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No win situation for Abu Dhabi tenant given 105% rent hike

I have lived in an Abu Dhabi building since 2007. Every year we have had a rental increase of 5 per cent at the renewal of the lease agreement. Currently the rent is Dh25,806. The lease agreement is expiring on August 23. Now I have received a notification informing me that the new rent will be Dh53,000 – which is a 105 per cent hike. I understand that this increase is due to the 5 per cent yearly increase cap being taken away but I would like to know, as per the law in the UAE, if there is any limit on the increase a landlord can demand. TT, Abu Dhabi

Before the abolition of the rental cap, the emirate of Abu Dhabi had strict laws limiting the amount a landlord could raise the rent annually and this was maximum 5 per cent of the annual rent. Your landlord is entitled to raise the rent for this year as he sees fit. There is no limit of increase imposed on landlords any more. The Government has allowed this to help landlords achieve market rent, especially for those investors who historically were receiving very low rents.

It appears that your landlord does not care whether you will stay or decide to vacate the property because of the outrageous increase. This being the case, I suppose that the landlord is maximising his position and if he gets away with it, he will be happy as he will be getting a substantial amount more for his rent. If you do leave, I guess that another tenant may be found relatively quickly. Either way you will end up being on the losing side.

I would like to buy a property in Dubai with finance and I have some questions:

1. Does the buyer need to issue the security cheque (10 per cent of property price) prior to seeing the Memorandum Of Understanding (MoU) from seller? Or should that be at the same time for the buyer’s safety?

2. Whose name should be the receiver name in the cheque? Should it be the seller or the property agent? I was told by the agent that I should write the cheque with the name of their company. Is it appropriate procedure in Dubai? Frankly I don’t feel safe to put the agent’s name rather than the seller. How can I protect myself from he possible misuse of the cheque by the agent or seller?

3. Regarding the MoU, is there any liability for the seller if he/she turns down the deal after receiving my cheque? Can I put that in place?

4. How do I know whether the agent company is licensed as well as the agent? AL, Dubai

Good practise for a buyer would be to produce the 10 per cent cheque before an MoU is signed, but it is normally handed over on the signing of the agreement. Under Rera rules the 10 per cent deposit should be in the name of the seller only. The agent should be holding this cheque as custodian only and it is normally handed back to the buyer on the day of transfer to be replaced by a manager’s cheque for the equivalent amount or full sale amount.

The sale price can be confirmed only when all parties have signed and the buyer has lodged the deposit with the agent. If you have signed and paid the deposit to the agent but the seller did not sign then subsequently changed his mind, the deal would be null and void and you would get your deposit back.

All companies and their agents should be Rera-registered. You can check this by visiting the land department website www.dubailand.gov.ae Always ask to see the company’s trade licence too to check that it is fully compliant and legitimate.

Mario Volpi is the managing director of Prestige Real Estate in Dubai (prestigedubai.com). He has 30 years of property industry experience in the emirate and London. Send any questions to mario@prestigedubai.com

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice

 



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