The great Dubai property boom of 2008 was followed by the Dubai property bust of 2009, when prices sank by up to 60 percent, cranes stopped turning and many of the city’s building projects were canned, stalled or fast-tracked from the drawing board to the waste bin. In the midst of this slowdown, property scandals and disputes became more common, and government authorities quickly moved to crack down on those looking to take advantage of the changing fortunes in the emirates. Fast forward to 2012 and the troubles have moved down the food chain, from developers and owners to tenants, and there have been a number of well-publicised rental scams in the past year.
Today, Better Homes, the city’s biggest real estate agency, estimates that the number of residents renting in Dubai is as high as 90 percent, meaning that rental laws affect nearly all of us. For this reason, Time Out has gathered a team of experts to address the key questions you should be asking before putting down your deposit, as well as what to do if your apartment isn’t up to scratch, how to cancel your contract and more.
Associate director at Asteco Property Management
Head of residential at Better Homes
Head of residential sales and leasing at Cluttons
Sales and brokerage division at Aston Pearl Real Estate
Signing the contract
You’ve found the apartment of your dreams. So how can you go about securing it quickly and efficiently, without the wool being pulled over your eyes?
Mario Volpi: Check the internet to see that the rent is reasonable (Editor's note: try www.dubailand.gov.ae - according to the Decree No 2 of 2011, the Index will provide a fair range reflecting an updated market analysis in Dubai) then make sure you see evidence of proof of ownership from the landlord, such as a title deed or original sales contract and passport copy. To secure the property, you’ll have to pay a five percent deposit to the landlord. Make sure you use a reputable Real Estate Regulatory Agency [RERA]-approved agent.
What questions should you ask the agent?
Priyesh Patel: Who is liable for the chiller [A/C] fees? Chiller fees are usually charged on properties that have a centralised A/C. Typically, it is the landlord who pays the chiller charges, but there are certain areas in Dubai where chiller fees are charged separately. (Editor's note: it is often the case that the cost of A/C connection is the responsibility of the landlord and the cost thereafter is the tenant responsibility.)
How can you spot a dodgy estate agent, and what steps can should you take to ensure they’re the real deal?
Annetta Shaw: The tenant should ask to see the agents’ business card, as well as their RERA card. This will show that the agent is a certified broker through RERA and is not a freelancer – freelancing is illegal. Check that they are registered on the land department website Dubailand.gov.ae.
How many cheques should you expect to give the landlord to cover your annual rent?
Vineet Kumar: At the end of the day, it’s down to the landlord how many cheques he requires. However, three to four cheques seems to be the market norm at the moment. (Note: if date is not specified or unable to determine, the rental value shall be paid on four equal installments).
What other fees should you watch out for?
MV: The agent commission is five percent of the annual rent. Make sure the deposit is no more than five percent.
What should you expect from a lawful contract?
VK: It should be an Ejari contract and contain all of the following points: lease break clause, maintenance responsibility, parking details, insurance and liability.
What other documents should you ask for?
PP: Request a copy of the landlord’s passport and title deed or proof of ownership copy. Also ask for a copy of the cheques issued to the landlord, with the landlord’s signature of receipt.
What are the landlord’s legal obligations?
PP: The maintenance charges are under the landlord’s account. It is the responsibility of the landlord to make sure that property is in liveable condition before he or she hands it over to the new tenant. (Editor's note: According to the law No. 26 of 2006 Article (16) it clearly states: Except when otherwise agreed, the landlord is obligated, during the tenancy period; to maintain the property and fix any defect that may affect the usage of the property.)
• Ensure the contract is registered with Ejari.ae.
• Most landlords ask for postdated cheques to cover a year’s rent. Three to four cheques currently seems be the market norm.
You’ve moved in and found there are problems with the facilities – for example, the A/C doesn’t work or the apartment is infested with ants. What can tenants legally and lawfully expect the landlord to help out with?
AS: The tenant should conduct a thorough inspection of the property prior to moving in. Major maintenance is usually the responsibility of the landlord, while minor maintenance is the responsibility of the tenant (see editor's note above).
