Tenant-landlord disputes surge amid soaring Dubai rental costs

Scottish expatriate Julie Thom successfully sued her landlord after being unlawfully evicted

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Dubai’s surging property prices – and consequent rental hikes and illegal evictions – are leading to a rise in landlord-tenant legal disputes in courts across the emirate, experts told Al Arabiya English.

The realty market in Dubai saw a rebound in 2022 and 2023, with the emirate’s economy making a strong post-COVID-19 recovery. This resulted in many residents facing steep hikes in rentals, even as there were rising instances of tenants being unlawfully evicted by owners as the latter looked for higher earnings on soaring property prices.

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Now, an increasing number of tenants are looking to sue their former landlords for up to a year’s rent after being forced out of their homes.

Dr Hassan Elhais, a legal consultant at Al Rowaad Advocates, told Al Arabiya English that Dubai Land Department’s Real Estate Regulatory Authority (RERA) is currently handling an influx of complaints filed by tenants against landlords. Al Arabiya English came across examples of owners demanding a 50 per cent hike in rentals from their existing tenants in order to get their contracts renewed or vacate the properties.

The demands by some landlords violate government rent control rules and tenants’ rights.

Rental increases are capped at 20 per cent per year, depending upon changes in market prices in a given area. However, if the landlord and tenant agree to a higher increase in private negotiations, then rent increases can exceed 20 per cent. However, some landlords wanting more have been evicting their tenants to get new ones at inflated prices.

A general view of Dubai Downtown showing world's tallest building Burj Al Khalifa, in Dubai, UAE. (Reuters)
A general view of Dubai Downtown showing world's tallest building Burj Al Khalifa, in Dubai, UAE. (Reuters)

Rita Ayoub, associate at UAE law firm BSA, also told Al Arabiya English that, since the outbreak of COVID-19, the UAE real estate market has experienced an increase in demand, particularly in the Emirate of Dubai.

“Rents have been steadily increasing, and landlords are capitalizing on these favourable market conditions to maximize their return on investment,” she said. “This trend in the real estate market is seen as a positive development for the UAE economy, as landlords are achieving higher rental returns, which attracts more investors to the UAE real estate sector. While at the same time, some landlords are taking advantage of the current situation by increasing the rental value of the properties beyond the RERA Index (a tool outlines the maximum allowable percentage increase in rent when a lease is renewed).”

Some tenants may be willing to go beyond the rental rates prescribed by the RERA Index to avoid moving costs or even paying higher rents for leasing new properties; however, it is undisputed that the considerable increase in rent is presenting challenges for some tenants, which led to an increase in rental disputes, said Ayoub.

“While there are no specific statistics available indicating the exact number of rental cases registered per year or the percentage of increase in such cases, we can confirm a notable increase in the number of clients seeking legal advice on rental disputes.”

During and after the pandemic, disputes pertaining to default in payment in rent were the most common rental disputes encountered, as individuals and companies experienced financial distress, leading to a surge in disputes arising from their inability to meet rent payment obligations.

Post-pandemic, this has changed, said Ayounb.

“More recently, we have seen a significant increase in disputes related to the quantum of the rent during lease renewals, as well as disputes relating to evictions served by landlords to tenants.”

Dubai’s rules for landlords and tenants

RERA has clear rules for landlords and tenants, says Dr Elhais, adding that there are several common complaints currently being handled by judges at rental dispute courts in the emirate – the most common being disputes over rental increases and evictions.
Al Arabiya English attended a RERA hearing and witnessed hundreds of people waiting to be seen by a judge. Many complained about being unlawfully forced to leave their homes.

“Rental contracts in Dubai frequently incorporate clauses permitting annual rent hikes,” Dr Elhais told Al Arabiya English. “Disputes may arise if tenants find rent increases unjustified or if landlords fail to comply with legal requirements for such adjustments.”

He further said: “Eviction is permissible under specific circumstances such as non-payment of rent, lease agreement breaches, sale of property or if the landlord wants to take possession of the property for personal use. Wrongfully evicted tenants can file complaints with RDSC [Rent Disputes Settlement Centre], which will investigate and potentially provide compensation.”

According to the Dubai Land Department (DLD), landlords must provide a minimum of 90 days’ notice regarding any changes to existing rental Ejari tenancy contacts regis-tered with RERA, Dr Elhais said. Changes include breaking the contract or increasing the rent amount. Tenants are within their right to legally refuse a rental increase if this 90 day notice period has not been provided by the landlord.

The tenant can file a case with the RDSC at DLD upon refusing to agree to the new terms of the contract but will have to pay 3.5 per cent of the rental amount to open a dispute. This is capped at $5,450 (Dh20,000).

