• Home
• /
• Legal

No hike if rent is up to 25% below average

It is our fourth year at our three bedroom apartment in Al Nahda, Dubai. We moved to the apartment in January 2010 for an annual rent of Dh77,000 (even then the rent was high compared to other flats in the same locality). Following recession, the average rent in that area fell to Dh60,000 to Dh65,000. At the time of renewal in 2011, the landlord said that the rent could be reduced to Dh70,000 and no more, to which we finally agreed.

The rent for similar apartments in the area further fell to between Dh55,000–Dh60,000 and further to negotiation, our landlord agreed to renew our tenancy contract in 2012 for an annual rent of Dh64,615. But on the contract, he mentioned the clause, “Dh70,000 for 365 days + 30 days free only for the current year.” The contract expired in the month of April 2013. Our landlord did not intimate us in the last quarter of the expired contract period that he was planning to increase the rent. Under the belief that the same contract would be renewed, we had informed the management regarding our interest to renew the contract in January 2013 itself. As per the Rera rental index calculator, “our rent is less than or equal to 25 per cent of the average similar rent in the area and hence, we are not entitled to any increase of rent.” Now our landlord is insisting that rent for 2013-2014 would be Dh70,000 for 365 days. According to us, he is effectively increasing our annual rent from Dh64,615 to Dh70,000 without intimating us regarding the hike in advance. But he says, that is not the case since, as per the old contract, rent was Dh70,000 only and 30 days was specified as free for the current year only. Kindly advise if we legally hold any right to insist on renewing the old contract stating that the hike is not justified and was not intimated to us in advance?

Article 1 of the Decree No (2) of 2011 of the Ruler’s Court (Government of Dubai) states “The maximum rent increase percentage of property units in the Emirate of Dubai leased before the enforcement of this Decree shall be as follows:

> There should not be any rent increase, if the rent for the real estate unit is up to 25 per cent below the average similar rent.

> If the rent value was 26 per cent to 35 per cent less than the average similar rent; the maximum rent increase shall be equal to 5 per cent of such value.

> If the rent value was 36 per cent to 45 per cent less than the average similar rent; the maximum rent increase shall be equal to 10 per cent of such value.

> If the rent value was 46 per cent to 55 per cent less than the average similar rent; the maximum rent increase shall be equal to 15 per cent of such value.

> If the rent value was less than 55 per cent of the average similar rent; the maximum rent increase shall be equal to 20 per cent of such value.”

In accordance with the aforesaid Decree, any increase in rent of your apartment by the landlord would not be justified because the rent you have paid for the year 2012-2013 is 25 per cent less than or equal to the average similar rent for the area as per the aforesaid Decree.

It is understood that for the lease year 2012-13, the tenancy contract executed between you and the landlord specified the annual rent at Dh70,000, although, in fact, you had actually paid Dh64,615 only, which the landlord had accepted and did not raise any objections. Further, it is assumed that the landlord issued receipts acknowledging the rent amount paid by you to the landlord for the year 2012-13.

Further, the landlord never notified you on any increase in the rent or any change in the terms of the tenancy contract after the previous contract period expired. Thus it may be implied that the lease period on the property has been renewed based on the same terms and conditions in accordance with Article 6 of Law No. 26 of 2007 on “Regulating Relationship Between Landlords and Tenants in the Emirate of Dubai” which states: “If the tenant continues to occupy property after expiry of contract period without any objection by landlord, the contract shall be renewed for similar period or for one year, whichever is less, with the same terms and conditions.”

There appears to be ambiguity(s) in the tenancy contract for the year 2012-2013 executed between you and the landlord. You may argue that the actual rent amount paid by you was Dh64,615, while the landlord may argue that the rent amount stated on the tenancy contract was Dh70,000, and 30 days rent free period was offered by the landlord at its discretion, which you accepted by signing the tenancy contract. In support of your argument(s), you may provide the receipts for Dh64,615, and also rely upon the fact that the landlord never notified you of any increase in rent.

In the event of failure to amicably resolve this matter, you may lodge a case with the municipal committee for settlement of disputes between landlords and tenants, in Dubai.

Ban if company closes?

I started working with an accounting service firm in Dubai as Accountant General from February 1 on an unlimited contract. The company, which is a professional firm, has decided to close its operation from this month. Since my visa will be cancelled due to the company’s closure, will I get a labour ban? My probation period is six months and I am a Bachelor’s Degree holder. What are the options left for me if there is a labour ban?

It is learnt that in the event of closure and winding up of your company, no ban should be imposed upon you. However, should a ban be imposed by the Ministry of Labour after cancellation of your employment visa but prior to actual date of closure and winding up of your employer, you may file a request with the Ministry of Labour for lifting of the ban, within two months from the date of closure and winding up on your employer. Further you may get a ban lifted if your remuneration from your subsequent employer is a minimum of Dh12,000.

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.comor send them to Legal View, Khaleej Times, PO Box 11243, Dubai.