Everything You Need To Know About RERA Rental Property Laws. UAE

Everything You Need To Know About RERA Rental Property Laws

Just as every game should have its rules, every activity that involves certain contract relationships should have clearly defined laws. These laws regulate and govern the most common aspects regarding what each of the parties shall (or shall not) or is allowed (or not allowed) to do. In other words, these laws define parties’ rights and obligations.

And the rental business in Dubai is no exception.

Definitive laws regulate the rental relationship between the landlord and the tenant

As of rental relationships in Dubai, there are three main laws that regulate them:

  1. Law No 26 of 2007;
  2. Law No 33 of 2008;
  3. Decree No 43 of 2013.

The first ones regulate the rental relationship a whole. Here, the Government defines essential aspects regarding:

  1. The necessity of signing a tenancy contract and registering it with the specialized government body;
  2. Tenancy period and important aspects of its prolongation, including sub-tenancy period;
  3. Rent value, what it includes, how the parties can amend it, and terms of payment;
  4. Landlord and tenant obligations;
  5. Eviction and specified conditions when the landlord can evict his tenant prior or upon expiry of the contract;
  6. Other general rules such as a situation when the landlord dies, the title transfer, etc.
  7. Final judgment and means to resolve rental disputes.

It’s worth mentioning, the Law No 33 more clearly defines or amends some provisions of the Law No 26. For example, it has the following most important changes:

  1. The exclusion of the two-year moratorium on changes in the contract and rent value;
  2. The inclusion of an eviction case for a commercial shop;
  3. Specifying property demolition and reconstruction under the Dubai requirements as the reason for eviction prior to the expiry of the contract instead of the reason of eviction upon the expiry of the contract;
  4. The inclusion of an owner’s intention to sell the leased property as the reason to justify eviction upon expiry of the contract;
  5. Changes in eviction notification requirements.

The last Decree, Decree No 43 of 2013, regulates how much the landlord can increase the amount of rent he charges his tenant with. This rent increase cap is based on the current rent value and its comparison with the average rent on the market.

The landlord is prohibited from claiming lease renewal fee

Sometimes, when the landlord and the tenant interact with each other directly, without rental agency involvement, the landlord claims a certain amount of money as a fee for lease renewal. But do you know the landlord doesn’t have the right to claim such a fee?

Indeed, the main rule of each business transaction is “get what you pay for”. For example, when the landlord charges the rent, he provides a premise to live (or work) in. But what services does the landlord provide when charging the fee? Nothing.

In fact, it is just an act of signing a new rental agreement between the same parties. The typical procedure of lease renewal when dealing with the landlord directly goes one of two ways:

  1. Both parties arrange a meeting where they sign their new lease.
  2. The landlord sends the contract to the tenant for signing it and sending back. Then he signs it himself and sends one copy to the tenant (at least, he should do this, though, unfortunately, not every landlord provides his tenant with the lease copy).

If, for example, the contract is drawn incorrectly and this results in problems with EJARI registration, the tenant has to waste his time again on signing the contract. One more meeting. Or one more time waste on sending the lease back.

Thus, as you see, there is nothing more than just agreeing that one party provides his property to temporary disposal for another party. No contract facilitation. No additional convenience for the tenant. Nothing of this kind.

However, everything changes when a rental agency or property management company gets involved in the rent renewal deal. Especially, when it is such an innovative company as BSO. Here, the tenant can enjoy contract facilitation, hassle-free lease renewal, and be sure the contract is correct and will be registered. At last, he saves his time due to the implementation of modern technologies such as, for example, online signature.

So, the verdict is as follows. The landlord can’t claim a lease renewal fee as he does not provide any services in addition to renting his property. However, a lease renewal fee as the payment for property agent services is a fair practice as they simplify your lease renewal procedure.

Lease gets renewed automatically when the tenant continues to occupy the real estate without the owner's objection

Yes, it is so simple. This condition is defined in the Article (6) of Law No 26 of 2007. If the period of the previous contract is more than a one-year contract, a renewed contract shall have a one-year tenancy period. However, if the previous contract stipulates the tenancy period of less than a year, the same period shall be written in a new agreement.

But what does “without the owner's objection” really mean? This question sends us to the Article (25), which defines all the cases of eviction. As we are talking now about signing a new rental contract after the previous one expires, let’s turn to the clause 2 of the Article (25), which defines when the landlord can opt not to renew the contract. So, if the landlord does not plan to renovate, demolish, sell, or live in the rental property, he is regarded as not having any objection.

However, even if he plans to renovate, demolish, sell, or live in the rental property, he shall notify the tenant about his intentions in written. Moreover, this notification must be sent via NP or by registered mail no later than twelve months prior to the date of the contract termination.

At BSO, we strictly follow the law. Thus, when you hand over your property under our management, you have nothing to worry about. The full compliance of your rental business with local legislation is guaranteed. Contact us to know more about our real estate management services and push your property under our care.

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