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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.

 

 

 

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Know about all the Tenant rights in Dubai

With such a wide variety of residential options in Dubai, finding the right home can be a long process.  This is why, after finalising the desirable property, people get too excited about their stunning new home that they fail to pay enough attention to what they are signing up for with the landlords. This can lead to uncomfortable situations between them later on. Inquiries on tenancy relationships are usually raised at the time of tenancy contract renewal, so here is a comprehensive guide on tenants’ rights and obligations in Dubai to save you from unnecessary hassles in the future.

First things first. The laws you need to keep in mind are:

  1. Law no. 26 of 2007 as amended by Law no. 33 of 2008. This law regulates the relationship between landlords and tenants in Dubai.
  2. Decree no. 26 of 2013. This established the Rent Disputes Settlement Centre, which caters to and solves all sorts of rental disputes in Dubai.
  3. Decree no. 43 of 2013. This law specifically governs rent increase in Dubai. Per this law, a tenancy contract needs to include details of landlord and tenant, details of the relevant property, the purpose of tenancy, the term of tenancy, amount of rent decided and payment terms.

Tenants and landlords can also include an addendum to the standard “one-page” tenancy contract, which may include further terms and conditions of the contract. It needs to be attached to the tenancy contract as it comes in handy when dealing with the payment of utility charges (i.e. service, chillers, electricity, etc.), getting a no objection certificate (NOC) from landlords to carry on fit out works along with renewal and increase of rent.

It is obligatory for either tenant or landlord to register the tenancy contract with Real Estate Regulatory Agency (RERA). The registration of the contract is important as it ensures that the same unit is not leased twice at the same time. If the rental contract is not registered, any dispute arising in future will not be entertained by the Dubai Rent Dispute Settlement Centre (RDSC).

Tenancy contracts or rental contracts may not be individually terminated by either tenant or landlord unless otherwise agreed between the two parties. In a case where a tenancy contract expires and tenant continues to live in the property without any objection from the landlord, the term of tenancy is extended automatically, for a similar period or for one year (whichever is less), on same terms and conditions.

In cases where landlord desires to amend a tenancy contract, a written notice should be served to the tenant at least 90 days prior to the expiration of the tenancy contract. Normally, the rent is to be paid per the agreed terms in the tenancy contract. In a case where there is no such agreement, the rent can be paid in annual or four equal instalments.

The payment of rent is usually made through the deposit of post-dated cheques with the landlord. IN cases where landlord refuses to receive the rent, it can be deposited with the RDSC. In cases where rent has been increased, the increase can be calculated by RERA’s rental increase calculator available on Dubai Land Department’s official website. RERA reserved the exclusive authority to specify the percentage of rent increase to property units in all Dubai localities.

The landlord is required to hand over the property to the tenant in good condition. He should undertake the responsibility of major maintenance and repair works on the property and refrain from making any changes that may affect tenant’s intended benefit.

A tenant can be evicted prior to the expiry of rental contract if tenant:

  • Fails to pay the rent within 30 days of being served with landlord’s written notification
  • Subleases the property without landlord’s written approval
  • Uses or allows others to utilise the property for immoral or illegal activities
  • Causes or allows others to cause damage or changes to the property that endanger safety of the property
  • Uses property for purposes other than the purposes for which it was leased for
  • Fails to comply with any of the terms of the tenancy contract or the law
  • If the property is in danger of collapse.
  • In cases of commercial properties, a landlord may demand eviction, if the tenant has closed business operations for 30 consecutive or 90 consecutive days without giving any valid reasons.

In the case of the expiry of the tenancy contract, a landlord may demand eviction if:

  • Landlord wishes to reconstruct or demolish the property
  • Development requirements necessitate reconstruction or demolition of the property
  • The property requires comprehensive maintenance or renovation
  • A landlord wants to sell the property or use it for his personal use or even for his relatives of the first degree. In such instances, the landlord must provide the tenant with a 12 month’s written notice through registered mail or public notary

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All what you need to know about RERA

Real Estate Regulatory Agency (RERA) is the regulatory arm of Dubai Land Department (DLD). It sets policies and makes plans for Dubai’s property sector to boost foreign investments and settle disputes between tenants and landlords. RERA has administrative independence, enjoys its own financial system and secures full legal authority to regulate Dubai’s realty.

Another function of RERA is to offer a transparent and effective legal framework to everyone related to the real estate sector of Dubai. The agency works hard to develop an on-line society for buyers, property developers and real estate investors and also facilitates supporting sectors such as the insurance, law firms and banks in order to boost mutual cooperation.

Its responsibilities include licensing real estate agents operating in Dubai, regulating and supervising the owners’ associations managing various buildings in the emirate and registering and regulating rental agreements. The agency also publishes studies for the property sector, regulates realty advertisements in the Mass Media and manages property developers’ trust account. Apart from licensing all real estate activities in Dubai, RERA also regulates and licenses real estate exhibitions along with working hard to enhance national participation in emirate’s realty sector.

The agency works in harmony with the DLD and together they have launched many smart applications to ease the life of everyone involved in the property business of Dubai. Here are five such real estate technologies DLD featured at the 36th edition of GITEX Technology Week 2016.

SMART PAY SERVICE

The Smart Pay Service is a new fee payment method developed by DLD. It allows people to pay the required procedure fees directly using a smart phone app. Through secure government channels, the app allows people to pay through different methods such as Credit Cards, Wire Transfer (From Limited Banks) and NQOODI Wallet. Smart Pay Service also saves user’s payment history, multiple credit cards and even the wallet balance.

DUBAI BROKERS

Dubai Brokers another DLD introduced smart application provides people with accurate and real-time information about licenced property brokers in Dubai and their offices. It also ranks brokers per their performances and efficiency and provides details about projects a particular broker specialises in along with the number of transactions he/she has completed. Dubai Brokers app also verifies ownership certificates and thus it increases efficiency, speed up service delivery and reduce costs paid by the people.

INVESTMENT MAP WEBSITE

Investment Map portal offers an integrated set of applications designed to offer people everything they need to make an educated investment decision in Dubai. It also features tools that ease the decision-making process and allows people transact online through secure government channel.

EJARI

Ejari is DLD’s smart leasing management application that specialises in the management of leasing operations. Property management companies, property owners and even the owner’s representative can utilise this application to manage the leases from anywhere and at any time. It also reduces cost and time required to complete the registration of rental contracts and allows people to simply register their tenancy contracts online.

SMART JUDGE

The Smart Judge app educates all parties involved in a rental contract about their legal rights with respect to EJARI and informs them whether they can file a judicial case or not. It also offers virtual judgments as a result of a final request for legal advice and provides free legal consultancy on the rental business in Dubai.

RERA has set also definitive laws to regulate the relationship between the landlord and the tenant. These laws also outline each party’s roles and responsibilities and are designed to minimise the frequent disputes and misunderstandings between tenants and property owners. We will soon be releasing a detailed article summing up Law No. 33 of 2008 in order to help people better understand everything they need know when renting a property in Dubai. So stay tuned to our blog.