Homefront: ‘Can I break my contract early if I have lost my job because of Covid-19?'

The Downtown Dubai resident doesn't want to pay a Dh8,500 penalty for terminating the lease before its expiry

Dubai , UNITED ARAB EMIRATES. July 23, 2015  - Stock photograph of the Boulevard buildings by Emaar Properties in Downtown Dubai, July 23, 2015. (Photo by: Sarah Dea/The National, Story by: STANDALONE, STOCK)
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I was renting an apartment in Downtown Dubai when I was laid off from my job because of Covid-19. My tenancy contract expires in the middle of October, however, due to the current circumstances, I need to break the contract earlier. I have read in media reports that if someone is laid off due to Covid-19, it is considered an emergency and their tenancy contract can be terminated without a penalty.

I told the landlord I planned to end the contract earlier and shared the termination letter from my company. But the landlord wants to charge me Dh8,500, which is one month’s worth of rent, as a penalty for exiting the lease before its expiry. I handed over the apartment on July 1 and plan to file a case at the Rental Dispute Settlement Centre (RDSC) to get back my deposit which the landlord intends to retain in place of the penalty.

Is it worth filing a case at the RDSC rather than paying Dh8,500 to the landlord? I know I need to pay 3.5 per cent of my annual rent to file a case, but there is a chance the judges might rule in my favour. If I do win, will I get a refund of the legal fee because the landlord should pay for his mistake? RB, Dubai

During these difficult times, many different scenarios take place, so I would like to walk you through your options. My first point relates to your contract being terminated due to Covid-19. It is true that some judges at the RDSC have moved to cancel a rental contract due to either job loss or loss of income through a salary reduction for the tenant. However, these situations are treated strictly on a case-by-case basis. It is not a given that each and every judge will deliver the same verdict.

The RDSC is always keen to find a common point between a tenant and landlord and they stress that both parties should look to waive their rights to come to a mutual agreement.

That said, I suggest you try again to have a meaningful conversation with the landlord to explain that your job loss is the cause of you not being able to pay the rent as per the contract and that to move forward amicably, certain rights ought to be mutually waived. Clearly, the landlord is going to feel concerned that your job/financial situation will impact him. So he may dig his heels in to mitigate his losses because you wish to break the contract.

In terms of what to do next, this is up to you. If you wish to file a paper at the RDSC, there is a good chance the case will be found in your favour and as a result, the cost to file the case is often added to the damages.

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