I have a one-bedroom apartment rented out in Dubai International City. The contract with the tenant was set up through a property management company and the current one-year lease ends June 18. The going rate for one-bedroom apartments in International City is Dh36,000, but the yearly rental for this apartment is Dh28,000, paid in four cheques less the management fee. I have done my best to be a good landlord and have never had problems with tenants up to now. However, the current tenant has proved to be difficult, demanding and unpleasant. The property now seems more trouble than it is worth, especially since I am paying heavy service charges plus the property management fee. I am now thinking of selling the apartment when the lease ends in June and terminating the property management arrangement. I would like to know what my best course of action is. J O, Abu Dhabi
The laws in Dubai have been set up to protect tenants, so as a landlord you must follow the rules. If the rent that your tenant is paying is significantly less than that shown on the Real Estate Regulatory Authority (Rera) calculator, then you may be able to increase at the next renewal date, but only by limited amounts and the tenant must be given at least 90 days’ notice of the rise. The Rera calculator is only valid three months ahead of time so the potential increase will depend on the values closer to the renewal date.
As an example, if the renewal date was next month, the calculator states that the average rent for one-bedroom apartments in International City is from Dh30,000 to Dh40,000 a year, and then states: “The rent is lower by 20 per cent of the average rent for the type of unit. According to the law governing change your rating category is 25 per cent, so you are not entitled to any increase.”
This is the current situation and may change closer to the renewal date. As a landlord you may ask a tenant to leave only for specific reasons (as specified in Article 24.1 of Law Regulating Relationships between Landlords and Tenants in the Emirate of Dubai No 26 of 2007) including failure to pay rent, the property being used for an unapproved purpose or the property being severely damaged.
You may also give a tenant 12 months’ notice, at rent renewal date only, to leave the property if you plan to live in it yourself or to sell it. This must be in writing and delivered by registered mail or by notary public.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com
