What Can Happen, and How to Solve Them?
The purpose of this article is to provide landlords and tenants with guidance on the rental laws in Dubai, and to explain what rights they have in circumstances where a dispute may arise.
THE LEGAL FRAMEWORK
The main legislation governing landlord and tenant disputes in Dubai are:
Dubai Law No. 26/2007 On the Organisation of the Relationship between the Lessors and Tenants in the Emirate of Dubai.
Dubai Law No. 33/2008 Amending Dubai Law No. 26/2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai.
Dubai Decree No. 26/2013 On the Rental Disputes Settlement Centre in the Emirate of Dubai.
Dubai Decree No. 43/2013 On the Determination of the Increase in the Real Estate Rent in the Emirate of Dubai.
Please note that separate laws govern DIFC and ADGM landlord and tenant disputes.
THE TENANCY CONTRACT
The tenancy contract is the principal document which governs the legal relationship between a landlord and tenant. Unless there are provisions within the tenancy contract which are not permitted by the above laws and/or are contrary to public order, the terms and conditions in the tenancy contract shall prevail, and must be adhered to by the parties.
THE RENTAL DISPUTES SETTLEMENT CENTRE
The Dubai Courts have created a separate division to deal with rental disputes which is known as the Rental Disputes Settlement Centre (the “RDC”).1 If a dispute cannot be resolved between a landlord and a tenant, either party may refer the dispute to the Rental Disputes Settlement Centre.
We set out below key considerations for landlords and tenants when entering a tenancy contract:
Importance of Ejari – for a tenancy contract to be deemed valid the Ejari must be registered with the Real Estate Authority Agency (RERA)2. The Ejari is an online system set up by the government, allowing it to regulate all tenancy contracts registered under it.
Term of Tenancy Contract - a valid tenancy contract in Dubai is usually set for a lease period of one (1) year, and a tenancy contract will generally be null and void upon expiry of the contract. However, if a tenant continues to occupy the property upon the expiry of the lease with no objection from the landlord, the tenancy contract shall be renewed for a similar period or for one (1) year whichever is less.
Notice To Amend Tenancy Contract – if either the Landlord or the Tenant wishes to amend any terms in the tenancy contract, they must give the other party at least ninety (90) days notice prior to the expiry of the contract. For this to apply, there must be mutual consent between the parties.
Termination of Tenancy Contract - if there is a valid tenancy contract, then it cannot be unilaterally terminated by either the landlord or the tenant, unless there is mutual consent of the parties, or in accordance with Dubai rental laws.
We set out below key questions when it comes to rental disputes:
Change to Rent?
- First and foremost, the rental amount must be specified in the tenancy contract. If not, and a dispute arises, the rent is likely to be considered as the rental value of similar properties in that neighborhood/area.
- If there is any amendment to the rental amount, the landlord must notify the tenant ninety days prior to the expiry of the tenancy contract.8
Increase in Rent?
The maximum rental increase for properties in Dubai is determined upon renewal of the properties lease contracts based upon the following:
- No increase in the rent value of the property should its rent be less than 10% of the average standard rent.
- 5% of the rent value of the property should its rent be less by a percentage varying between 11% and 20% of the average standard rent.
- 10% of the rent value of the property should its rent be less by a percentage varying between 21% and 30% of the average standard rent.
- 15% of the rent value of the property should its rent be less by a percentage varying between 31% and 40% of the average standard rent.
- 20% of the rent value of the property should its rent be less by a percentage exceeding 40% of the average standard rent.
In respect of the above, the standard rent shall be determined in accordance with the “Dubai Rental Index” adopted by RERA, and the parties can use the rental index calculator to determine the standard rate.
What are the Landlord’s Obligations?
- The Landlord has general obligations whereby they must ensure that the property is handed over in good condition to allow the Tenant to use it as stated in the lease.
- Any works of maintenance of property and the reparation of any defects or fault shall be the responsibility of the landlord.
- The landlord is not permitted to make any changes that will affect the use of the property by the tenant.
- If the landlord wishes to make any changes, they are required to provide all required approvals to the tenant and the same to the competent authorities in Dubai.
Can the Landlord Evict a Tenant?
The landlord may evict a tenant prior to the expiry of the tenancy contract on the following grounds:
- Failure of the tenant to pay rent within 30 days of being served the eviction notice.
- Tenant subletting the property without consent of the landlord.
- The property being used by the tenant for any illegal purpose or purpose conflicting with public order or morals.
- Tenant causing damage or changes to the property or allowing others to do the same which endangers the safety if the property in which it cannot be restored to the original state.
- The tenant uses the property for any other purpose other than what was agreed upon between the tenant and the landlord in the tenancy contract.
- Failure of the tenant to comply with any of their obligations under the law or the tenancy contract within thirty (30) days of receiving notice to comply with the obligation.
- Where the government entities decide that the property needs to be demolished or reconstructed in accordance with urban development requirements in the emirates.
The Landlord can also evict a tenant upon the expiry of the lease if:
- The landlord wishes to demolish, reconstruct, or make any changes which may prevent the tenant using the property as agreed upon.
- The property requires restoration or comprehensive maintenance which cannot be done while the tenant is occupying the property. This needs to be approved by a technical report issued by the municipality.
- The landlord wishes to take repossession of the property for personal use.
- The landlord wishes to sell the property.
In either of the above circumstances, the landlord must notify the tenant with a written notice stating the reasons for eviction at least twelve (12) months before the date of eviction and this notice needs to be notarised by the Notary Public. If the above is not adhered to, the eviction notice shall be deemed invalid.
What are the Tenant’s Obligations?
- A tenant is required to pay rent by the agreed due date and cannot carry out any changes, maintenance, or renovations to the property without the consent of the landlord.
- Upon expiry of the tenancy contract, the tenant must return the property to the landlord in the same condition in which he received to receive their rental deposit and if the tenant had made improvements to the property, they may not remove it upon vacating the property unless it has been agreed by both parties.19
- A tenant is not permitted to sublet to another party without the written consent of the landlord.
Please note that this article was written with the intent to be used as guide, and this does.
We hope the above article is useful, and if you have any questions and/or queries regarding any of the points we have referred to above, please do not hesitate to contact us.