Confusion with the 12-month notice period and rental hike

Confusion with the 12-month notice periodHelen Tatham

- I'm a little confused about this whole 12-month notice thing. My landlord has raised my rent and has thereafter asked me to vacate my flat. My one-year contract ends this June. When I called in May to renew my contract, I was told my rent had gone up by Dh13,000. When I said they cannot raise the rent before two years are over, I was told I had to vacate the property. Is this legal? Can the landlord raise the rent when I've only been in this flat for less than two years? And doesn't he have to serve me with a 12-month notice through the notary? — Anandita Mankodi

There are several points for discussion here, but the quick answer is no, your landlord cannot tell you to vacate on a month's notice. And any rent increase is subject to Rera guidelines and the Rental Increase Calculator (Ric). In accordance with the Rental Law Decree of December 2013, if a tenant is paying a rent below the average market rate as specified by the Ric, a landlord is entitled to increase the rent by a certain percentage in accordance with the following structure: up to 10 per cent below market price, no increase applies; 11-20 per cent below market price, an increase of 5 per cent is allowed; 21-30 per cent below market price, an increase of 10 per cent; 31-40 per cent below market price, an increase of 15 per cent; more than 40 per cent below market price, a 20 per cent increase is permitted.

The new law replaced those of 2007 and 2008, whereby the former stated that there could be no increase in rent for the first two years of tenancy, which then changed to a controlled 5 per cent rental cap, but only the Decree of 2013 applies today. In your case, you would need to compare your current and the proposed rent against the Ric to come to an agreement.

If your landlord wishes you to vacate the property, then a 12-month legal notice must be served through the Notary Public or registered post. In simple terms, the only reasons he can evict you are to demolish or carry out serious restoration to the property, to take possession of the property for personal use or to sell the property. The landlord is then not allowed to rent out the property after you have vacated. He can be reported to the proper authorities if he does so.

- I'm looking for a studio in Abu Dhabi and all agents seem to have put down a self-conjured minimum commission of Dh3,000. The studio I'm looking at is going for only Dh20,000, so the 5 per cent commission works out to Dh1,000. How can these agents charge three times the legal amount? — Rami Fayed

I can understand why you question the amount being charged as the arithmetic doesn't work, so on the face of it this should not be a viable proposition. In the UAE, the standard fee charged by real estate agents is 5 per cent of the rental value, but this is not a mandatory amount.

The Real Estate Regulatory Agency (Rera) regulates Dubai's real estate market and has firmer guidelines in place compared to Abu Dhabi, due to the absence of an equivalent authority. Nevertheless, in all emirates many agencies are now charging a minimum fee for rentals because the amount of work involved in facilitating a tenancy in lower-cost housing is no less than for a property being rented out for Dh100,000.

A respectable agency will declare its charges to a prospective tenant from the outset, so there are no surprises later on. While this may seem ''self-conjured'', there is justification for this disproportionate fee, due to a real estate company's standard level of service and policies.

- Is there any regulation regarding pets in buildings? It seems that agents and landlords change their mind about allowing or not allowing pets in buildings, depending on how desperate they are to find a tenant. If pets have no rights in this country, then why does the government happily allow (and charge a fee) to have them registered? — Alan Hutchings

I see your point, but I won't get involved with the policies of registering of pets! Ultimately, it is the owner of the property who will give the directive whether or not to allow pets, but it also depends on the rules of that particular building. There are many area areas in the UAE where it is stated in their Master Community Rules that domestic pets are allowed to be kept in the premises, but strictly in accordance to certain rules and regulations.

Within the master community, there may be buildings built by private developers that could have different rules and regulations — they may not allow domestic pets to be kept in the premises, but this is rare. Regardless of the rules of the master development, it is the landlords who will give the ultimate permission and it is their right to do so. Some landlords might not like animals and others want to keep their asset in the best possible condition, so the tenant has the freedom of choice to rent the property or not.

Of course, if a landlord was to change the conditions of the lease on renewal, then this might be a case for the Rent Committee, provided that keeping a domestic pet was not in contradiction to the terms of the lease or Master Community Rules.

- I am in the process of buying my first property in Dubai and there is a bit of confusion over the 4 per cent transfer fee. Can I be charged a transfer fee if I am buying a new property? I thought this rule only applied to someone selling a property to another buyer—thus the transfer fee? — Madhu Singh

The transfer fee has been a topical subject, not only for the increase implemented on October 6, but also for its subsequent effect on the property market. By the nature of its name, you could be lulled into thinking that it means to transfer a property from one person to another, but in fact that is what happens when you purchase direct from a developer as well.

The 4 per cent is paid to the Dubai Land Department for the registration of the title deed, whether in the secondary or off-plan market, and it is paid on the date of transfer or along with the first installment. The increase from 2 per cent to 4 per cent raised eyebrows, but it was a government cooling measure to slow down the flipping of property by reducing the profit margin of the investor.

It has certainly had some effect as properties need to be kept for a longer period to make the gains that they were achieving before, and for end users it makes the whole process more expensive and potentially less affordable. I wish you the best of luck with your purchase and welcome you as a Dubai property owner!

Source: Helen Tatham, Special to Property Weekly

Helen Tatham is Managing Partner of Prime Places Real Estate, a boutique agency based in Dubai. Previously she was Director of Residential for the international firm Knight Frank and has been an observer of real estate trends in the UAE for more than ten years

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