Dubai rent hike only after 2 years

Does any law state that the landlord should not increase the rent for the initial three years of a new lease contract? If yes, please explain the provisions.

Each emirate in the UAE has its own set of laws and regulations governing resolution of disputes between landlord and tenant. Since you have not mentioned any particular emirate, we address your question based on the prevailing laws and regulations in the emirates of Dubai and Abu Dhabi.

The amount of rent should be specified in the tenancy contract and the rent should not be increased prior to completion of two years from the date of commencement of the tenancy contract in accordance with the Article 9 of the Dubai Law No. 26 of 2007 Regulating Relationship Between Landlords and Tenants in the Emirate of Dubai, which states: “Landlord and tenant must specify rent value in the tenancy contract, and should not increase such rent value or amend any of the tenancy contract conditions till the elapse of two years from the date of inception of original tenancy relationship.”

However, in the Emirate of Abu Dhabi, the landlord may at his discretion increase the rent on an annual basis up to a maximum of 5 per cent of the rent levied, subject to certain conditions as stipulated in Article 16 of Abu Dhabi Law No. 20 of 2006 as amended by the Abu Dhabi Law No 6 of 2009, which states:

“Article 16:

1. Without prejudice to the landlord’s right to claim the annual increment prescribed by the law, the rent agreed upon in the lease shall bind the contractors for the duration of the period of lease as specified in the contract.

2. The landlord may not increase the rent specified in the contract except once each year by no more than five per cent of the said rent. It is permissible, by decision of the Chairman of the Executive Council, to increase, decrease or cancel this percentage as deemed appropriate, and individuals concerned may resort to the committee if landlord has exceeded the defined percentage.

3. The former law shall be applied to leases in effect at the time the provisions of this law upon their renewal, be it with current or new tenants.

4. The calculation of the term for the annual increase in rent referred to begins from the date of the last lease or the date of the last increase, whichever is sooner.

5. The committee has the right to reduce the rate of increase to the legal limit and to impose a fine of no more than the one year’s rent on the landlord in the event he exceeded the set percentage increase, or in the event of non-compliance with the committee’s resolution to rectify this breach; the committee may impose this fine of its own accord even if this is not requested by the stakeholder.”

Notice period

I have been working for a company in Jebel Ali Free Zone Authority (Jafza) for over two years. My contract is for a three year period. Now I have got a better offer and I would like to move from this company but they are asking me to serve three months’ notice period.

The designation which is in my offer letter is instrumentation engineer and currently I work as a sales engineer. I have seen in Jafza contract they mention that the notice period is 30 days and for managers and sales people it may vary up to 90 days maximum.

But there is nothing mentioned about a notice period in my employment contract with the company. They have only mentioned they can reimburse my visa expense if I leave before three years. My basic salary is around Dh2,000 only, and I am willing to serve a notice period of 45 days. Is that enough? Do I really need to serve 90 days notice?

It is understood that no notice period is mentioned in the offer letter issued by your employer or the employment contract executed between you and your employer, for termination of employment contract.

However, you may terminate your employment contract at any time following the period of probation, by giving a 30 days’ notice period in writing in accordance with Article 9.9.1 of the Jebel Ali Free Zone Rules & Regulations, 2005, which states:

“9.9 Rules Governing Termination of Contracts of employment

9.9.1 A contract of employment may be terminated as follows:

a) By mutual agreement between the employer and employee and with the approval of Jafza.

b) By the employee or employer during, or at the end of the probationary period (without notice).

c) By the employee or employer giving 30 days notice in writing (after the probationary period).

d) On expiry of the service period prescribed in the contract, provided 30 days notice ‘Not To Renew’ is given by either party.”

In view of the provisions of the aforesaid article, you may serve a 30 days’ notice to your employer to terminate your contract. Should you have further queries on this subject you may contact Jafza.

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Ashish Mehta, LLB, F.I.C.A., M.C.I.T., M.C.I.Arb., is the founder and Managing Partner of Ashish Mehta & Associates, a legal consultancy firm in Dubai. He also practises in India, United Kingdom and Singapore. He has worked with international and commercial legal procedures, providing analysis and counselling on complex legal documents and policies such as commercial transactions, securitisation, real estate acquisitions, financial restructuring for distressed assets, mergers and acquisitions, arbitration and litigation issues. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.