Dubai and Abu Dhabi tenants locked in limbo as landlords seek rent advantage

After years of skyrocketing rises, the UAE’s rental market is finally slowing yet many residents complain their landlords continue to seek unfair rises or changes to their contracts.

Tulika Srivastava says she has been asked to vacate her Dubai home because she refused to pay a rent increase. Sarah Dea / The National
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Tulika Srivastava cannot prove it but she suspects her landlord is being vindictive by serving her family a notice to vacate.

It all started last year, shortly before the contract on her apartment in Jumeirah Lakes Towers was up.

“With one-and-a-half months left on the tenancy, we said ‘we have to go on holiday so can you please tell us when we have to renew the contract’,” she recalls.

The landlord wanted to increase the rent, but by Dubai law, he had to give 90 days’ notice – so Ms Srivastava, 30, from India, refused to pay the rise.

“They said: ‘we will go to court’, and we said: ‘OK, go’. Later they agreed on the same rent, but they realised we knew all the rules and gave us a notice. They say they want to sell just because we didn’t agree to their rent.”

Ms Srivastava’s situation is not unusual.

After years of skyrocketing rises, the UAE’s rental market is finally slowing, with an increase of just 4 per cent in Abu Dhabi in the first quarter, and unchanged in Dubai in the same period, according to the property firm JLL.

However, many residents claim their landlords continue to seek unfair rises, conditions or changes to their contracts.

"Most will try to get the best rental income they possibly can, but where a lot of landlords fall down is that they are either ignorant of the law or they know the law and still try to buck the system. That's when tenants should take the matter further," says Mario Volpi, the managing director at Ocean View Real Estate and The National's Homefront columnist.

In the past tenants would do as they were told because they were ignorant of the law, but now they are more informed, adds Mr Volpi.

“There are still tenants who will walk away and then there are those who say ‘no I have rights, I am going to fight’,” he adds.

That is what the American Mohammed Mansour, who asked for his name to be changed, decided to do. Mr Mansour’s problems began a year after he moved into a house off Al Manara Road in Dubai in 2012.

The market was pretty low at the time, so he negotiated a deal of Dh125,000 in one cheque for a three-bedroom town house. When the second year rolled around, his landlord demanded a 25 per cent rise – which is too high according to the Rera rent calculator.

Mr Mansour, 38, who is a landlord himself, refused to pay the increase, sticking with Rera’s increase, according to the law.

“He kept calling and threatening. He sent people round to my place saying they were going to cut off my electricity,” says Mr Mansour, a UAE resident for 10 years, who paid Dh125,000 again, a figure his landlord eventually accepted.

The next year his landlord demanded a 25 per cent rise once more. Again, Mr Mansour refused, a position he also adopted this year when his landlord demanded a 40 per cent rise.

“I said I am not going to do it.” He kept sending the maintenance guy every day and I said ‘stop coming to my house, his cheque is ready if you want to pick it up’.”

Eventually the landlord’s maintenance man picked up the cheque and promised to come back with the contract, but has not so far.

For now Mr Mansour has won, but the process has taken a heavy toll on him personally.

“It’s been stressful. It’s been inappropriate. I have to admit it has kept me up a couple of nights,” he says, adding that despite this, he wants to stay in the property – the house is central and near a park, schools, a mosque and within a 10-minute drive of his work.

He has decided against raising the case with Dubai’s Rent Disputes Settlement Centre because of the cost and time it would involve. Estate agents say UAE residents often avoid such centres, which exist in both Abu Dhabi and Dubai, because of the “hassle factor”.

In Dubai, by law each party must give at least 90 days’ notice before the expiry of the contract to communicate any changes. In Abu Dhabi, the landlord can make any changes if mutually agreed, at any time he or she likes, as long as they give two months’ notice. Any rise in rent will not, however, apply until after the expiry date on the current contract.

In Dubai, rental increases are calculated using a sum which involves the average rent in the index.

However, in Abu Dhabi there is no such restriction. The emirate removed a 5 per cent rent cap in late 2013, meaning if landlords want to impose a rise of 50 per cent, they can.

“The big thing that people always complain about is their landlord giving them less notice for a rent hike,” says Ben Crompton, who runs the Abu Dhabi branch of Crompton Partners.

“Often landlords don’t give the requisite notice and then try to raise the rent after that.”

A new real estate law was announced for Abu Dhabi this month, but the text has yet to emerge, so it is unclear if a rent cap or a rental index similar to Dubai will be introduced.

“Rent has been floated at market rates, as in most countries in the rest of the world,” says Mr Crompton.

“Now we are seeing more sustainable rent increases, still high but more sustainable. It’s likely the government will introduce some kind of regulation, but actually the best regulation is just to release more units on to the market and have rent lowered for everyone. At the moment we don’t have enough supply.”

Rent increases are not the only problem tenants face in the capital.

Jacob Coetzee, whose name has been changed, and his wife were forced to leave their Khalifa City A property just six weeks into the contract when the landlord cut off the power supply. The South African, a UAE resident for seven years, paid six months’ rent upfront at a cost of Dh50,000.

“They started asking my wife for money to reconnect the electricity, which is outside the bounds of my contract,” he says.

He refused to pay and toughed it out for a month living by candlelight before moving out. He has been trying to get his money back ever since.

“As in the rest of the world, the landlord has all the power and it is made worse here by the fact you pay a lot of rent up front,” says Mr Crompton. “The landlord holds your money and you don’t really have the option to hold back rent where repairs or your needs aren’t being addressed.”

Ms Srivastava knows this only too well.

All she can do is sit and wait for her landlord’s next move as the property has received no viewings from potential buyers.

“We don’t want to move but we are helpless now,” she says.

When the renters turn rogue

Landlords may hold more power but they also experience problems. Amir Ahmed, a UK investor who requested his name be changed, rented out his property in Jumeirah Lakes Towers two years ago to an employee of a real estate company.

The tenant asked for the name on the lease to be transferred to his company and not foreseeing any problems, Mr Ahmed agreed. However, the tenant later left the country and the lease remained in the name of the company, which moved another employee in. “The following year I told them I wanted the property back. They said: ‘Well, you have no right’. I said ‘OK if I don’t have rights can I at least know who I am talking to? They have never given me a name, I only get company signatures,” says Mr Ahmed. “It is like a sitting tenant now because I can’t get rid of them.” The landlord has good reason to want a new tenant. The rent the company pays is far cheaper than the average cost of apartments in the area, plus no rent has been paid this year and the contract is almost up. The company deposited the cheque with Rera and it was found only after the cheque expired. Mr Ahmed has served the company with a notice to vacate by August and hopes the tenant will comply. “They are rogue people who are taking advantage of the law. It is giving Dubai a bad name,” he says. “They knew what they were doing.”

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