There are only a handful of reasons landlords can legally evict a tenant. Tenants should also be aware that Dubai landlords who evict tenants through legal notices cannot rent their properties for two years under the emirate’s law which aims to protect tenants and stop landlords from getting people out of their homes just because of rising rental prices.

General view of Dubai's skyline. (WAM)
General view of Dubai's skyline. (WAM)

‘I knew my rights’

Scottish expatriate Julie Thom, 46, told Al Arabiya English that she successfully sued her landlord after being unlawfully evicted in 2022. She was paying $30,000 (Dh110,340) for a two-bedroom apartment in the Vida complex at Emirates Hills. In October 2021, she was served a 12-month notice by her landlord who said his son was moving back from Canada and would need to stay in the property.

Thom, who works in the real estate sector in Dubai, was aware of the RERA rules and regulations, agreed to move out, but said she soon realised that the landlord’s son was not going to use that property.

The notice that he had served also didn’t mention that his son would be moving in – which is one of the conditions stipulated by RERA under which a landlord can ask a tenant to vacate a property.

In March 2022 – at the end of her Ejari-registered tenancy contract, but with six months still to go under the 12-month eviction agreement –Thom told the landlord that if he wanted her to move out, rather than wait till the end of the eviction notice, they could come to a financial agreement if his son was ready to move in. “But he said his son wasn’t ready to move out of Canada yet and that I could stay until the end of the eviction notice, though for an increased rent.”

Under RERA rules, a landlord is not allowed to demand a rental increase after eviction notice has been served. So, Thom refused to pay the increased rent.

Fast-forward to October 2022, to the end of her eviction notice. Thom, who had just undergone a foot surgery and had also lost her grandmother – was forced to move out of the home she loved so much.

When she met her landlord to hand over the keys, she suspected that the landlord had re-rented the property to another tenant.
Two days later, the agent who had helped Thom take that property on rent in the first place, forwarded her a to-let advert for the apartment on rental property website Property Finder.

When it became clear what the landlord was planning to re-rent out the property, Thom got in touch with the RERA representatives in Bur Dubai.

She handed over a sum of money to begin an application for court proceedings and to hand over her proof and was given a date for her first RERA hearing.

Attending her first hearing was “eye-opening” about the sheer number of people in the same boat, said Thom.

“I had to join via a (Microsoft) Teams call. It was mind-blowing hearing all the other cases. There was about 500 other people on the same call all waiting to be heard by a judge.”

Thom said she “quickly realised” that she wanted legal representation. The hearing was held in Arabic – which she doesn’t speak – and her landlord had already hired a legal representee.

“I thought, I have already spent so much money on moving house and on initial court fees, I am not losing because I don’t speak Arabic and I don’t have legal counsel.”

Thom spent a further $4,000 (Dh15,000) hiring a lawyer on a retainer to close out the case. At that point, the lawyer took over as Power of Attorney.

Thom said it was “worth every penny.”

“My lawyer asked me some questions (to be used as evidence) that hadn’t even crossed my mind.”

“He asked me questions such as, ‘what was our view before?’. I said, ‘a golf course’. Then, ‘what is your view now?’. I said, ‘Al Khail road’. Then we worked out what I was paying per square footage before and then for my new apartment. I was paying way more. It hadn’t occurred to me – I just thought I was downsizing. I had never thought to look at how much I was losing, how much more I was paying for a smaller space.”

“He made me realise I was out of a lot of money – such as selling furniture that would no longer fit – as well as significant moving costs.”

Around this time, Thom managed to find out that her landlord had re-rented the property and had filed a new tenancy contract with RERA. The new tenant was paying about $46,000 – a hike of about $16,000 or an increase of 55 percent.

After disputing allegations in court – with her previous landlord attempting to say Thom had been planning to leave the country – she won her compensation case. Thom was awarded the difference between the rent she was paying and the rent the new tenants were paying - $16,000 (Dh60,000) - so the profit the landlord had made by evicting her.

Thom had originally gone for a year’s rent, and appealed the decision for a higher number – which she said was a move her lawyer recommended to “get an appeal in first” before her landlord did so.

The judge’s decision was upheld, and Thom was awarded her payout. She said she had paid out, by that point, about $5,450 in legal and court fees. Together with her moving costs - including new security deposits, agency fees, and the physical cost of moving – Thom said she “recouped what it cost me plus a little change.”

But she would advise anyone in her position to do the same.

“The critical message here is people put it in the ‘too difficult box’ – the court hearing is in Arabic, people think it is too much hard work.”

