The permissible amount of rent increase is determined by the Rera rent calculator, which can be found on the Dubai Land Department website. Alamy
The permissible amount of rent increase is determined by the Rera rent calculator, which can be found on the Dubai Land Department website. Alamy
The permissible amount of rent increase is determined by the Rera rent calculator, which can be found on the Dubai Land Department website. Alamy
The permissible amount of rent increase is determined by the Rera rent calculator, which can be found on the Dubai Land Department website. Alamy

Business

Money

UAE property: ‘What is the maximum amount a landlord can raise rent?’

Owner wants tenant to accept a 13% annual increase when he is legally entitled to an increment of 5% only

Mario Volpi

June 23, 2022

  • English
  • Arabic

My landlord notified me of a 13 per cent annual rent increase 90 days before the expiry of the contract. However, the Real Estate Regulatory Agency’s rent calculator stipulates a rent increase of 5 per cent at lease renewal.

My landlord asked me to vacate the property when the lease ends if I am unwilling to pay the 13 per cent rent increase. He plans to serve me with an eviction notice and move into the property with his family next year. What do you advise? TM, Dubai

There are two points to cover here. Firstly, the rental increase. Any changes to a tenancy contract, including an increase in rent, has to be communicated in writing (email is OK), giving 90 days’ notice from the contract expiry date to all parties involved.

The allowable amount of increase is not determined by the landlord or tenant, or even the market price. Instead, it is determined by the Rera rent calculator. This can be found on the Dubai Land Department website.

Once all the required details are inputted, it calculates what the rent will be at renewal. Therefore, the fact that the landlord wants a 13 per cent increase is against the law, so you should refuse his demand at this stage.

However, it is important to note that the calculator is simply a guide. What you and your landlord agree on in terms of a rent increase is up to you both. When you don’t agree, the calculator can be used as an arbitrator.

It is important for the tenant and the landlord to keep a good business relationship for the foundation of future deals.

The second point to discuss is the landlord’s wish to use the property himself. This is legal and his right. He must serve you the statutory 12-month notice to vacate, which states this reason, and it should be sent through registered mail or notary public.

After you vacate, if you subsequently find out that he has re-let the property to someone else, you will be entitled to compensation.

A landlord is not allowed to re-let the unit for two years after evicting a tenant. You can file a case at the Rental Dispute Settlement Committee (RDSC) for this reason.

I rent a villa and renewed the lease in February this year. My landlord sold the property and the new buyer said he wants to live in the villa.

I received a formal 12-month notice to vacate on April 28, which was the date on the eviction letter signed by a notary public.

I want to contest this on the basis that the 12-month eviction notice should be served on the contract renewal date, not later.

Can I file a case in person at the RDSC or should I hire a lawyer? RJ, Dubai

When filing a case at the RDSC, there is no need to hire a lawyer and you can do it yourself.

While you are right that the 12-month eviction notice should be served upon expiry of the existing tenancy agreement as per Law 33 of 2008, some judges at the RDSC allow for the vacation notice to be served at any time during the contract.

Therefore, while it is your right to file a case, please be aware there is a chance that a judge could uphold the notice that was sent to you on April 28.

I sent my tenant a 12-month eviction notice through Dubai Courts in December 2021. Although the eviction date mentioned in the notice is December 2022, the rental contract is valid until July 2023.

What is the legally enforceable eviction date — December 2022 or July 2023? In case it is July 2023, do I have to file another eviction notice in July 2022? MH, Dubai

Law no 33 of 2008 states that the eviction notice of 12 months should be served upon expiry of the tenancy agreement.

That said, some landlords have served the notice at any time during the contract. It has been observed in the past that some judges at the RDSC have upheld this move.

However, as the law in the UAE is not set on precedent, I cannot confirm whether this will be the case for you if the tenant contests the date later by filing a case at the RDSC.

It is up to the presiding judge at the time of the hearing whether he or she accepts your 12-month eviction notice or requests you to serve it again in July 2022 for a further 12 months.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years, in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com

