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What are the things that you need to know about real estate agencies when renting a property in Dubai?
When renting a property in Dubai, one must ensure the real estate agent or agency is registered with the Real Estate Regulatory Agency (RERA) and if the former is listed in the broker’s list.
Real estate agents are not entitled to charge fees on their prospective clients just by showing listings or stocks of properties unless there is a tenancy agreement signed by both the landlord and the tenant. These are called agency fees and are usually 5 per cent of the rental amount or Dh5,000, whichever amount is higher. It is mandatory for the landlords to follow RERA’s rental index.
RERA has applied the highest standards of transparency by exercising the best control on transactions and regulating interactions between investors and real estate agents.
What are the rental increase caps upon renewal of contract in Dubai?
In Dubai, rental increase is regulated by Law No. 43 of 2013. The law states that notice of rental increase must be given to the tenant at least 90 days prior to the expiration of the lease term with proof of receipt. Increase will be given if the tenant is paying 11 to 20 per cent less than the average similar rent as per the RERA index. The landlord may increase the rent by up to 5 per cent if the tenant is paying 21 to 30 per cent less than the average similar rent. Also, the landlord may increase rent by up to 10 per cent if the tenant is paying 31 to 40 per cent less than the average similar rent. The maximum increase is only 20 per cent if the rent is over 40 per cent less than the average similar rent, but if the tenant is paying 10 per cent or less than the average similar rent, the landlord cannot increase the rent. One can check the rental increase calculator on the Dubai Land Department website (eServices).
What are the fees that need to be paid when renting a property?
Rental fees are paid in advance in one or multiple cheques depending on the agreement between the tenant and the landlord. If paid by cheques, these should be dated at least one day before the starting date of the contract to allow time for clearance.
Agency fees, which are given to the broker, can be paid by cheques and current dated unless the tenant chooses to put a date a day before the start of the tenancy contract.
Security deposit is a refundable deposit which the landlord will use in restoring the property from its previous condition before it is handed over to the tenant. This is usually 5 per cent of the rent amount.
Utility fees include DEWA installation (Dh2,110 for apartments and Dh4,000 for villas). DEWA fees are refundable upon the expiry of the tenancy contract. Ejari registration (Ejari is an authority that regulates the relationship between the landlord and the tenant) is Dh210.
What are the obligations of a tenant?
One of the obligations of the tenant is to pay the rent on the due date to avoid eviction. He is also required to pay the security deposit to guarantee the coverage of the premises. In some instances, some landlords include the payment of the air conditioning on the rent amount.
A tenant should not alter, renovate or perform maintenance work without the landlord’s permission. He must not remove any fixtures unless agreed otherwise by both the landlord and tenant. A tenant is not allowed to sublease the property or let the property on short-term basis during his tenure unless he has a written agreement from the landlord.
As per RERA regulations, tenants are obliged to return the property to the landlord upon the expiry of the contract in the same condition as it was handed over to him at the beginning of the contract. This is except for normal wear and tear or for reasons beyond the tenant’s control. However, if any dispute arises, the issue will be referred to RERA for a resolution.
Question of the Week
What are the laws for eviction in an apartment?
Perhaps, primary amongst the tenant’s rights is the right to protection against unreasonable eviction.
The landlord may only evict a tenant for the following legal reasons: if the tenant was not able to pay the rent prior to a 30-day notice by the landlord; illegal use of the premises; and doing any alterations that may lead to property collapse.
In case the landlord wants to sell or use the property for his own personal use or for the use of his direct relatives, he must give the tenant a 12-month notice through notary public or registered mail.
If eviction is granted for personal use, the landlord must prove that he has no other properties to use. He is also not allowed to lease the property for two years.
If the property requires demolition or major renovation, the tenant may be evicted if work cannot be completed while the property is being occupied, but it has to be supported with a technical report.
If there are no legal reasons to evict anyone from the property, the tenant has the right to automatically renew the contract.
The key for growth in the realty sector is to make sure its players stay closer to their customers, anticipating their requirements and providing them with good value for their money
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Source: Oliver Geronga, Special to Freehold
Leasing Consultant, SPF