UAE is a land of opportunities and a large number of expats come here every year. With this huge inflow, the rental market of the UAE gained special significance as new constructions are undertaken and the existing properties are rented out.
The tenancy laws in UAE governs all the rights, responsibilities, and obligations between the landowner and the tenant. The general principles relating to all the tenancy matters are provided in UAE Federal Law No. 5/1985 (UAE Civil Code). Though all the Emirates also have their respective tenancy laws, they are quite similar and follow the principles provided under the UAE Civil Code. The legal principles are further amplified by the tenancy contract between the parties.
Highlights of the UAE Tenancy Laws
In UAE, it is mandatory to have a written tenancy agreement and it must be registered with Real Estate Regulatory Agency (RERA) through their Ezari Service. All the important terms and conditions must be incorporated in the agreement.
Before occupying the rental property, the tenant needs to remit a security deposit equivalent to 5% of the annual rent. Further, an additional deposit, ranging between 1000-2000 AED, needs to be remitted before the electricity and water provider. However, this security amount is refunded after the termination or expiration of the contract. In some Emirates, the tenants are also subject to the municipal tax charged on the leased property.
In UAE, the rent is normally paid in advance for the upcoming year in the form of cash, cheque, or draft. However, if the tenancy agreement is silent on it, the rent for the year shall be paid in 4 quarterly installments in advance.
One of the special features of UAE Tenancy Law is that the Landlord can’t increase the rent before the end of 2 years, from the date of formation of contract. After that period, the rent can be increased, but it mainly depends upon the current market rent of the property. If the current rent is less than 10% of the similar units in Dubai, the rent shall not be increased. If the current rent is between 11 and 20% less than those of similar units in the Emirate, the landlord can increase rent up to 5%.
If the landlord wants to alter or modify the tenancy agreement, he shall intimate the other party at least 90 days before the expiration of contract. Further, the law also prohibits the unilateral termination of the tenancy agreement.
In case of premature termination, a 3 months notice must be served to the other party. The landlord can ask for the eviction of the leased property on the following grounds-
1.The tenant hasn’t paid the rent even after continuous reminders by the landlord.
- The tenant sublease the property without the tenant’s consent.
- The leased property was used for some immoral or illegal purposes.
- The tenant breached the tenancy agreement.
In UAE Tenancy laws, if the tenant continues to live on the property even after the expired period and the landlord doesn’t object to it, the tenancy agreement will be renewed for the next year.
The tenancy agreement doesn’t expire on the death of either of the parties to the contract. The contract is transferred to their legal heirs, and if they want to terminate it, only then, the contract will cease to have effect.
All the disputes relating to tenancy are dealt with by the Rent Committee. The committee only initiates action when either of the parties formally files a complaint about it. The complainant also needs to deposit 3.5% of the annual rent as a fee to the rent committee. However, the cost of litigation will be borne by the losing party, and all the expenses are settled accordingly.
A tenancy agreement is a complex document that needs deep analysis and consultation. So, before entering into a tenancy agreement, it is highly advisable to seek legal assistance.