Dubai property apartment prices — May 2022

  • APARTMENT PRICES: Downtown Dubai rose by 0.7 per cent month-on-month in April to Dh2,034 per square foot. Reuters
    APARTMENT PRICES: Downtown Dubai rose by 0.7 per cent month-on-month in April to Dh2,034 per square foot. Reuters
  • Jumeirah: Dh1,972 per square foot — up 3.5 per cent a month. The National
    Jumeirah: Dh1,972 per square foot — up 3.5 per cent a month. The National
  • The Palm Jumeirah: Dh1,916 per square foot — up 4 per cent a month. Antonie Robertson / The National
    The Palm Jumeirah: Dh1,916 per square foot — up 4 per cent a month. Antonie Robertson / The National
  • DIFC: Dh1,646 per square foot — up 1.2 per cent a month. Jeff Topping / The National
    DIFC: Dh1,646 per square foot — up 1.2 per cent a month. Jeff Topping / The National
  • Business Bay: Dh1,502 per square foot — up 1.7 per cent a month. Sarah Dea / The National
    Business Bay: Dh1,502 per square foot — up 1.7 per cent a month. Sarah Dea / The National
  • Jumeirah Beach Residence: Dh1,467 per square foot — down 2.2 per cent a month. Photo: LuxuryProperty.com
    Jumeirah Beach Residence: Dh1,467 per square foot — down 2.2 per cent a month. Photo: LuxuryProperty.com
  • Mohammed bin Rashid City: Dh1,469 per square foot — down 0.2 per cent a month. Satish Kumar / The National
    Mohammed bin Rashid City: Dh1,469 per square foot — down 0.2 per cent a month. Satish Kumar / The National
  • Dubai Hills: Dh1,448 per square foot — up 0.3 per cent a month. Photo: Emaar Malls Management
    Dubai Hills: Dh1,448 per square foot — up 0.3 per cent a month. Photo: Emaar Malls Management
  • Dubai Marina: Dh1,366 per square foot — down 0.7 per cent a month. Victor Besa / The National
    Dubai Marina: Dh1,366 per square foot — down 0.7 per cent a month. Victor Besa / The National
  • The Greens and The Views: Dh1,096 per square foot — down 0.6 per cent a month. Sarah Dea / The National
    The Greens and The Views: Dh1,096 per square foot — down 0.6 per cent a month. Sarah Dea / The National
  • Jumeirah Lakes Towers: Dh983 per square foot — down 1.1 per cent a month. Antonie Robertson / The National
    Jumeirah Lakes Towers: Dh983 per square foot — down 1.1 per cent a month. Antonie Robertson / The National
  • Damac Hills: Dh978 per square foot — down 0.7 per cent a month. Pawan Singh / The National
    Damac Hills: Dh978 per square foot — down 0.7 per cent a month. Pawan Singh / The National
  • Jumeirah Village Circle: Dh896 per square foot — up 0.1 per cent a month. Razan Alzayani / The National
    Jumeirah Village Circle: Dh896 per square foot — up 0.1 per cent a month. Razan Alzayani / The National
  • Town Square: Dh858 per square foot — down 1.9 per cent a month.
    Town Square: Dh858 per square foot — down 1.9 per cent a month.
  • Motor City: Dh664 per square foot — down 0.7 per cent a month.
    Motor City: Dh664 per square foot — down 0.7 per cent a month.
  • Dubai Silicon Oasis: Dh598 per square foot — down 0.7 per cent a month. Chris Whiteoak / The National
    Dubai Silicon Oasis: Dh598 per square foot — down 0.7 per cent a month. Chris Whiteoak / The National
  • Dubai Sports City: Dh612 per square foot — down 1.1 per cent a month. Reem Mohammed / The National
    Dubai Sports City: Dh612 per square foot — down 1.1 per cent a month. Reem Mohammed / The National
  • Discovery Gardens: Dh523 per square foot — down 2.2 per cent a month. Pawan Singh / The National
    Discovery Gardens: Dh523 per square foot — down 2.2 per cent a month. Pawan Singh / The National
  • International City: Dh440 per square foot — down 0.6 per cent in a month. Antonie Robertson / The National
    International City: Dh440 per square foot — down 0.6 per cent in a month. Antonie Robertson / The National
Company%20profile
%3Cp%3EName%3A%20Cashew%0D%3Cbr%3EStarted%3A%202020%0D%3Cbr%3EFounders%3A%20Ibtissam%20Ouassif%20and%20Ammar%20Afif%0D%3Cbr%3EBased%3A%20Dubai%2C%20UAE%0D%3Cbr%3EIndustry%3A%20FinTech%0D%3Cbr%3EFunding%20size%3A%20%2410m%0D%3Cbr%3EInvestors%3A%20Mashreq%2C%20others%0D%3C%2Fp%3E%0A

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

ESSENTIALS

The flights 
Fly Etihad or Emirates from the UAE to Moscow from 2,763 return per person return including taxes. 
Where to stay 
Trips on the Golden Eagle Trans-Siberian cost from US$16,995 (Dh62,414) per person, based on two sharing.

Jetour T1 specs

Engine: 2-litre turbocharged

Power: 254hp

Torque: 390Nm

Price: From Dh126,000

Available: Now

Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

The specs

Engine: 1.5-litre, 4-cylinder turbo

Transmission: CVT

Power: 170bhp

Torque: 220Nm

Price: Dh98,900

Updated: June 23, 2022, 4:38 AM
Personal financePropertyRenting