Being an investor also means becoming a landlord… and, as many of you know this is not always the easiest job. We have all heard about the nightmare tenants who don’t pay their rent, trash apartments, or even worse, do not ever want to leave your investment properties.
The legislation in most countries across the world is in favour of tenants, and there is a good reason for it, however, it also comes with a price. Looking at the United Kingdom in particular, over the years the Government introduced number of laws in favour of tenants. Whilst, we all know this is to help the good tenants, it also take the toll on any landlord when they are dealing with an odd bad tenant.
In this articles we will go over some of the rights and obligations of tenants and landlords in Dubai. You’ll be surprised, it seems that the practices are in your favour here.
Tenant Obligations in Dubai
Utilities
Upon signing a Tenancy Agreement and registering it with Dubai Land Department, Tenants must register with DEWA to access utilities in the dwelling. This is solely tenant’s responsibility to do so and landlords do not get involved with this step unless previous DEWA account was not cancelled by a tenant, which is unlikely. DEWA deals with all the billing, and debt is not transferred onto the landlord should they fall behind on payments.
It is also resident’s responsibility to cover the costs associated with registering with DEWA, including paying the deposit (AED 2,000 for apartments, and AED 4,000 for villas).
Cancelling Tenancy
It is tenant’s responsibility to cancel Tenancy with Dubai Land Department to ensure all liabilities are halted from the day they’re vacating the premisses. Unless this is completed the new tenant will not be able to register their tenancy; hence, will not be able to register with DEWA etc. In a rare instance when tenants do not cancel their tenancy, landlord can do so through an app online.
Upkeep
It is tenant’s responsibility to upkeep the dwelling to a satisfactory standard, this includes covering maintenance regimes on items such as Air Conditioning units, water tanks etc. All maintenance issues below AED 500 must also be covered by tenants.
Landlord Rights & Obligations in Dubai
Registering Tenancy
Whilst under law, it is landlord’s responsibility to register any new tenancy with Dubai Land Department, it is a common practice that tenant’s do so on their own and cover the administration costs associated with this.
Furnishing
Majority of the units available on the market are offered unfurnished, this means that tenants only receive a shell of an apartments with cabinetry in the kitchen. Landlords have no obligation to provide any white goods or other furnishing in the property. This means that fit out costs and upkeep are minimised for the landlords.
Maintenance
If you own an apartment portfolio, maintenance will be usually provided within the development and covered under the service charge. Moreover, tenants are responsible for any and all maintenance under AED 500 as well as general Planned Preventative Maintenance, such as fire prevention, Air Conditioning Maintenance, Window Cleans etc. If you own villas, tenants are responsible for the upkeep of gardens, garage shutters etc unless otherwise specified in the Tenancy Agreement.
Whilst it is not a standard to have a property managed in Dubai, it is strongly advised that landlords implement upkeep strategy for all relevant items, which can be added as a premium onto a rent. Managed properties are considered premium in Dubai.
Home Insurance
Under current legislation, insurance policy is not a requirement for the landlord, from experience, I strongly advise all landlords to purchase a policy to ensure any and all damages and incidents can be covered to ensure there are no unexpected costs to be accrued.
Right to repossess the property
Repossession rights are limited in Dubai, this will be expanded a little more further down in Evicting Your Tenants section.
Tenancy Renewals
Existing Tenants have the automatic right to renew the Tenancy at the end of the term, this means, the landlord is unable to put the dwelling back on the market unless 3-months notice is served by the tenant at the end of the Term.
Rental Increases
Landlord has the right to increase rent at tenancy renewal in line with RERA regulations. This means if market soars in the period of the Tenancy Term you are unable to increase the rent in line with the current rates, and landlords must follow specified guidelines under Dubai Land Department laws.
The rent calculator is available here. But if you’re unsure about what to do, speak to your trusted Real Estate Broker to seek advice or contact me to discuss your questions.
Evicting your tenants
In the UK, every landlord has heard of Section 21 and Section 8. The first offers an opportunity to end the tenancy at the end of the term or in line with a break clause included in the Tenancy Agreement, the latter, offers an opportunity to evict tenants due to significant breaches to the Tenancy. Unlike these practices in the UK, under Dubai Laws, Landlord can only serve 1 type of Eviction Notice to the tenants.
Tenants here are also protected under Ejari, and landlord can serve 12-months Notice to Evict based on one of the following circumstances:
- Landlord plans on moving in to the dwelling;
- Landlord plans on selling the property;
- Landlord plans on performing major refurbishment in the dwelling.
Some of you may be scared now, thinking of all incidents you had to deal with when investing back home. But, we need to remember that Dubai has strict modesty and public obedience laws. A lot of what is considered acceptable in the West, is prohibited in the UAE. It is highly unlikely that your tenants will:
- Grow illegal substances in your property and if they do, the Police will take care of it immediately;
- Act against Public Order laws, and Police will get involved if noise or excessive drinking is reported;
- Damage your property extensively as it is against the law;
- And the list goes on…
Law Enforcement’s effectiveness in Dubai is second to none and any breaches to the conduct are resolved almost immediately. This is why Dubai is considered to be one of the safest places in the world to live.
Rent Payments and chasing debt
Rental payments in Dubai are still made with a cheque, and tenants are expected to present Personal Cheques covering all rental payments at the beginning of the tenancy. Landlords across Dubai are still hesitant to accept Bank Transfers as a mode of payment, and this is due to the fact that cheques provide a form of security. It is actually against the law for a cheque to bounce, and if it bounced 3 times, you have the right to report it to the Police, and this will be investigated as a criminal offence. As a result, tenants can be punished to prison for issuing cheques that can’t be paid. More on this topic in another article.
It is worth mentioning that most of the rents are often paid in 1 cheque, meaning, the landlord receives the entire annual rent at the beginning of the Tenancy Term.
Dubai is considering implementation of Direct Debits as a form of payment for rents, however, more information is to be released on this by Dubai Land Department.
To conclude…
Speaking from experience of overseeing vast number of dwelling in the United Kingdom, the costs associated with being a landlord in Dubai are marginal compared to Europe. Tenants bare majority of the costs associated with the tenancy and maintenance.
Moreover, it is important to note that over 80% of the population of Dubai are immigrants, depending on visas, and any breaches to the tenancy can adversely affect their rights to remain in the UAE. For this reason, most of residents of the UAE are following the letter of law.
And, if you are ever in doubt about what to do with difficult tenants, feel free to reach out to me to discuss your options.