Homefront: 'Can I remortgage if my villa no longer has 25 per cent equity due to falling property prices?'

The Dubai resident wants to secure a better rate on his home loan

Banks that charged customers 3 per cent early settlement fees will be required to give a refund within 30 days. Pawan Singh / The National

I currently have a mortgage on a villa in Dubai with a rate of 5.19 per cent, however, I have been offered a two-year fixed rate of 3.49 per cent by another bank. This would then move to 4.4 per cent after two years. Due to the fall in property values, my villa no longer has 25 per cent equity. Would this prevent me from remortgaging and, if so, is there any value in speaking to my existing lender to negotiate my current rate? NC, Dubai 

Sadly if there is less than the required 25 per cent equity in your villa, you will not be able to re-mortgage with the other bank. Your best bet is, as you say, to try and negotiate with your existing lender to see if better terms can be achieved.
Although the profit rate from the other lender is better, always remember that they will have set up fees and you may also have to pay early redemption charges from your bank too, all of which will bite into the better terms overall.

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I live in an apartment in Abu Dhabi and my tenancy is ending soon. This is my first tenancy contract in UAE and I do not wish to continue with it. I gave the landlord one month's notice, but now they are saying I have to pay two month's rental as a penalty. My argument against doing this is:

1. I am not breaching the one-year contract. The tenancy is almost over, so why should I pay a penalty?

2. The landlord has not given me a notice of renewal. Does the rule apply on both sides?

3. There is no two-month notice period mentioned in the contract. They have mentioned a rule (20) of 2006, but being a new entrant in the UAE, I was unaware of this.

I am not in a situation to be able to pay a penalty. What actions can be taken by the landlord? HK, Abu Dhabi 

Any changes to the rental contract of a property in Abu Dhabi must be communicated in writing giving two months’ notice prior to the expiration of the current lease. If two months’ notice is not given, (in theory) the contract will automatically renew under the same terms as before and you will be liable for another years rent.

In reality though, this rarely happens; instead penalties are imposed for not keeping to the two months’ notice. Speak with your landlord and agree to pay an additional month in rent as a penalty given you did give one months’ notice. If you do not get to a mutual agreement, it is possible that the owner could stop you from removing your furniture or items by not giving access to removal lorries etc.

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Today I have moved into a new apartment but it is in a pathetic condition. The apartment has been handed to me without being painted or deep cleaned and there are no light fixtures.  I want to complain or even go down the legal route. Please advise. RG, Dubai 

A property has to be given back at the end of the tenancy in the manner that it was given at the beginning. Therefore, in your situation, you would be perfectly entitled to hand it back in this same state if you so choose. Having said this, it is not normal to receive a property that requires this much attention, especially at the beginning of the tenancy contract. You would be quite within your rights to complain to the landlord to get him or his representative to repair and repaint to a satisfactory standard.

If you are met with excuses or negativity, you are also within your rights to cancel the contract and get your money back.

You pay rent for the quiet enjoyment of the property and if this is not what is offered, you can walk away.

Going down the legal route can be time-consuming and expensive, therefore I urge you to seek mediation directly with the landlord in the first instance.

Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for over 30 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to [e-mail]