“The desire not to renew the contract” is a means of pressure to increase the rental value

Tenants said that some real estate management companies take advantage of the expiration of the residential unit contract to raise the rental value by a certain percentage, by sending notices of “the landlord’s unwillingness to renew the rental contract.”

They confirmed to Emirates Today that they had recently received notices not to renew their housing contracts, without giving reasons from the real estate management offices in which they live. When communicating with her, they were given a choice between leaving the residential unit, or renewing with rental values ​​exceeding the legally specified amount.

Two lawyers believed that this behavior is considered an abuse of the right, because the notice is not used to achieve its original purpose, which is the real desire not to renew, but rather as a means of pressure to force the tenant to give up explicit legal protection, pointing out that protecting the tenant from exaggerated increases loses its effectiveness if it is circumvented by using “notices” as a negotiating tool to increase the rental value.

For their part, two real estate agents said that the landlord does not have the right to evict the tenant simply because he wants to increase the rent. They reviewed to Emirates Today the cases specified by the law for eviction, stressing that the legislator in the UAE carefully regulated the rental relationship between the landlord and the tenant, and that the law also stipulates a specific protection period during which the landlord may not request an increase in the rent upon renewing the contract.

On the other hand, an official in a real estate leasing office said that the existence of a gap between the rental value paid by the old tenant compared to his new counterpart, prompted some landlords to resort to the right granted to them by law, which is not to renew the lease contract.

Request and recovery

In detail, tenants said that some real estate management companies are taking advantage of the expiration of the residential unit contract, to raise the rental value by a percentage higher than the legally prescribed amount, as they send notices of the landlord’s unwillingness to renew the rental contract.

An official in a real estate leasing office, Sayed Muhammad, said: “There is a great demand for housing in many areas characterized by advanced infrastructure, great facilities for living and quality of life, which has contributed to a real estate recovery in the market, and an increasing demand for residential units, and thus an increase in rental values.”

He added: “This shift in market prices created a gap between the rental value paid by the old tenant compared to his new counterpart, which prompted some landlords to resort to the right granted to them by the law, which is not to renew the lease contract, on the condition of notifying the tenant within the period specified by the law, which puts the tenant between two options: either eviction, or negotiating with the landlord the new rental value, in line with market prices.”

He stressed that “this method cannot be generalized to all landlords, because there are many of them who adhere to the legal percentage of the increase, taking into account the situation of the families who have resided with them for years.”

Abuse of the right

For his part, lawyer Ali Musabih said, “The law is considered the primary reference for every dispute between the two parties, and it grants jurisdiction over disputes to the rental dispute settlement committees in the Judicial Department.”

He added: “There are legal texts that regulate renewal and notification, including an article that stipulates that (the lease contract is implicitly renewed under the same conditions, if the tenant continues to occupy the leased property without objection from the landlord, unless one of the two parties notifies the other of his unwillingness to renew before the expiration of the period),” pointing out that, according to practical application, it has become obligatory for the landlord to notify the tenant at least two months in advance in residential contracts.

He continued: “Although the law allows the owner the right not to renew at the end of the contract term and without obligating him to state a reason, this right is not absolute, but must be exercised within the framework of good faith, as the Federal Civil Law established the principle (non-arbitrary use of the right), which is a general principle that punishes any party that uses a legitimate right on its face to achieve an illegal goal in its essence. Here the main problem arises, when the real goal of the notification is not non-renewal, but rather to pressure the tenant to accept an increase that exceeds the imposed legal limit.”

He explained, “The most common problem is that some landlords send their tenants a legal notice of their unwillingness to renew, and then they make side or informal communications with the understanding that the landlord may withdraw the notice, provided that the tenant accepts a significant increase in rent, exceeding the 5% rate approved by local legislation.”

Musabih considered that this behavior is essentially an abuse of the right, because the notice here is not used to achieve its original purpose (the real desire not to renew), but rather as a means of pressure to force the tenant to give up explicit legal protection.

