Rent increases and eviction notices: what are your rights?

One of the recent popular discussion topics across all social platforms in the UAE has been about the rights of landlords and tenants in regard to rent increases and eviction notices.

There is a lack of clarity around:

• When can a landlord increase rent?
• Can a landlord increase rent arbitrarily?
• When does a landlord have the right to evict a tenant?
• What is the legal percentage rental increase? Where can I find this out?
• Are rents frozen for three years?

There is a lot of confusion around the answers to these questions and unfortunately many tenants, unaware of how the law regulates their rights, fall victim to arbitrary or unfair actions by their landlord.

This update aims to provide a general overview of both the landlords’ and the tenants’ rights and to clarify the legal process around rent increases and eviction notices.

For the purposes of this update, it is important to highlight two key laws:

1. Law No. 26 of 2007 on the Organization of the Relationship between the Lessors and Tenants in the Emirate of Dubai – the original Landlord and Tenant Law and;
2. Law No. 33 of 2008 (“Landlord and Tenant Law.”) which brought in amendments to the 2007 law and is the law in use today.

The rent freeze announcement

In January 2021, the Dubai Land Department (“DLD”) announced that a new law could be passed which would freeze rental agreements for a period of three years, however specific details of the implications of this were not included. Tenants, pleased by this announcement, expected their current rental agreements to ‘freeze’ without due research or consideration, and in their confusion, did not take proper and usual action to negotiate their rental agreements with their landlords. This led to much uncertainty and dispute, leading to many cases for the Rental Dispute Committee to resolve.

As of the date of this publication, the law announced by the DLD is not yet enacted, meaning rents have not been frozen. The law governing the landlord’s right to increase rent is still the amended Landlord and Tenant Law (2008) i.e. the same regulations apply as prior to the DLD announcement.

Has there ever been a rental freeze?

The original 2007 law did provide an explicit rent freeze for tenants. Article 9 of the 2007 law provided:

“Landlord and tenant must specify a rent value in the tenancy contract, and in all cases, it is impermissible to increase the rent or modify any terms of the lease except after the expiration of two full years from the date of the commencement of the rental relationship.”[1]

However, the 2008 amendments eradicated the rent freeze and provided landlords with the right to increase rent after the first year of the tenancy (unlike other Emirates), provided ninety (90) days’ notice was given.

While landlords have the right to increase their rental yield after a year, this increase is regulated by the DLD, considering market conditions, similar rent yields and several other factors.

[1] This is not an official translation.

Under what circumstances can a landlord increase the rent?

The Dubai Government issued Decree No. 43 of 2013 on the Determination of the Increase in the Real Estate in the Emirate of Dubai. In essence, this short decree provides landlords with a maximum rate of increase in rent according to the average market price of similar properties within a certain area. Tenants should know the following:

1. No rent increase is permitted if the current rent is less than 10% below the average market rental rate;
2. A maximum of 5% increase is permissible if the current rent is less than 11% - 20% below the average market rental rate;
3. A maximum of 10% increase is permissible if the current rent is than 21% - 30% below the average market rental rate;
4. A maximum of 15% increase is permissible if the current rent is less than 31% - 40% below the average market rental rate; and
5. A maximum of 20% increase is permissible if the current rent is less than anything greater than 40% of the average market rental rate.

Tenants who are unable to manually determine their exact rental increase can either download the Dubai REST application on their smart phones, or alternatively can use the rent calculator found on the DLD website. In the event of a disagreement between the landlord and tenant over rent increase, either party has the right to refer their dispute to the Rental Dispute Committee (RDC). The RDC shall determine the allowable rent increase in accordance with the provisions of the Decree.

When can a landlord evict a tenant?

It has become common for some landlords to seek to evict their current tenant in order to chase higher rental yields. In one rare case, a landlord even went as far as serving an eviction notice only a day after signing a new tenancy contract.

It has recently become common practice for tenants to receive their notice of eviction through emails or WhatsApp messages. The 2008 Landlord and Tenant Law makes it very clear that if a landlord wishes to evict their tenant, the landlord is obliged to serve their eviction notice through the notary public or by way of registered mail. More importantly, the landlord is obliged to provide reasons for the eviction.

The 2008 Landlord and Tenant Law makes it clear why and when landlords can evict their tenants. The 2008 Landlord and Tenant Law draws a distinction between a landlord wishing to evict their tenant before the expiry of their lease and evicting their tenant upon the expiry of their lease.

Eviction prior to expiry of the lease

The Landlord and Tenant Law provides an exhaustive list of 9 reasons for which the landlord is entitled to evict their tenant prior to the expiry of their lease. These are the following:

1. In the event the tenant fails to pay rent even after thirty days of notifying the tenant of the rent due;
2. The tenant sublets the property without the landlord’s consent;
3. If the leased property is used for illegal purposes that violate public order and moral;
4. In the event the leased premises is a commercial premises, and the premises is left vacant for thirty consecutive days or for a period of ninety non-consecutive days in one year;
5. The tenant’s actions cause changes to the premises that endangers the safety of the premises, or causes damage to the premises as a result of an intentional or gross negligence act;
6. The premises is used for purposes other than those for which it has been leased, or their use violates the planning and building regulations of Dubai;
7. If the premises in question is in desperate repair as shown and proven by a technical report approved by Dubai Municipality;
8. In the event the tenant fails to abide by a legal obligation or by a term found in the lease contract even after providing the tenant with a thirty-day notice to abide by agreement or law; and
9. The government requires the demolition of the premises.

These provisions provide landlords with recourse in the event that the tenant is in breach of their lease obligations and if the tenant has failed to rectify the situation even upon notice.

Eviction upon expiry of the lease

Even upon the expiration of the tenant’s lease, landlords are confined to certain parameters in order to be permitted to evict their tenant.

Firstly, the notice of eviction needs to be done through the notary public or registered mail outlining the reason(s) for eviction. More importantly, the landlord needs to provide the tenant with twelve (12) months’ notice prior to the date of eviction to successfully evict their tenant.

Reasons for evicting one’s tenant are confined to the following:

1. The landlord desires to demolish the premises in order to reconstruct it, or add new buildings and this addition will deprive the tenant from benefiting from the leased premises, provided that the landlord obtained the relevant approvals;
2. The condition of the leased premises requires renovation or extensive maintenance, and such work cannot be carried out while the tenant is in use; provided that a technical report approved by Dubai Municipality is obtained to show the need of renovation;
3. The landlord desires to occupy the leased premises for their own use or by any member of their family up to the first degree, provided that the landlord does not own any other similar suitable property; and
4. The landlord desires to sell the leased premises.

Conclusion

The laws in the Emirate of Dubai clearly outline the landlords’ and tenants’ rights with a view to fairly balance the powers among the parties. It is clear that landlords have the right to increase rent yet through a regulated mechanism, and tenants have the right not to be evicted from their premises unless there is a compelling reason prescribed by law.

It is advisable for both landlords and tenants to familiarize themselves with Law No. 33 of 2008 ( the Landlord and Tenant Law) in order to evade incurring additional costs by referring their dispute to the RDC. If either party is uncertain about a certain provision of the law, it is always best to seek the opinion and assistance of a legal professional.

Contact

Hazem Balbaa Associate, Litigation hazem.balbaa@bsabh.com

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