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What happens if you want to terminate your contract early?

What do you do if you suddenly decide to move or leave the country, but your tenancy contract doesn’t expire anytime soon? Do you just lose the money you have paid for your property? Or is there a way to get it back? Follow the following steps for a smoother exit:

Know the law

Law 26 regulating the relationship between landlords and tenants does not provide an article for early contract termination, but rather governs the relationship between the two parties as long as the contract is valid. So if you want to terminate your contract early, don’t depend on filing a case with RERA, especially if you don’t have a specific clause in your contract.

Check your contract

Now that you know where the law stands from your decision, you can go back to your tenancy contract and check for any exit clauses or penalties mentioned for breaking the contract. Unfortunately, unless you have included an exit clause in your contract, the landlord is not obligated by law to let you off easily. Your next step would be talk to your landlord and hope the two of you could reach an agreement.

Negotiate with your landlord

You’re highly advised to approach your landlord and count on his good nature. Explain the situation to him and try to negotiate an exit deal which suits both parties. He might demand a two month rent as a penalty fee. In that case you have two option; you could either pay the penalty or offer to find him a substitute before you leave, in which case he wouldn’t be at loss.

Look for replacement

Some landlords might pardon early contract termination if you take it upon yourself to find a new tenant before you leave. If your landlord is willing to negotiate, you could offer to find him a replacement, and only if you’re unable to find one in time, you then pay the two months penalty rent.

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Want to know more about unfair rent increase in Dubai?

Disputes between landlords and tenants are a worldwide phenomenon and Dubai is no different. But unlike in many places where dispute resolution forums have been defined but disputes are rarely resolved, Dubai’s rental dispute settlement forums actually work.

Besides, Dubai Land Department has provided all residents with an effective rent calculator that should be consulted in the eventuality of a rent increase. Rents are usually increased after a year and likewise, the rent index is also updated every year. Sometimes we see Dubai landlords ignoring the rents specified by the government and introducing an arbitrary rent hike. Here is how you can save yourself in such an event.

REGISTER WITH EJARI

Before you rent an apartment, townhouse or villa in Dubai, know that all tenancy contracts have to be registered with Ejari. It costs around AED 200 and can save you a lot of hassle in the future. Registering your tenancy agreement with the government places tenants in a better position, as the government would be able to intervene and settle any disputes that may arise.

Apart from the tenancy contract, tenants require a recent Dewa bill, title deed copy or affection plan, tenant’s passport and visa and Emirates ID copy for a successful Ejari registration.

Another question that must be addressed is who would pay the Ejari fee? Real Estate Regulatory Agency (RERA) has not specified the party paying the fee, but generally, it is paid by the tenant. Where a tower is managed by a property management firm, the firm pays the fee, only to recover it from the tenants later.

REMEMBER THE 90-DAY NOTICE

All landlords have to serve a 90-day notice if they wish to increase the rent of a specific residential unit. The increase must be according to RERA’s rent index and the notice sent through a registered mailing service. If a notice hasn’t been served, the landlord cannot raise the rent at all

In an event where there is no communication between the two parties, the contract is automatically renewed with the previous rents. If your landlord or real estate agent has given you a 30-day notice period, take the case with the rent dispute settlement committee and continue living in the apartment until the issue is solved.

KEEP A CLOSE EYE ON RENT INDEX

Remember, following the rent index is mandatory for all landlords and so is the 90-day notice period. In case your rent has been increased to an amount that surpasses the limit outlined by the rent calculator, file a case with RERA and do not accept it in any case.

KNOW THE LAW

Dubai government has introduced strict laws to control arbitrary rent increases. Decree No. 43 of 2013 concerns the percentages of maximum property rent increase allowed upon renewal of tenancy contracts. The rent increase slabs are as follows:

  • Rent will only be increased if the rent of a property unit is less than 10 percent of a similar property in the same area.
  • If the rent is 11 to 20 percent less than the average rent of similar properties, the maximum rent increase will be equal to five percent of the rent value.
  • In case the rental value of a unit is 21 to 30 percent less than average rent for similar units, the maximum rent increase allowed is 10 percent of the rental value.
  • If rent of a residential unit is 31 to 40 percent less, the maximum rent increase allowed is equal to 15 percent of the rental value.
  • For residential units having rents less than 40 percent or more than the average rent of a similar unit, the maximum rent increase applicable is 20 percent.