PP: This is one reason why you’ll need the landlord’s contact details as mentioned in your tenancy contract. Usually landlords have their own maintenance contractors who will assist you with these kinds of issues.
If said problems are the responsibility of the landlord, yet he refuses to help, how can you take action?
MV: If you’ve exhausted all avenues with the landlord and he still refuses to co-operate, make necessary repairs yourself, keep the receipts then take up a case with the rent committee. If the property is managed, then contact the agent. (Editor's note: disputes are handled by the Rental Dispute Committee at the Dubai Municipality. Only Ejari disputes and/or requirement are handled by RERA.)
• Check that the landlord is up to date with maintenance charges by contacting the maintenance company in charge of the building or the homeowners’ association. If he isn’t, it could cause problems.
• It is vital to carry out and record an inspection, and photograph any damage already existing.
• Taking your case to the Dubai Municipality Rent Committee (04 221 5555) will cost 3.5 percent of the property's annual rent at a, at a minimum of Dhs350 and a maximum of Dhs20,000. This fee is paid by the case loser as per the committee decision regardless of who has approached the committee with the complaint.
Renewing your contract
Are landlords allowed to raise rent after just one year? If so, what’s the maximum/minimum amount?
MV: Landlords are not permitted to raise the rent after just one year if the rent is up to 25 percent below the average rent of similar properties, according to the RERA rent calculator. If the rent is 26-35 percent less than the average, the maximum increase allowed is five percent. If the rent is 36-45 percent less than the average, then the maximum increase allowed is 10 percent. If the rent is 46-55 percent less than the average, then the maximum increase allowed is 15 percent. If the rent is more than 55 percent less than the average, then the maximum increase allowed is 20 percent. (Editor's note: the landlord should give a written notice period of rent change 90 days prior lease agreement expiration.)
PP: Landlords may increase rent based on RERA rentals caps or what you have agreed during the signing of the tenancy contract. If no increase has been mentioned for the area in which you’re living, the landlord should keep your agreed rent.
Are you within your rights to dispute a hike in rent? If so, how?
MV: You can dispute any rent hike, but if an agreement is not reached, you can lodge a complaint with the rent committee.
• Official rental prices can be found on the RERA website (www.dubailand.gov.ae). Rent can only be increased after one year if the amount is more than 25 percent below the average of similar rents.
• If you do enter into a dispute with a landlord, check out the Dubai Courts website (www.dubaicourts.gov.ae), which has now launched a new pro-bono service called ‘Sure’.
If you need to leave before your year is up, what’s the best way to go about it without losing money or breaking the law?
MV: Try to agree a strategy with your landlord. In a lot of cases, there are break clauses written into an addendum at the time of signing the contract: two months’ rent is a common penalty for tenants wanting to leave early.
PP: If you really can’t avoid breaking your contract, you need to take into consideration the penalties mentioned in your contract addendum for contract early termination. Landlords are protected by law in terms of early contract termination.
The landlord informs you he wants to sell and you have to move out immediately. How much notice should you be given?
AS: The landlord will be required to provide 12 months’ notice to the tenant (as per law 33 of 2008, amending the law 26 of 2006). This will need to be sent to the tenant in writing (in English) through the notary public or via registered mail, unless agreed otherwise by the landlord. The apartment will need to be returned by the tenant in the same condition as it was when they moved in.
How should disputes over the deposit be handled, legally?
MV: Again, try to resolve any disputes with your landlord amicably and record all conversations and document all agreements.
You plan to see out your contract, but don’t intend to renew – what steps should you take to ensure you get as much of your deposit back as possible?
PP: If you do not wish to renew the contract, you need to inform your landlord at least 90 days before the end of your lease term. The apartment should be handed over to the landlord in its original liveable state, in which case the landlord must return your full refundable deposit.
• A penalty of two months’ rent is common for tenants wanting to leave early.
• UAE landlords are protected by law in terms of early contract termination.