“But (for change to happen), people need to dig their heels in to stop landlords doing this over and over again.”

General view of Dubai Marina, Dubai, UAE. (Unsplash, Adam Le Sommer)
General view of Dubai Marina, Dubai, UAE. (Unsplash, Adam Le Sommer)

Property prices

Earlier this month, a report from consultancy firm Knight Frank revealed that residential property prices in Dubai have surged by 17 percent in the second quarter, compared to the previous year, making it the 10th consecutive quarter of expansion.

During the period April to June, property prices experienced a 4.8 percent increase over the previous quarter, with villas displaying the most significant leap in value.

According to Knight Frank’s market report, apartment prices in the city have climbed by 21 percent since January 2020, reaching an average of Dh1,290 per square foot currently. In parallel, villa prices have seen a remarkable surge of 51 percent over the same period, averaging Dh1,520 per square foot.

Faisal Durrani, the Partner and Head of Research for Middle East and Africa at Knight Frank, noted that all market indicators continue to point towards further price increases, especially in the villa segment due to a persistent imbalance between supply and demand.

This trend is particularly noticeable in prime locations such as Jumeirah Bay Island, Emirates Hills and Palm Jumeirah, where villa prices have risen by 11.6 percent in the second quarter alone, marking an impressive 125 percent increase since January 2020. Villa prices in other parts of the city are described as “supercharged” and currently stand 5 percent above the peak seen in 2014, Durrani said.

Furthermore, even more affordable locations in the emirate are witnessing a robust price growth. Notably, Dubai Hills Estate has experienced a 24 percent increase in villa values over the past year, representing the sharpest growth rate in the city.

Also, in July, property consultancy CBRE said Dubai residential property prices in the year to June 30 rose at their fastest in almost a decade, climbing by 16.9 percent, while average rents jumped by 22.8 percent.

A general view of the Burj Khalifa and Downtown Dubai at sunset.( Unsplash, Alla Rome)
A general view of the Burj Khalifa and Downtown Dubai at sunset.( Unsplash, Alla Rome)

Know your rights

Ayoub said, given that the real estate market is on the rise in Dubai, “it goes without saying that landlords will endeavor to grasp this opportunity to maximize their investment, by either serving eviction notices upon their tenants or attempting to increase the rent to the maximum extent possible.”

“What tenants must know to safeguard their legal rights is that rental hikes in the market is not a reason for eviction. In fact, if the landlord wishes to increase the rent, which is considered an amendment to the contract, the landlord must address a written request to the tenant at least 90 days prior to the expiry of the lease agreement. To determine if the rental value is subject to an increase both the landlord and the tenant can verify the rental market rates in the relevant area from the RERA Index or the Dubai Land Department’s (“DLD”) paid service of rental evaluation.”

Dr Elhais also said tenants in Dubai have specific rights when faced with eviction, adding that the eviction process must adhere to the legal framework.

This includes a proper notice. “Landlords are required to provide tenants with proper notice before proceeding with an eviction. The notice period varies based on the reason for eviction and the terms of the tenancy contract.”

Landlords must also serve a valid reason for eviction.

“Landlords can only evict tenants for specific valid reasons, as outlined in the law,” said Dr Elhais. “These reasons may include non-payment of rent, breach of the lease agreement, the need for property for personal use by the landlord or their close relatives, major maintenance or renovation work, and certain other specified circumstances.”

Dr Elhais said, to be on the right side of the law, landlords must provide documented evidence to support the reason for eviction.

“For example, if eviction is due to non-payment of rent, landlords must provide proof of non-payment and the corresponding notices sent to the tenant. If tenants believe that the eviction is unjust or not in line with the law, they have the right to contest the eviction through RDSC.

Entitlement for compensation

Dr Elhais said if an eviction is deemed wrongful by RDSC, tenants may be entitled to compensation for damages, inconvenience and other related costs.

They are also not obliged to leave the property until the eviction process is completed.

“Until the eviction process is completed, tenants have the right to continue residing in the property and enjoying all the benefits of the tenancy contract,” Dr Elhais said.

“Landlords cannot forcefully remove tenants or take actions that hinder their use of the property during this time. (Also) if tenants have fulfilled their contractual obligations and wish to renew their lease, landlords cannot evict them without a valid reason and proper notice,” he added.

