In Dubai’s evolving real estate market, both tenants and landlords are experiencing shifts as rental prices surge and the Dubai Land Department has decided to revise the rental calculator to be more consistent with current market dynamics (read more here: https://viewit.ae/blogs/rera-rental-index-calculator-update).

This surge has prompted landlords to consider serving notice to their tenants, often leaving renters uncertain about their rights and options. Understanding the legal framework surrounding tenancy contracts and rent increases is crucial for both parties to navigate these changes smoothly. We’ve written up a quick summary of what this means for tenants and landlords and how to navigate sticky conversations with a legal understanding.

Eviction Notice Update

Recent court decisions highlighted by the Dubai Rental Dispute Centre (RDC) indicate that eviction notices in Dubai can now be transferred between property sellers and buyers, ensuring continuity and protection for both parties. Previously, new property owners were required to apply for a new 12-month eviction notice when acquiring a property with a sitting tenant, even if a notice had already been served. However, the evolving interpretation of article 25 of law 33 of 2008 now attaches the eviction notice to the property itself, offering stability and protection for all involved. This shift aims to strike a balance between providing stability for tenants and safeguarding the interests of property investors in Dubai.

Legal Framework for Notices

Landlords in Dubai are subject to specific regulations regarding the termination of tenancy contracts. While the desire to capitalize on rising rental prices may lead some landlords to serve a 365-day notice to tenants (which is the legal way of serving an eviction notice), it’s essential to understand that such notices are only applicable if certain conditions are met.

According to Dubai’s rental laws, landlords can only evict tenants for specific reasons which include;

• Selling the property
• Major maintenance on the property
• Personal use

Serving a 365-day notice solely to increase rent is not a valid reason for eviction. However, landlords do have the option to agree on mutually agreed-upon terms with tenants for early termination of the lease.

Impact of Market Dynamics

Recent market dynamics have intensified conversations between landlords and tenants. Following a period of low rents during the COVID-19 pandemic lockdown, rental prices began to soar as restrictions eased and residents started moving again. This rapid shift in market conditions has prompted many landlords and tenants to reassess their agreements. While most tenants are aware of their rights under the law, some may struggle to determine their standing when served with a notice.

Rent Increase Guidelines

For landlords considering rent increases, adherence to the Real Estate Regulatory Agency (RERA) guidelines is crucial. RERA provides a framework for determining permissible rent increases based on the property’s current annual rent compared to the market value. These guidelines stipulate varying percentages of allowable rent increases based on the deviation from market value.

Additionally, landlords must provide tenants with a minimum of 90 days’ notice before implementing a rent increase. Failure to comply with the notice period renders the rent increase invalid, regardless of adherence to RERA’s guidelines.

If the current annual rent is less than 10% of the market value, a landlord cannot increase the rent.

So for example, if the current annual rent for a 1 bedroom in JBR in AED 100,000 and the RERA rental calculator says the current rent for the same apartment is AED 120,000 (which is 20% more than the current rent for that particular apartment), the landlord can increase the rent by 5% or AED 5,000 to an annual rent of AED 105,000.

Tenant Recourse and Legal Options

Tenants who believe they have been served an eviction notice unlawfully have recourse through the Rental Dispute Center (RDC). They can file a claim via the Dubai Rest App or visit the Dubai Land Department in person. Successful claims may result in compensation of up to a year’s rent but this takes time. They will have to produce evidence supporting their claim that the landlord is unlawfully evicting them in order to re rent for a higher price or sell the unit without providing a one year notice.

Landlords can also file claims at the RDC against tenants who are not willing to fix issues they have caused in the property, are not willing to negotiate the rent with the help of the RERA rental calculator or have bounced cheques or not paid the rent on time.

Conclusion

In Dubai’s dynamic rental landscape, clear communication and understanding of legal rights and obligations are paramount for both landlords and tenants. As rental prices continue to fluctuate, adherence to regulatory frameworks and open dialogue between parties can foster mutually beneficial agreements while ensuring compliance with the law. By staying informed and proactive, landlords and tenants can navigate rental notices and increases with confidence and clarity.