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  • Writer's pictureAkram Cheik - Lawyer

Rent regulation in Dubai

The United Arab Emirates has experienced strong economic growth in recent years, thanks in particular to its strategic position as a global trade and tourism hub. This economic growth has led to an increasing demand for real estate, especially in major cities such as Dubai and Abu Dhabi. This increased demand has led to higher housing prices, which has had an impact on the cost of rents.

Since 2021, this trend has intensified, as many expatriate workers have on the one hand come to the United Arab Emirates following the easing of travel restrictions related to the COVID-19 pandemic. On the other hand, this demand increased after the start of the war in Ukraine which caused an increase in rental prices, which prompted some unscrupulous landlords to try to exaggerate the setting of rental prices.

It is therefore essential to remain vigilant about the regulations in force, as this will help tenants to avoid abuse by unscrupulous landlords and to protect their tenancy rights. In particular, tenants should be aware of applicable laws and regulations governing rent increases and dispute resolution procedures in the event of a dispute with their landlord.

Therefore, it is necessary to understand the legislation in this area in order to avoid being the victim of an abusive increase in one's rent, in particular through the laws regulating the regulation of rent prices (I) but also the legal consequences of disagreements between tenants and landlords (II)

I – Rent regulation rules in Dubai

A – The rules laid down in Articles 9 and 10 of the 2007 law

In order to be able to control the prices fixed by the owner, the government enacts in 2007 "Act on the rental of real estate of 2007". So, this law established the rules and regulations for renting real estate in Dubai. In view of the inflation of the price of real estate, especially rentals two key items are to be known in order to be able to contest an excessively sudden increase in rent.

Firstly, the provisions of section 9 of Act (26) of 2007 provide that a mutually acceptable amount of rent must be specified in the rental agreement between the landlord and the tenant, and that this amount cannot be increased before the end of a period of two years from the date of the initial contract. Any increase in rent must be notified to tenants at least 90 days before the expiry of the initial contract and must comply with Decree No. (43) of 2013, which establishes ceilings on the maximum increase in rent based on the current rent. of the property. The tenant can accept or refuse the increase, with a notice of at least 60 days before the date of renewal in the event of refusal.

Secondly, Section 10 of Act (26) of 2007 grants the Real Estate Regulatory Agency exclusive authority to specify the percentage increase in rent in Dubai. Landlords and tenants can use RERA's rental calculator to find out what percentage of rent increase they are eligible for. It is important to note that unscrupulous landlords may attempt to exaggerate when pricing rents, and that it is important for tenants to be vigilant and know their rights under tenancy law. from Dubai.

Ultimately, the purpose of Section 10 is to ensure a fair rent increase for landlords and tenants and to regulate the rental market in Dubai, and must be consistent with the Executive Order (43) of 2013 and Law (26) of 2007.

B – The rules laid down by decree (43) of 2013

Executive Order (43) of 2013 and Act (26) of 2007 are two separate pieces of legislation in force in Dubai. If Law (26) of 2007 sets out the general rules on real estate rental, while Decree (43) of 2013 specifically concerns rent increases.

Thus, Decree No. (43) of 2013, also known as the Executive Decree on Rent Increases for Residential Properties in Dubai, provides several rules for setting rents in Dubai in order to maintain a stable prices.

Here are the main provisions of this decree:

Firstly, landlords cannot increase the rent on a residential property before the expiration of a tenancy agreement with a minimum term of one year, unless the tenancy agreement arranges otherwise.

Therefore, any increase in rent cannot exceed 20% of the existing rent, calculated on the basis of the average rent for similar properties in Dubai.

Landlords must notify tenants of any rent increases at least 90 days before the current tenancy agreement expires.

Also, if a tenant disputes the proposed rent increase, the landlord must submit the matter to a tenancy dispute committee for review.

Landlords must also provide written justification for any proposed rent increase, which may include factors such as inflation, the cost of utilities and amenities, or market conditions.

In summary, the decree aims to regulate rent increases in Dubai in order to protect tenants' rights and provide some stability in the rental market.

II – The legal consequences of disagreements

A – Methods of contesting a rent increase in Dubai

Before proceeding with any legal intervention, it is advisable to check using the RERA calculator whether the price envisaged by the owner is indeed in line with what is provided for in terms of ceiling by Decree 43 of 2007.

As a reminder, a rent 10% lower than the average rent for a similar area should not result in an increase. On the other hand, a 5% increase should be authorized if the rent is between 11% and 20% lower than the average rent in the same district. It may be advisable in this case to go through a formal notice.

Therefore, it is preferable at first to favor an amicable agreement with the owner in order to obtain a consensus on the median price. Thus, if the tenant estimates with regard to the calculator that the price requested by the owner is higher than the maximum authorized, he can request a review from the RERA. In addition, there is also a request for mediation involving a mediator in charge of finding a solution.

Finally, filing a complaint with DLD may be an option if the tenant feels that the landlord has breached the rent setting rules, they can file a complaint with the DUBAI LAND DEPARTMENT (DLD). The complaint will be investigated and the DLD will take appropriate action if necessary.

B – Termination of the contract and expulsion

With regard to the termination of lease agreement (Ejari), Section 7 of the Dubai RERA Rental Act provides that existing lease agreements cannot be unilaterally terminated during their term by the tenant or the owner, unless both parties have agreed.

Furthermore, according to Article 27, the tenancy agreement does not end even if the tenant or the landlord dies. In this case, the rental relationship is transferred to the heirs of the deceased party and, unless they decide to terminate the contract, the latter remains in force. If the heirs wish to terminate the contract, they must give 30 days' notice or until the end of the current contract, whichever comes first.

Furthermore, regarding eviction, Article 25 of Law No. (26) of 2007 provides for this eventuality and the rare cases in which it is possible to evict a tenant. Indeed, only a valid reason such as non-payment of rent or violation of the terms of the rental agreement. According to this article, the landlord must first send a written notice to the tenant, asking him to settle the outstanding payments or to correct any violation of the tenancy agreement within 30 days.

If the tenant fails to respond or correct the violations within that time, then the landlord can file a lawsuit in the courts of Dubai to seek the eviction of the tenant. However, the court must give the tenant the opportunity to defend themselves before making a final decision.

Finally, Article 25 also provides specific conditions for situations where the tenant is evicted due to the demolition or reconstruction of the rented building, as well as for situations where the owner wishes to recover the property for his own use or that of his immediate family. In these cases, the landlord must provide written notice to the tenant at least 12 months before the expiration of the current rental agreement.

Akram Cheik, Lawyer

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