Dubai Hills estate (Supplied)
Dubai Hills estate (Supplied)

Law on evictions

According to Dubai Law No 33/2008, a landlord may seek a tenant’s eviction from the property before the expiry of the lease contract only if the tenant fails to pay the rent or any part thereof within thirty (30) days from the date of service of a notice on the tenant by the landlord requesting the payment – unless otherwise agreed by the parties – if a tenant sublets the property or part of the property without obtaining the landlord’s written approval if the tenant uses – or allows others – to use the property for illegal purposes or the tenant makes any change to the property that endangers its safety in a manner that makes it impossible to restore the property to its original state or causes damage as a result of deliberate acts or gross negligence.

A tenant is also not allowed to use a property for a purpose other than that for which it is leased, or in a manner that violates the planning, construction and land use regulations in force in the emirate.

A landlord is allowed to evict a tenant if the property is likely to collapse, provided the landlord proves this by way of a technical report issued or certified by Dubai Municipality or if government entities decide that the demolition and reconstruction of the property are mandated by urban development requirements in the emirate. If so, the landlord must serve a notice on the tenant through a notary public or by registered mail.

Upon expiry of the lease contract, the owner can only seek eviction of the property if he/she wishes to demolish and reconstruct it or to add any new structures that would prevent the tenant from using the property, the property is in a condition that requires restoration or comprehensive maintenance that cannot be carried out while the tenant occupies the property (which requires supporting documents from Dubai Municipality) and if the owner wants to use the property for his/her own use or wishes to sell the property.

If a tenant believes he or she is facing an unlawful eviction or if his or her rights are being violated, then he or she can file a complaint with the Rental Disputes Centre (RDC) at Dubai Land Department.

Typically, it costs 3.5 per cent of the annual rent of a property to open a case with RDC in Dubai, up to a maximum of $5,445 and involves a minimum fee of $136. Administration costs come to around $87.

Filing a case

“Tenants should gather evidence, such as copies of the lease agreement, communication with the landlord, notices served and any other relevant document to support their case,” advised Dr Elhais.

Tenants may be required to pay a filing fee when submitting a complaint to RDC. The fee amount can vary and depends on the nature of the dispute. Tenants can choose to represent themselves or hire legal representation to guide them through the process.

If RDC determines that the eviction was unlawful or that the tenant’s rights were violated, it may order compensation for any damages suffered by the tenant, such as relocation costs and other related expenses.

If the tenant has paid rent beyond the eviction date, the landlord might be required to refund the unused portion of the rent.

Ayoub also said,throughout the trial, the tenant must prove to the RDC that they were indeed unlawfully evicted; this would include presenting documentation evidencing that another tenant is residing in the property.

“The tenants must also present legitimate and tangible evidence to the RDC about the financial damages they have sustained as a result of the unlawful eviction. The common evidence deemed as valid and acceptable by the RDC includes, but is not limited to, moving costs and difference in the rental amount incurred by the tenant in case they had to rent out another property for a higher rental value.”

“In cases where the tenant fulfils the evidence requirements, the RDC will most likely indemnify the tenant for the amount of actual financial damages they were able to prove by way of supporting documentation.”

Steep property hikes

Earlier this year, Harry Tregoning of Dubai-based property company Tregoning Property, told Al Arabiya English that rental increases are emirate-wide, but the steep hikes are in exclusive communities and in particular with villas and townhouses.

“Rents are increasing in all areas, but it is at the high end that we are seeing the highest increases,” he said. “We know of many properties that are renting now for double their pre-pandemic prices,” Tregoning said.

“Villas definitely saw the increases start first as residents looked for space and gardens during the pandemic. Communities such as Palm Jumeirah and District One seem to have seen the highest rise in rents, with many doubling or more. Increases in apartment rents followed a similar trajectory as those of the villas,” Tregoning said.

Other rental disputes

Other ongoing disputes in RERA include disagreements over security deposits.

“Landlords often seek security deposits from tenants as insurance against potential damages or unpaid rent, (but) disputes can arise when tenants believe their security deposit has been unfairly withheld by the landlord at the end of the lease,” said Dr Elhais.

“Common disputes include disagreements over property damage assessment, wear-and-tear evaluation and differences of opinion on reasonable deductions from the security deposit.”

Some other common complaints involve maintenance disputes – which occur when landlords neglect necessary repair work or upkeep of the property – and lease agreement disputes, which arise from disagreements over the lease terms.

Dr Elhais said RERA plays a crucial role in regulating and managing the real estate market in the emirate. “RERA’s primary role is to regulate, control and supervise various aspects of the real estate market. It ensures that all parties involved in the real estate sector adhere to the regulations and legislations in place,” he further said.

The RERA rental increase calculator is a handy tool that helps landlords and tenants determine legitimate rental increases based on market conditions and regulations. This mechanism prevents arbitrary and unfair rent hikes and ensures a balanced approach to rental adjustments.

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