No arbitrary rent hike allowed: Follow Dubai rent index, landlords told
Rental dispute committee’s fast-track system will take decisions in just 30 days
By Parag Deulgaonkar
Published Sunday, February 28, 2016
Tenants in Dubai, who are facing arbitrary rent hikes by landlords, can move the rental disputes settlement centre for justice.
“There is a rent law in place and all have to follow it. All the rents have to be increased as per the rent index,” Dubai Land Department Director-General, Sultan Butti Bin Mejren told Emirates 24|7 on the sidelines of the recently-concluded ‘Cinder Dubai 2016’.
He added: “If somebody is cheating in the market you can go to the rental dispute committee.
“We now have a fast-track system in place and decisions are taken in just 30 days.”
The government announced the setting up of the Rental Disputes Settlement Centre in September 2013, aimed to enhance legal procedures that facilitate the settlement of rental disputes which, in turn, reflect positively on socio-economic stability among members of the community.
The official rent index is now being updated once a year, effective January 2016.
Asked why the change was introduced, Bin Mejren said: “We thought it would be best for the market. One rents an apartment for a year and hence, the rent will not change every month or quarter, but only after a year.”
He added they were working on launching an improved version of the rental index, but no specific time was given.
Tenants should keep in mind the following points to possibly thwart their landlord’s effort of any arbitrary rent hike.
# Ejari is mandatory
All tenancy contracts in Dubai have to be registered with Ejari.
It costs Dh195, but the question is who pays?
Real Estate Regulatory Agency (Rera) does not specify the party paying the fee, but generally in a strata tower the onus is on the tenant.
Where a property management firm manages a tower they have to pay the fee.
These companies, however, do recover the cost from the tenants.
Documents required for registration includes tenancy contract, recent Dewa bill, title deed copy or affection plan, tenant’s passport, visa and Emirates ID copy.
# 90-day notice is must
A landlord has to give a 90-day notice if s/he wants to increase the rent and that too as per the Rera rent index.
No notice being served means a landlord cannot raise the rent at all.
If there is no communication between the two parties, the contract is automatically renewed at the same rental price.
Generally, agents, on behalf of the landlord, tend to give only a 30-day notice period to force tenants to accept the hike as moving out becomes difficult.
# Follow rent index
It is mandatory for the landlords to follow the rent index, but as mentioned the 90-day notice is mandatory.
In case the notice has been served, either electronically or in writing, the landlord can increase the rent as indicated by the index.
What the Rent Law says?
In order to control arbitrary rental hikes, the Dubai government has already issued Decree No. 43 of 2013 concerning the percentages of maximum property rent increase that are to be allowed upon renewal of tenancy contracts.
The rent increase slabs are as follows:
# No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property in the same residential area.
# If the rent value is between 11 and 20 per cent less than the average rent of a similar property, the maximum rent increase shall be equal to 5 per cent of the rent value.
# If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the maximum rent increase shall be equal to 10 per cent of the rental value.
# If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property, the maximum rent increase shall be equal to 15 per cent of the rental value.
# If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the maximum rent increase applicable is of 20 per cent.
The decree also informs that the average similar rental value of the property will be determined by the rent index.