He added: “In the face of this picture, the tenant is not without protection, as he can first adhere to his legal right to renew according to the rate of increase specified by law, and reject any increase that exceeds the permissible limit, especially if the notice came in the context of a later negotiation aimed at imposing new conditions that are not consistent with the law. The tenant can also keep all correspondence that proves that the landlord is using the notice as a means of pressure, whether via e-mail, phone messages, or via any means of communication that complies with the legal rules of evidence.”

He continued: “If the landlord insists on not renewing as a means of imposing the increase, the tenant has the right to resort to the Rental Disputes Resolution Committee and request the renewal of the contract according to the legal increase only, along with presenting the notice and the resulting pressures as an abuse of the right. The committee, in accordance with its legal powers, has the right to decide whether the notification was used for an illegal purpose, and to consider it invalid in terms of its effects, or to oblige the renewal of the contract at the legal price, and it can even award compensation if it is proven that the tenant suffered damage as a result of an abusive practice.

Musabih stressed that the legal ceiling for the increase (5% in some emirates, for example) is an important step to control the market and protect the tenant from exaggerated increases, but this protection loses its effectiveness if it is circumvented by using “notifications” as a negotiating tool, which makes the role of rent committees essential in restoring balance to the contractual relationship, and preventing any attempt to turn legal rights into means of pressure.

He said: “In the end, the main goal of the law remains to achieve a balance between the owner’s right to manage his property and obtain a fair return, and the tenant’s right to residential stability and not be exposed to increases beyond his ability. By adhering to the legal texts and using proper litigation channels, the tenant can protect his legal position and ensure that he is not subject to any increase that exceeds the permissible ceiling, while the law maintains a fair and balanced rental regulation framework.”

Controls and guarantees

For his part, lawyer Imad Al-Din Othman said, “Rent Law No. 20 of 2006 and its amendments established many controls and guarantees with the aim of achieving the interests of both parties to the rental relationship. It legislated the inability to legally extend the lease contract at the expiration of its term against the will of the lessor, to protect him, and established foundations and controls for the percentages of annual legal increases that he cannot exceed, to protect the tenant. However, the realistic application of the controls that the law sought to preserve The interests of both parties to the rental relationship – especially in the recent period – showed trickery by some landlords to reach increases in the rental value that exceeded the maximum percentage permitted by law, as they resorted to notifying the tenant – during the legal period – of their unwillingness to renew the lease at the end of its term, and the real desire is to pressure the tenant to accept an increase in the rental value, in excess of the maximum permitted by law.

Othman added: “I suggest that the legislator intervene to develop solutions to such practices, although we believe that it is possible for the tenant – if he is forced, due to his personal circumstances, to submit to the landlord’s desire for an exaggerated increase – to resort to the Rental Disputes Settlement Committee, by requesting a reduction in the rental value due to it being exaggerated. It is permissible for the judge, if he sees a basis for this, to actually order a reduction in the exaggerated value, although we believe that the most appropriate and best way to achieve the interest of both parties to the relationship, and to stabilize the rental conditions in society, is for the legislator to intervene to establish the necessary controls, to prevent the lessors from being deceived by expressing a desire not to renew the contract to the tenant for the purpose of imposing an exaggerated increase in the rent that is not commensurate with the reality of the conditions on the ground.

Eviction cases

In addition, Ismail Al Hammadi, a real estate development consultant, founder and CEO of Biznet Consulting, which specializes in consulting on the management and development of real estate projects in Dubai, said, “The landlord does not have the right to evict the tenant simply because he wants to increase the rent.”

He added to Emirates Today: “According to the laws regulating the rental relationship in Dubai and the rest of the Emirates, which clearly specified the reasons for eviction, which include: sale, the owner’s personal residence, demolition and rebuilding, or changing the nature of the use of the property according to specific controls.”

Al Hammadi confirmed that Law No. (33) of 2008 amending some provisions of Law No. (26) of 2007 regulating the relationship between landlords and tenants of real estate in the Emirate of Dubai, for example, clearly specified cases of eviction due to non-payment of rent within 30 days of official notification, subletting without written consent from the owner, and using the property for an illegal purpose or in violation of public order.

