Rent increase is a serious amendment of the tenancy contract. Therefore, the Government developed some rules to make the rent increase procedure less painful for the tenants and give them time to prepare.
In this post, you will find how and when you as a landlord shall inform your tenant about the rent increase. You will get a full understanding of how much you can raise your rental value and when you can file a case with RDC on regard rent issues and disagreements.
Legal Requirements for Rent Increase Notifications
To start with, Law No. 33 of 2008 and Law No. 26 of 2007 are all about tenancy relationships. In other words, it regulates all the relevant aspects, including those regarding rent increase notifications.
To go to, provisions of LAW NO. 26 OF 2007 are effective only in case there are no amendments stipulated in Law No. 33 of 2008. For the purpose of rent increase notification, the latter is a legal document to turn to. To clarify, its provisions amend Articles (9), (13), and (14). Also, there are some amendments in Article (2), where you can clarify the meaning for all important terms applied. So, according to Law No. 33 of 2008, there are two legal requirements for rent increase notification:
First, according to Article (14), a landlord shall notify their tenants about all amendments in the contract. The notification deadline is 90 days before the contract expires. Rent increase is also a kind of contract amendment. Therefore, this notification deadline is applicable here;
Second, according to Article (2), the notification shall be in written. Moreover, applicable delivery channels are of a narrow range. They include Notary Public and registered mail, though allow personal delivery or any other technological means that Dubai legislation approves.
How to Legally Increase the Rent
Existing laws and decrees are explicit. However, numerous RDC cases regarding violation of the procedure indicate the landlords often need some guidelines to follow to comply with the law. To make things easier for you, we provide a step-by-step guide on how to legally increase the rent:
First, make sure you have the right to increase the rent by as much as you are planning. The legislation to turn to here is Decree No. 43 of 2013. To get more details, read the next paragraph of this post;
Second, make sure, you can deliver rent increase notification to your tenant 90 days or more before your current tenancy contract ends. Note, not just send, but actually deliver. Thus, if you have, for example only 91 days before your contract expiry date, you are late. If you have, for example, 115 days (three months and a half) before the expiry date, you'd better hurry. At last, if you have, for example, five or six months before the expiry date, you have enough time ahead but still can send your notification right now;
Third, compose your rent increase letter in written. Include your tenant's name, the address of the rental unit for which you want to raise your rental price, your new rental price, and the date when you will apply your new rent. Typically, this is the day of the contract renewal.
Forth, send the letter to your tenant. Despite stipulations about such possible notification delivery channels as personal delivery or technological means, the most reliable way to send is via registered mail or Notary Public. To clarify, in these two cases you will have proof in your hands. We generally recommend sending notification 100 days in advance. Because 10 days are enough to deliver any letter.
How Much Can the Landlord Raise the Rent?
Now, it's time to turn to Decree No. 43 of 2013, a decree that clarifies a maximum rental increase cap to apply when a landlord increases the rent. The Decree provides the cap in the percentage of the current rental value. Generally, your exact cap will depend on just two bullet points:
Your current rental value;
Officially declared average current market rent of the same unit in the same location and with the same amenities and facilities.
How to file a rental dispute in Dubai
For the purpose of this post, we discuss only cases that may involve a rent increase letter. Directly or indirectly.
So, regarding this, we can consider only one case – a case when a landlord suffers from non-payment or not-in-full payment issues. The variations of the cases can be as follows:
When the tenant renewed the contract with new rental prices but issued a cheque for a lower sum (the sum he paid the previous year);
When the tenant continues to occupy your premises but refuses to renew the lease with new rent terms (and, accordingly, refuse to pay increased rent).
In this case, you can file a rental dispute with RDC Dubai. Up to eviction. Your actions should include:
Contacting a Typing Center to fill up your application;
Providing all proof and papers, including not only your identification documents, the lease, and EJARI registration;
Among all these, you must provide proof you notified your tenant about an upcoming rent increase in compliance with the legislation and send them a rent increase letter within set timeframes;
Paying a cheque for filing a case, which includes court, typing center, and other fees.
However, note, Law No. 26 of 2007, Article (14) stipulated that if the tenant opts not to renew the lease, he must notify his landlord about this non-renewal decision not less than 90 days before the valid lease ends. However, Law No. 33 of 2008 amended Article (14) and excluded these requirements about non-renewal notification.
That is to say, a tenant is free not to prolong his tenancy relationship with his current landlord when the contract ends. Without any 90-day notification. So, if your tenants do not agree with your new prices, they can just not come for the lease renewal and vacate your premises the day their lease ends. In this case, you have no legal ground for prosecuting them.
As you see, there are so many nuances to consider when dealing with a rent increase. At BSO, we are here to help you with this and others activities. Contract with us for your property management and enjoy your hassle-free landlordship.
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