I own a three-bedroom villa in Dubai. I have taken good care of my property and sign maintenance contracts on a yearly basis for any preventive maintenance and to sort out any issues for my tenant.
I decreased the rent to reflect market conditions, especially during the peak of Covid-19. Occasionally, I did not cash my tenant’s cheques for a month upon his request. Now, he is not willing to pay a higher rent and refuses to vacate the property as well.
I sent him an email that I plan to increase the rent by 20 per cent at renewal but he insists on responding to me exactly 90 days before contract expiry. Please advise. LA, Dubai
Ninety days before the expiry of an existing contract is the notice period required to make any changes to the rental agreement at renewal.
You can speak and agree on future terms with your tenant earlier than this, but I have my suspicions as to why he will not engage with you earlier than the 90-day period.
With reference to increasing the rent, you can only do this by checking the Real Estate Regulatory Agency’s rental calculator, which can be found on the Dubai REST app or on the Dubai Land Department website.
After providing all the details, such as the location, type of property, number of bedrooms and existing rent, the calculator will let you know exactly what rent increase is permitted at the next lease renewal.
A 20 per cent increase is the most a landlord can demand in a year and only if the calculator states that this is allowed.
I agree that you have been a model landlord in the past. However, when it comes to rental increases at the time of renewal, there are restrictions in place and the increase is not determined by market prices as those reflect vacant units waiting to be rented.
Rental increases for properties with an existing tenant can only be determined by the Rera rental calculator, unless otherwise agreed.
I believe your tenant is waiting until the 90-day period before telling you what the calculator states. Be one step ahead of him and check this out yourself. But I suspect that the rent increase will not be as high as the 20 per cent you want.
The next step is to negotiate with your tenant to come to a mutual agreement.
I own a one-bedroom apartment in Dubai, which I leased for Dh48,000 a year. This lease ends on September 30, 2022.
I seek your guidance in negotiating a rent increase. If the renegotiated rent is not satisfactory to me, how can I commence eviction proceedings? VB, Dubai
Shortly before the expiry of your tenancy agreement, contact your tenant to find out if they wish to extend the lease. A 90-day notice is required to allow for any changes to the contract, such as rental increases at renewal.
Before doing this, you need to check the Rera rental calculator online to see what rent can be quoted at the next renewal. Whatever the rental calculator says is the only permissible amount that can be quoted at renewal.
If you don’t agree with the amount, you are at liberty to speak to your tenant to see if you can convince him about your price, but remember he has access to the same calculator online.
If your tenant doesn’t agree to your rental amount, you cannot evict him immediately. Remember that you are not allowed to re-let the property for a higher amount when you already have a tenant in place.
However, you can request eviction of your tenant, citing one of the four reasons below:
- For purposes of selling the property
- For own use or use by next of kin of first degree
- For extensive modernisation
- For demolition
Regarding the second point, if you evict for this reason, you are not allowed to re-let your property for a period of two years. If you do and the tenant finds out and files a case against you, you are liable to compensate them.
Regarding the third and fourth points, you will need the approvals of specific authorities for the planned works or demolition.
In all these four cases, you will need to send a written notification of eviction citing the reason and serve 12 months’ notice. This needs to be sent either via registered mail or notary public.
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 rents — where they are rising and falling in Q1 2022?
