UAE Property: ‘Is a rent increase valid when I take over as landlord?'

New homeowner intends to issue a 12-month eviction notice but wants the tenant to be well-informed

When you buy a property with a tenant in situ, you take over the tenancy and all the terms and conditions in its entirety. Getty Images

Question: My wife and I are purchasing a townhouse in Dubai; we’re close to completion and see no signs of it falling through.

With that in mind, the property is currently rented for about Dh90,000 ($24,500) a year and the contract will expire on September 23. It means when we become the new owners (and landlords) in the next couple of weeks, the tenant’s contract will end shortly after.

The current owner, who lives abroad, uses a letting agent and property management company to handle day-to-day affairs.

Before our offer was accepted, the agency emailed the tenant in May informing them of the Real Estate Regulatory Agency-approved rent increase, which at the time was 5 per cent, so it is due to go up to Dh94,500.

However, I understand this date was too far ahead of Rera’s window (between 60 and 90 days). Additionally, the rent increase rate has since risen to 10 per cent.

Does the original agreement with the tenant, landlord and letting agency still stand when we take ownership? Nothing has been signed, it’s just email communication between them.

If it’s invalid, does it roll over automatically to a flexible contract and where do we stand with rent increases or contract extension?

We want to live in the property, so intend to issue a 12-month eviction notice, but we want a happy and well-informed tenant throughout that period.

We’ve been renters most of our adult lives and have suffered at the hands of unscrupulous landlords in the past – so we don’t want to be the same.

When are we able to communicate with the tenant directly? In our eyes, the current property management company is not fit for purpose? DW, Dubai

Answer: The first thing to point out is that when you buy a property with a tenant in situ, you take over the tenancy and all the terms and conditions in its entirety, as before.

It can be argued that, despite the letting agent informing the tenant earlier than the required 90-day window, the renewal should be allowed to go ahead with the statutory Rera-allowed increase.

This is because the minimum notice period to inform the tenant of any increase is at least 90 days, and sending this communication via email is fine.

Therefore, I believe you can go ahead and negotiate the new rent at renewal with confidence.

My advice would be to renew the contract for another 12 months with this tenant but also send a one-year notice of eviction at the same time for the reason of moving in yourself.

This way, it will be clear that this next renewal will be their last.

Q: I purchased an apartment in Dubai in June 2022 and the unit was already rented out.

About 90 days before contract renewal, I sent the tenant a notice for an increase in rent and the revised contract as well.

The tenant has not yet signed the contract and has not provided me with all the rental cheques. However, he has paid me the new rent on time for a six-month period.

Can I ask the tenant to vacate after the six-month cheque period is over? Also, since he did not sign the contract in April, am I allowed to increase the rent again in October if he intends to stay for another six months? MA, Dubai

A: Presumably, your tenant has paid you in monthly cheques for this initial six-month period?

However, since he hasn’t signed the contract, this tenancy is not and cannot be registered with Ejari and, as this is a legal requirement, it can only be described as a short-term agreement.

Any tenancy that is six months or less is regarded as short-term and doesn’t need to be registered with Ejari.

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However, your tenant will not see it this way, as I’m sure he believes he has a long-term agreement. Therefore, if you were to request either his eviction at six months or a further increase in rent, I’m sure he will not agree.

If this is the case, you must encourage the tenant to file a case at the Rent Dispute Settlement Committee (RDSC).

Since he hasn’t signed a proper written contract, it would be difficult for a judge to find in his favour.

That said, I stress that any decision would be based on the findings of the judge at the RDSC at the time of the hearing.

Mario Volpi is the sales director at AX Capital. He has worked in the property sector for 39 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]