He continued: “Eviction cases also included leaving the commercial store unoccupied for a period of 30 consecutive days, or 90 intermittent days annually if the property is commercial, causing serious damage or changes that affect the safety of the property, using the property for a purpose other than the agreed upon purpose or in violation of the regulations, proving that the property is on the verge of collapse with an approved technical report, violating the terms of the contract or the law, and not correcting it within 30 days of notification.”

He said: “Eviction cases also include demolition and rebuilding of the property for urban development purposes, comprehensive restoration or maintenance that cannot be carried out in the presence of the tenant, the desire of the owner or one of his first-degree relatives to live in the absence of a suitable alternative, or the desire of the owner to sell the property. The tenant must be notified at least 12 months before the date of eviction, via a notary public or registered mail.”

Al-Hammadi stressed that eviction for the purposes of re-renting at a higher price is not considered a legitimate reason, and can be appealed and a complaint filed before the rental dispute resolution committees, pointing out that the rent index represents the only official reference for determining increase rates, and any attempt to exceed these rates, whether by imposing direct increases or pressuring the tenant to evict, is considered a clear regulatory violation.

Al-Hammadi stressed that the official rental index primarily protects tenants from the fraud of some landlords, and that real estate law in general, and the rental law in particular, was created to protect the rights of both parties to the rental relationship, and guarantees the tenant his right to the property, and also guarantees the owner his right as well, according to regular conditions stipulated in the contract, and each party must be aware of their rights. He also warned the tenant not to sign any document without legal review, and to keep a copy of the eviction notice, and to verify the approved increase rates through the official rent index, while resorting to the competent authorities in the event of any violations.

Achieve balance

In turn, the CEO of Bezlink Real Estate Company, Ismail Al Hosani, said that the legislator in the UAE has carefully regulated the rental relationship between the landlord and the tenant, specifying the rights and duties of each party, pointing out that this regulation aims to achieve a balance between the landlord’s interests in collecting the rental value, and ensuring the tenant’s protection from any unjustified increases during a specific period of the contract.

Regarding the increase in the rental value, Al Hosani explained that “the law stipulates a specific protection period during which the landlord is not permitted to request a rent increase when renewing the contract,” stressing that in order to benefit from this legal protection, the tenant must adhere to several conditions, which are regular payment of rent without delay, non-return of rent checks, and commitment to renew the contract within the specified dates. He said: “This is what guarantees the tenant continued legal protection, and that he is not exposed to any risks related to eviction or additional unjustified claims.”

Al Hosani continued: “The landlord has the right to request a rent increase in accordance with what is determined by the law. For example, in the Emirate of Sharjah, the landlord can request a rent increase when renewing the contract after three years have passed from the first contract, that is, in the fourth year, and after the first increase, the landlord may request a new increase after two years, that is, in the sixth year of the contract.”

He added: “If the tenant rejects the proposed increase rate, he has the right to refrain from paying the excess amount, but he must take quick legal action by opening a rental dispute file one month before the end of the lease contract, which allows the tenant to benefit from legal protection without running the risk of eviction.”

He explained that the tenant requests, in the memorandum of dispute, to settle the rental value before the competent judge, and deposits the rent amount in the court’s treasury during the period of consideration of the case, and then the judge reviews the request, and may issue a decision to reduce the rental value, or reach a fair settlement between the two parties, in a way that guarantees the rights of the landlord and the tenant, and preserves the stability of the rental relationship.

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Rental dispute resolution committees

Rental dispute resolution committees are responsible for examining – as a matter of urgency – disputes arising from the rental relationship between the landlord and the tenant, and deciding on requests for temporary measures submitted by either party to the contract, in accordance with Law No. 20 of 2006 regulating the relationship between landlords and tenants in the Emirate of Abu Dhabi.

Each rental dispute settlement committee shall be formed under the chairmanship of a judge and the membership of two judges. The number of judges in each committee shall not be less than three, and the committees shall be subordinate to the Judicial Department.