Mario Volpi: Dubai tenant wants lower rent on apartment facing construction, but landlord wants to raise it

A tenant whose tower faces a soon-to-be demolished building in Dubai Marina set to be replaced by a high-rise tower is justified in negotiating a rent decrease.

Dubai Marina. Reem Mohammed / The National

We are currently renting a two-bedroom apartment in Dubai Marina for Dh180,000 a year. The rental agreement ends on March 28 and our unit is facing a building that is soon to be demolished, meaning it will be heavily affected by the construction of a high-rise hotel in its place. In keeping with what is stipulated in our rental agreement, we reached out to the landlord to enter renewal negotiations 90 days before the end of the rental agreement. We explained the situation and proposed a renewal at Dh170,000 – a very fair offer given the situation, we thought. The landlord countered with an offer of Dh190,000 and has since moved little despite intense attempts to convince him that rents are dropping in our development because of the upcoming construction. Real estate agents have told us that many landlords are selling their apartments in the building. We got a good deal on this apartment a year ago and the landlord probably wants to correct the price now, but he fails to understand that the circumstances have changed dramatically. Our questions are:

• Is the landlord entitled to demand a rent increase at all? The Rera rental increase calculator shows that we are already well above the neighbourhood average for the Marina, rendering a rent increase illegal

• What happens if we don’t come to an agreement? Does the rental contract automatically extend for another year at the same conditions or do we need to move out?

• What are the benefits of filing a case with the Rent Committee? Can they force the landlord to lower the rent because of the construction or do they only enforce a non-increase because of the neighbourhood average? PS, Dubai

Your landlord will not be allowed any increase in rent unless the Rera rental calculator allows this. I have checked and I can confirm that for the next renewal your landlord will indeed not be allowed an increase in rent from the agreed Dh180,000. The calculator states that the average rent for a two-bedroom apartment in Dubai Marina is between Dh120,000 and Dh160,000. The calculator does not take into consideration quality of apartment, size, view nor facilities, which is why your rent falls outside the average range, given that your building is sought after and therefore commands a slightly higher rent than the average.

If after further negotiations your landlord is still not in agreement with you, I would comment as follows: as long as you remain within the law – whatever the calculator states is the correct amount – my advice would be to write out the same number of cheques payable to the landlord for the amount the calculator states, which in this case is Dh180,000, then lodge them at Rera within the Land Department. They will contact the landlord for him to collect the rent cheques from them. If the landlord is still in disagreement, he is entitled to file a case at the rental dispute committee, who will (after some time) decide on the outcome.

The situation surrounding all the towers close by/opposite/next to the proposed development is unusual as the actual level of disruption/loss of enjoyment of a specific unit could be subjective from person to person. Although I agree that there will be some disruption overall. This is why it is more definitive to see what a judge at the rental committee will decide is a fair rental price compared to just the rental calculator, which as stated is not that sophisticated to take into consideration an event such as demolition and construction nearby.

What you have offered the landlord is indeed a fair price, so now it is up to you to convince him and negotiate. Explain that if you are forced to move out, the chances of finding another tenant willing to pay Dh170,000 or more will be extremely difficult, as new tenants do have a choice of where they live. A new tenant will try to exploit the situation and the landlord may find that even Dh170,000 could be tough to get.

Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for the past 32 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to [e-mail].

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