be made at least 90 days prior to the expiry of a Tenancy Contract.
If the landlord chooses to increase the rent beyond the prescribed rate as per the rent calculator, the tenant may choose to negotiate with the landlord to reduce the amount of the rent to fit the rent bracket for the property. Should the landlord refuse to lower the rent, then such matters shall be referred directly to the Rent Dispute Settlement Committee.
The Dubai’s Rental Dispute Settlement Centre (RDSC) located at the Dubai Land Department has now replaced the earlier Dubai Municipality Rent Committee effective from November 2013. The establishment of the new RDSC has come about as a result of HH Sheikh Mohammed Bin Rashid Al Maktoum’s Decree No. 26 for 2013.
To settle claims and disputes brought about by landlords or tenants within 75 days.
There are four stages that a dispute may go through with the RDSC. The disputing parties may choose to settle the case at any stage throughout the dispute:
For Dubai landlords:
For Dubai tenants: