Leasing Rights in Dubai: Insight for Landlords and Tenants

 

This article is written for the purposes to provide awareness and insight for both Landlords and Tenants and also Agents in Dubai concerning the legal framework and practical considerations governing the renewal of their leases. The relationship between Landlord and Tenant is governed by the Law No. 26 of year 2007 as per their amended Law No. 33 of year 2008 (The Tenancy Law). Landlord’s rights to evict the Tenant before the expiry of the Lease: Under the Tenancy Law, Article 25 (paragraph No. 1) provides several grounds to where the Landlord can evict a Tenant before the expiry of the Tenancy Contract and provided that there is a notice through the Notary Public or registered mail.

The Landlord may seek eviction of the Tenant from the Real Property prior to the expiry of the term of the Tenancy in the following cases: 

  1. where the Tenant fails to pay the Rent or any part thereof within thirty (30) days after the date a Notice to pay is given to the Tenant by the Landlord unless otherwise agreed by the parties; 
  2. where the Tenant sub-lets the Real Property or any part thereof without obtaining the Landlord’s approval in writing. In this case, the eviction will apply to both the Tenant and Sub-Tenant. However, the Sub-Tenant’s right to claim a compensation from the Tenant will be preserved; 
  3. where the Tenant uses the Real Property or allows others to use it for any illegal purpose or for a purpose which breaches public order or morals; 
  4. where the Tenant of commercial Real Property leaves the Real Property unoccupied for no valid reason for thirty (30) consecutive days or ninety (90) non-consecutive days within the same year, unless agreed otherwise by both parties; 
  5. where the Tenant makes a change to the Real Property that renders it unsafe in a manner that makes it impossible to restore the Real Property to its original state, or damages the Real Property wilfully or through gross negligence, by failing to exercise due diligence, or by allowing others to cause such damage; 
  6. where the Tenant uses the Real Property for a purpose other than that for which the Real Property was leased, or uses the Real Property in a manner that violates planning, construction, and use-of-land regulations in force in the Emirate; 
  7. where the Real Property is condemned, provided that the Landlord must prove this by a technical report issued by or attested to by Dubai Municipality; 
  8. where the Tenant fails to observe any obligation imposed on him by this Law or any of the terms of the Tenancy Contract within thirty (30) days from the date a Notice to perform such obligation or term is served upon him by the Landlord; or 2 
  9. where competent Government entities requires demolition or reconstruction of the Real Property as per urban development requirements in the Emirate. 

Landlord’s rights to evict the Tenant upon the expiry of the Lease: 

Under the Tenancy Law, Article 25 (paragraph No. 2) provides four cases or grounds to where the Landlord can evict a Tenant upon the expiry of the Tenancy Contract and provided that there is a written judicial eviction notice of 12 months prior to the date set for eviction through the Notary Public or registered mail. 

The Four cases, as mentioned by Article 25 (2) are as follows:

  1. where the owner of the Real Property wishes to demolish the Real Property to reconstruct it, or to add any new constructions that will prevent the Tenant from using the Real Property, provided that the required permits are obtained from the competent entities; 
  2. where the Real Property is in a condition that requires restoration or comprehensive maintenance that cannot be carried out in the presence of the Tenant in the Real Property, provided that the condition of the Real Property is verified by a technical report issued by or attested to by Dubai Municipality; 
  3. where the owner of the Real Property wishes to take possession of it for his personal use or for use by any of his first-degree relatives, provided that the owner proves that he does not own another Real Property appropriate for such purpose; or 
  4. where the owner of the Real Property wishes to sell the leased Real Property.

Hence, the Landlord’s rights to evict the Tenant are strictly limited to the grounds stated in Article 25 (2) and in the event of a dispute, the Rental Dispute Committee may require the Landlord to provide the applicable reason. 

Moreover, it was a common practice where the Landlord served the 12 months eviction notice for their wishes to sell the leased property but has initiated their selling before the end of 12 months eviction period which constituted to the invalidity of the issued eviction notice as ruled by the RDC and obliged the new Landlord to serve a new 12 months eviction notice to Tenants (unless agreed between the parties “Landlord and Tenant” to evict earlier). 

Therefore, it is important to know that the served eviction 12-month notice by the Landlords to their Tenants for any of the above cases or grounds should be in their custody & ownership until the 12 months period is expired (unless agreed between the parties to evict earlier). Hence, the Landlord shall not practice or execute the selling before the end of the 12 months period or otherwise to agree with the Buyer/New Owner to serve their 12 months eviction notice from their end to the Tenant upon the successful transfer of ownership.

Landlord’s rights to increase the rent on the Tenant: 

According to Dubai Land Department, the Landlord must provide 90 days’ notice before the expiry of the lease agreement when they acquire any changes to the lease terms and conditions for the rent (unless agreed amicably by both parties) which applies to the rent increase too.

Article No. 1 concerning the Increase for Tenancy in Dubai from the Decree Law No. 43 of 2013 has stated: 

When renewing real property lease contracts, the maximum percentage of rent increase for real property in the Emirate of Dubai will be as follows:

  1. no rent increase, where the rent of the real property unit is up to ten percent (10%) less than the average rental value of similar units; 
  2. five percent (5%) of the rent of the real property unit, where the rent is eleven percent (11%) to twenty percent (20%) less than the average rental value of similar units; 
  3. ten percent (10%) of the rent of the real property unit, where the rent is twenty one percent (21%) to thirty percent (30%) less than the average rental value of similar units; 
  4. fifteen percent (15%) of the rent of the real property unit, where the rent is thirty one percent (31%) to forty percent (40%) less than the average rental value of similar units; or e) twenty percent (20%) of the rent of the real property unit, where the rent is more than forty percent (40%) less than the average rental value of similar units.

RERA has established an online rental increase calculator in which Landlords and Tenants can check whether there is a rental increase in their property or not. 

Regarding the Rental valuation report, it can be conducted from Landlord or even Tenant in Dubai Rest App/DLD site where it allows them to request the valuation: 

  • The fee is AED 2,000 per unit up to AED 10,000 maximum 
  • AED 10 Knowledge fee 
  • AED 10 Innovation fee 

In event of dispute or disagreement between the Landlord and Tenant regarding the rental increase, either party has the right to refer their dispute to the Rental Dispute Committee (RDC). The RDC shall determine the appropriate allowance for the rent increase having into consideration to the RERA rental index, similar market rent for properties in the area, the rental valuation report and in accordance with the provisions of the Decree. 

The Laws in the Emirate of Dubai outlines clearly the Landlords’ and Tenants’ rights in their contract and hence it is always advisable for both Landlords and Tenants to familiarize themselves with the Tenancy Laws from the Dubai Land Department site in order to avoid any disputes at the Rental Dispute Committee.



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