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Dubai United Arab Emirates
Many landlords in Dubai are asking tenants to vacate their properties in order to list them for sale, to cash in on record high prices, or move in themselves to beat rising rentals.
Rents have been increasing at a double-digit rate in Dubai over the past three years due to high demand from new residents coming to the emirate.
Anisha Sagar, director of property management at Allsopp and Allsopp, said the law is clear that owners can serve notice to a tenant if they decide to sell the property or intend to move into the property for personal use.
“What we have noticed is an increase in landlords looking to take advantage of the excellent market and listing properties for sale in higher numbers. We have also seen an increase in landlords moving back into the properties they own, as rents across the city continue to increase."
For owners that do decide to move back into their own homes, they are not permitted to place the property back into the market to re-rent for two consecutive years. In March, the Real Estate Regulatory Agency (Rera) revised its rental index to bring rates in line with the market.
Eviction notices
However, industry insiders say that some landlords are sending eviction notices to their tenants who are paying less than the Rera Rental Index.
“Some landlords in Dubai are issuing eviction notices to tenants paying below the rental index rate. Although the updated Rera Rental Index permits adjustments to market rates, many landlords prefer to evict tenants to reset rental agreements and maximise their rental income,” said Anmoll D Shroff, founder and chairman of Elton Group.
Valid reasons
Rupert Simmonds, director of leasing at Betterhomes, said: “The reasons for the eviction notice must be valid. Valid reasons include the landlord wanting to demolish or reconstruct the property, the property requiring major renovations, which cannot be carried out with the tenant in situ, the landlord or first-degree-relative wanting to use the property themselves, and the landlord wishing to sell the property. Eviction notice for these reasons requires a 12-month notice period through the correct channels.”
He added that a “landlord is not permitted to evict a tenant to rent the property again at a higher price, circumventing the rental increase calculator.”
Shroff said landlords may give eviction notices to tenants who pay less than the Rental Index rate, but the legality of this action depends on the specific conditions and regulations set by the Dubai Land Department and Rera.
“A landlord must follow proper legal procedures and have valid reasons for eviction like planned property sale, personal use or significant renovations. Evictions done solely with the objective of increasing rent are likely illegal unless justifiable reasons accompany them. It is essential for both landlords as well as tenants to take into account the recent Rera guidelines and seek legal advice if required,” said Shroff.
“If a tenant's rent is significantly below the index, it can be a factor in the landlord's decision to serve an eviction notice. If landlords decide to do this, they are required to give tenants a full 12-month notice and they would not be able to re-rent the unit for two years. It is important to note that the maximum annual increase is 20 per cent and any increase is dependent on a number of market-related variables,” Sagar added.
Increasing in line with the Rera index
Simmonds elaborated that most landlords will align their pricing strategy according to local market activity and follow advice from their broker when increasing the rents to bring them in line with the Rera Rental Index.
Shroff said that in some situations, landlords might want to raise rents beyond what the Rera Rental Index allows, particularly in areas that are highly sought after.
“But, these increases should be legally justified and in conformity with Rera regulations. It is common among many landlords to make adjustments to their rents as per current market rates. This means that if the prices of goods go up in line with the demand within the region where they live, there may be higher rents than those seen within the Rera index,” he said.
The amount of rent increase for new tenants can vary significantly. Landlords generally set new rents based on current market conditions, which can lead to substantial increases. This increase can be modest or significant, depending on factors such as the property's location, amenities, and current demand in the area.
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