• If the landlord wants to sell the property, they are required to provide 12 months’ notice to the tenant.
• If a tenant doesn’t want to renew a lease, they should give three months’ notice.
• To get a full refund, tenants must return the property in its original condition.
You discover you’re the victim of a scam. What steps should you take to ensure you won’t be thrown out on the street?
VK: Establish contact with the actual owner, speak to your bank and explore the possibility of handling post-dated cheques.
MV: Hopefully you will have registered the agreement with Ejari. Contact your landlord – he/she may be a victim too. Establish how badly you’re affected, consult your agreement and seek legal advice.
Are there any agencies that have been set up to help landlords or tenants who have fallen foul of scams?
VK: No – it is the tenant’s responsibility to ensure that the agents they are dealing with are RERA-compliant.
MV: Other than RERA, the only people who can help you at this stage are the police. It’s possible to file a case with the police against the scammers.
Are there tell-tale signs of a scam in the making? What should you look out for?
VK: Be wary if: the rent is much lower than the rest of the market; if copies of the title deed, service charge payments and so on are not produced; if you’re asked to write the cheque to another name and not the one on the title deed.
Are the UAE’s tenancy laws more susceptible to scams than elsewhere in the world?
VK: I don’t believe so. As mentioned earlier, tenants should be aware of the documents to check prior to signing a lease, and only deal with agencies they know they can trust. To check whether an agency is trustworthy, look at how long it has been operating in the city or country and how big its portfolio is. This said, in the west, landlords are paid on a monthly basis, rather than in multiple cheques per year, making it more difficult to carry out a scam.
Three Dubai residents retell their rental nightmares so you can learn from them.
After getting a raise in salary, I decided to move into a new apartment on the Palm Jumeirah and live the real Dubai dream. This turned into a nightmare when I discovered my landlord wasn’t up to date on the maintenance fees, and the developer began draining the pools, closing the gyms and not letting those in arrears onto the beach. I contacted my landlord and he was trying to sort it out, but it meant I couldn’t use the facilities I was expecting and had paid for as part of my rent, which I had paid upfront for a year. Luckily, the landlord agreed to refund some of my money and also arranged access to a beach club nearby for me. However, some of my neighbours were not so lucky and were left out of pocket, with access to none of the promised facilities. Before you sign, make sure the maintenance fees are up to date. If not, I’d recommend looking for a different property.’
Age: 33 Nationality: British
Occupation: Graphic designer
‘A friend of a friend was moving out of his apartment and going back to the UK, so I took on his lease. The rent was low for a furnished flat, and included bills. But a few weeks after I moved in, the DEWA was cut off unexpectedly and a couple appeared at my door claiming they were the owners and they hadn’t received any rent money. I had no leg to stand on because I was subletting and didn’t have any official paperwork, and the couple claimed they hadn’t been paid any rent in three months. The rule is: just because you’re dealing with a friend doesn’t mean you shouldn’t go through all the usual checks.’
Occupation: HR manager
I’m one of the hundreds of Dubai residents who was a victim of one of the recent headline-grabbing tenancy scams. In good faith, I rented out the one-bedroom apartment I own in The Greens for Dhs85,000 a year through a reputable broker. I soon discovered that the company that carried out the scam had sublet the property to another tenant for Dhs115,000. The scammers got one cheque from the tenant, so she has paid for the whole year, but I have only been paid for six months. The next cheque is due in a few weeks, which I assume will bounce, so I’m two cheques down and have only received six months’ rent. I was advised to contact the person living there to see if we could come to a private arrangement, which I think we have. It’s a terrible situation, because I don’t want to make someone homeless, but I also have my own bills to pay.’
• Always have a direct contact number for your landlord and make sure they are legitimate by checking with RERA if necessary.
• Freelance real estate agencies are illegal, as is subletting, so if you do this you must accept it is a risk.
• If you are a landlord, make sure you check the tenant in the property is the person listed on the lease.
• If you suspect you have been scammed, check with Dubai Police (www.dubaipolice.gov.ae) to see whether any other claims have been lodged.