Navigating the complexities of rental contracts may be difficult for landlords and tenants. Understanding the rules and best practices for rent hikes is critical. Let’s look at the consequences and procedures that both parties might take when a landlord raises rent more than 90 days before the renewal date.
THE SITUATION: CAN A LANDLORD INCREASE RENT MORE THAN 90 DAYS PRIOR TO RENEWAL DATE?
A landlord emailed a tenant on July 1, 2024, informing them of an anticipated rent rise. The tenant is now paying an annual rent of AED 150,000, which the landlord seeks to raise to AED 180,000. However, the tenant’s lease is only up for renewal on November 1, 2024. This indicates that the warning was received long before the statutory 90-day notice period required by Dubai’s leasing laws.
Adding to the complication, the landlord had shown the home to potential buyers. The prospective buyer is currently awaiting a bank evaluation of the property. This has led the tenant to question the landlord’s motives and seek assistance on how to continue.
LEGAL FRAMEWORK FOR A 90-DAY RENT INCREASE NOTICE IN DUBAI
RERA tenancy laws in Dubai require that any modifications to an existing rental contract, including rent hikes, be informed with at least 90 days’ notice. This needs to be completed before the renewal date. These RERA rent increase standards provide tenants enough time to adjust to new conditions, whether by planning for the increase or electing to relocate.
In this case, the landlord’s notification, issued more than 90 days in advance, raises concerns. The RERA confirmed that the requested rent increase is consistent with the Dubai rental index. However, they cautioned that finalizing the hike so close to the renewal period may be premature.
TENANT OPTIONS.
When a landlord raises the rent more than 90 days before the renewal date, tenants have two options:
- Accept the Changes Now: The tenant can accept the revised terms immediately, ensuring that these will be the agreed-upon conditions at renewal. This choice gives clarity and helps the tenant to plan confidently.
- Negotiate Closer to Renewal: The tenant may agree to the rent increase in principle but allow the precise amount to be determined closer to the renewal date. This strategy allows for modifications in response to changes in the rental market or personal circumstances.
It is vital to remember that any agreed-upon adjustments will only take effect at the time of renewal, so the present contractual conditions must be followed until then.
PROPERTY SALE COMPLICATION
The prospective sale of the property adds a further layer of difficulty. If the property is being sold, the tenant can continue living there. The landlord can only ask the tenant to leave after providing a 12-month notice, which must be given via notary public or registered mail.
A pertinent example demonstrates this point. When a new property owner found out that the current tenant had received a notice to leave from the previous owner, they still had to issue a 12-month eviction notice because the tenant decided to challenge the previous notice at the Rental Dispute Committee (RDC). This highlights the importance of clear communication and a comprehensive understanding of tenant rights.
PRACTICAL STEP FOR TENANTS
The following actions can assist tenants in dealing with an early rent increase notification:
- Check Legality: Ensure the notice meets local legal requirements, including the notice period and adherence to rental index guidelines.
- Document Communication: Maintain thorough records of all communication with the landlord about the rent increase and any possible property sale. This documentation can be essential in the event of disagreements.
- Seek Mediation: If there is a disagreement, consider mediation through a relevant authority, such as the Rental Dispute Settlement Committee, to resolve the issue through amicable settlement services.
- Plan Financially: Start planning financially for the potential increase. This might involve adjusting budgets, seeking additional income sources, or exploring more affordable housing options.
- Understand Rights: Familiarize yourself with the rights of tenants in Dubai regarding property sales. If the property is sold, the tenant can stay for 12 months post-notice, giving ample time to find a new place.
PRACTICAL STEP FOR LANDLORDS
Landlords must follow best practices to ensure compliance and maintain good tenant relations.
- Provide Clear Notices: Ensure all notices, including rent increases and potential sales, are clear, detailed, and issued within legal timeframes.
- Stay Informed: Stay updated on changes in rental laws and market trends to make well-informed decisions about rent adjustments.
- Communicate Openly: To prevent misunderstandings and cultivate trust, foster open communication with tenants.
- Use Professional Channels: Consider utilizing professional channels such as notary public or registered mail to ensure legal compliance when issuing notices.
However, Dubai landlord rights allow property owners to increase the rent if it is below the average market value.
MOVING FORWARD
Understanding and following the rules regarding rent increases and property sales is essential for landlords and tenants to prevent conflicts and ensure a smooth rental experience. Clear communication, legal compliance, and mutual respect are key to navigating these situations successfully. Both parties can effectively manage their rental agreements and avoid unnecessary disputes by staying informed and proactive.
