UAE property: 'Can I increase rent on an occupied unit to match vacant prices?'

Empty properties usually command higher rents compared with homes that have a tenant in place

Residential high-rises beyond the sands of Al Mamzar beach in Dubai. Tools such as the rent calculator only serve the public when there is a dispute or a difference of opinion. Bloomberg

I have a query relating to tenancy contract renewal. I own a few properties in Dubai and would like to increase the rent for some units, which are due for tenancy contract renewal in November.

Although the Real Estate Regulatory Agency’s (Rera) calculator shows lower rent, properties in the same building are being rented out at almost double the rate. The Rera calculator does not consider the service fees I pay the developer.

I would like to know my rights as a landlord. Even if I cannot double the current rent, I want to increase it by at least 10 per cent, which the tenant is unwilling to accept.

Although the tenancy contract gives landlords the discretion to refuse to renew, I believe the tenancy law does not allow the landlord to do so.

What is the recourse available to me as a landlord? SM, Dubai

You are correct that the Rera rental calculator is not specifically accurate but does a good job in being informative on rent increases in general.

In your case, you have to detach yourself from the knowledge of what similar units are renting for on the open market because these are vacant unit rental prices and yours is not.

For this reason, there is always a disparity between the rents of occupied and vacant properties.

There are a couple of things you could try. Firstly, go to the Dubai Land Department and request a rental valuation notice to show your tenant and to validate your wish for a higher rent.

While this remains a new option for landlords, it has not been proven to work generally because the valuation is based on vacant possession. However, it might help in your negotiations with the tenant.

The other point is to agree to a mutual understanding between the parties. Tools such as the rent calculator only serve the public when there is a dispute or a difference of opinion.

In a rising market, tenants should be more lenient towards landlords and offer what would seem fair rent, even if it goes above what the calculator states.

Good business relationships are the key to a perfect landlord/tenant scenario because if we speak about a longer rental term between the parties, there will be some years that the tenant would appear to have the upper hand and others when the landlord comes out with an advantage. All parties should strive for a win-win.

______________

I live in an apartment and the owner sold the property to someone else. I signed a separate 12-month contract with the new owner and also paid a commission to an agent for this deal.

However, the new landlord was not clear that he wanted to use the apartment for his personal use.

Within 15 days of signing the contract, he sent me a vacating notice. Shouldn’t the notice be served before the tenancy contract expires?

If he had informed me this before signing the contract, I would have taken a different decision. What can I do now? AA, Dubai

Law no 33 of 2008 is the amending law of 26 of 2007, which is the jurisdiction for relationships between landlords and tenants.

In this amended law, it states that the 12-month notice for requesting eviction of a tenant should be served upon expiry of the tenancy agreement, therefore allowing the tenant one more year in the property.

However, there have been instances when a case has been filed at the Rental Dispute Settlement Committee (RDSC) where some judges have allowed the 12-month notice to be served at any time during the contract. It is very difficult to predict how a judge will decide the outcome.

Any eviction notification must have a reason attached to it. You stated that the new owner has not made his intentions clear.

There can only be one reason that applies in this case: the landlord needs the property for his own use or use of next of kin by first degree.

He cannot evict you to then re-let the property. If this happens, you can file a case at the RDSC and claim compensation, which amounts to a year’s rent plus associated costs.

In your case, I would see out the next 12 months and then keep an eye on the property to see what happens. If the landlord re-lets the unit, you can file a case for unfair eviction.

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 [e-mail]

______________

Dubai apartment prices — September 2022 — in pictures