Dubai tenant cannot walk away despite not signing contract renewal

Keren Bobker reveals what happens if both landlord and tenant do nothing when it is time for renewal - and whether the tenant has to pay a penalty if they want to leave.

I am a tenant living in Dubai. My rent has been Dh80,000 and my renewal was due in January. The landlord has contacted me to say that the rent is increasing by 10 per cent although I did not think he could do this to me. He is insisting that the rent must increase. I have not renewed my contract and I want to leave now, but he says I must pay a penalty of two months’ rent even though I have not signed a new contract. Can you please advise me where I stand with this issue and do I have to pay the fine? J A, Dubai

If any landlord wishes to increase the rent payable they must give their tenant 90 days' notice. Even if the increase is in accordance with the Real Estate Regulatory Agency (Rera), proper notice is required. If a landlord, or a tenant, does nothing about the renewal until after the renewal date, then it is assumed that the contract will renew on the same terms and in the same amount as before. This means that a tenant is also bound by the terms and cannot just walk away. If the contract specifies that the tenancy can end early if a penalty is payable, then this is enforceable. The lesson for both parties is to act in a timely manner and provide the proper notice well before the tenancy renewal date.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at [e-mail]

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