A rise in new tenancy contracts is to be expected outcome with rental prices rising so much, so quickly and landlords looking to make the most of this lucrative time. However, for tenants, this is an expensive time to make a move.
Tenants are being served notice from landlords and often find themselves wondering what the conditions of this notice are and if there has been a breach in contract.
Many owners are choosing to serve a 365-day notice to their tenants in the hope of achieving a higher rent. However, legally, this is not allowed. An owner can only evict a tenant if they are selling the unit, are carrying out major maintenance to the property or if they are planning to move into the property themselves. There is an alternative option for owners - coming up with a mutual agreement with the tenant to vacate the unit earlier than 365 days.
Recently, we have noticed more conversations between landlords and tenants because rents were low for quite some time as a result of the Dubai lockdown in the throws of the covid-19 pandemic but very quickly were on the rise as the lockdown lifted and residents began to move. We have seen owners and tenants making agreements between themselves. Most tenants are educated on their rights when it comes to renting a property and know they are protected under law. However, for some, they are finding it difficult to determine where they stand when being served notice.
In many cases, owners are looking at the rental index calculator to potentially increase the rental price of their investments. This can be done by giving at least 90 days notice to the tenant but the following RERA guidelines must be adhered to:
If the current annual rent is below 10% of the market value, a landlord cannot increase the rent.
If the current annual rent is between 11% -20% of the market value according to RERA, a landlord can increase the rent by up to 5%.
If the current annual rent is between 21% -30% of the market value according to RERA, a landlord can increase the rent by up to 10%.
If the current annual rent is between 31% - 40% of the market value according to RERA, a landlord can increase the rent by up to 15%.
If the current annual rent is above 40% of the market valuet according to RERA, a landlord can increase the rent by up to 20%. 20% is the maximum a landlord can increase the annual rent.
It is important to note that a rental increase cannot be actioned if the landlord has given less than 90 days notice. The Rental Index Calendar could say that the landlord is eligible to increase the rent but unless the correct notice period is given, this cannot be actioned.
Should an owner serve a 365-day notice then the tenant would need to vacate the unit after 365 days. There are no legal options other than to appeal the notice should they be aware that the owner doesn't plan to use the property for personal use or to sell the unit. Should the owner serve notice for a time period shorter than the 365 days notice, the tenant can refuse and remind the landlord of the 365-day notice law. This should be stated in the tenancy contract.
If the tenant is aware that the owner is not serving an eviction notice legally, they can file a claim at the Rental Dispute Center (RDC). They can do this via the Dubai Rest App or go in person to the Dubai Land Department. If the tenant is deemed successful, they can claim up to a year's compensation. Owners need to know that if they do not use the property for personal use, sell or have maintenance work done, they are not able to re-rent the unit for two years. They would need to cancel the notice to the current tenant and give first refusal to the rental to the current tenant.