Homefront: ‘Can my new landlord ask me to vacate the property before the lease ends?’

The property was sold by the previous landlord and the new owner wants the tenant to move out

The Dubai tenant needs to submit upcoming rent cheques in the name of the new landlord but has been denied access to the property owner's contact details. istockphoto.com
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Our landlord has sold the property we live in. The new owner of the property wants us to vacate the premises before the end of our rental contract. The message was conveyed by a sales agent and not by the new owner himself. We have been offered a “deal” to move out early, but we do not wish to accept this.

We cannot discuss this issue with the new landlord because he has not contacted us directly. We have requested for his details from our old landlord and the sales agent but with no success. We have asked how to submit the rent cheques in the new owner's name since the next rent is due soon. How do we proceed? AC, Dubai

When a landlord wishes to sell the unit and wants the present tenant to vacate, he will have to send an official vacating notice for reason of selling, which gives the tenant 12 months before having to leave. It has been shown in the past (via verdicts issued by the Rental Dispute Settlement Committee) that if the buyer is an owner-occupier, they will have to send another 12 months’ notification to the current tenant.

These notices have to be sent either by registered mail or via notary public and only this means of communication is valid.

The rights of the tenant remain intact even if the property is sold. This means the tenancy contract remains in place and all the terms and conditions attached to it remain valid.

With reference to your rental cheques, presumably you are ready to give them, so I would do nothing until the person concerned contacts you. The important thing to point out is that your tenancy remains in place unless the necessary notices have been served and even then, you will still have 12 months’ notice to vacate.

My friend purchased a two-bedroom apartment in Dubai for Dh900,000 on mortgage a few years ago. He now pays around Dh130,000 annually for it, including mortgage payments and a service charge of around Dh18,000.

My friend is an owner-occupier and if he leases the unit, he would only get Dh48,000 in rent per year.

If he continues paying the mortgage, he would end up paying another Dh1.3 million to the bank. He has already paid Dh500,000. If he sells the property now, he will only get Dh600,000, of which Dh550,000 needs to be paid to the bank.

Should he sell the property now, pay Dh550,000 to the bank and close the loan, keep the apartment and pay Dh1.3m to the bank, or rent it out? MQ, Dubai

There are some great offers in the secondary market or from developers in the primary sector

The property market creates winners and losers. Most buyers fall under either one of the two categories depending on many factors, but especially the timing of the investment along with the economic climate at the time.

After looking at the figures and options, it is clear to me that the best financial option would be to sell the property now and settle the bank loan. Your friend would come out at virtual break-even, which is much better than some who have sold at a loss. Your friend would then be free to find other great rentals either in the same area or elsewhere, reducing his living costs dramatically based on his previous expenses of mortgage payments and service charges.

After some time, he can perhaps look to get back into the property market as there are some great offers in the secondary market or from developers in the primary sector.

Bank interest rates have fallen over the past two years and the loan-to-value rate is now 80 per cent, which is more generous than when he took out his original loan.

It is worth pointing out that any property market is cyclical. In the past, owner-occupiers and investors have made great returns, which counterbalances the losses some have suffered in recent years.

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