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The tenancy laws in the emirate of Dubai are subject to the rules and regulations of the Real Estate Regulatory Agency (RERA), which constitutes the regulatory arm of the Dubai Land Department (DLD). Speaking of tenancy laws in the UAE, one would often come across tenancy terms such as ‘EJARI’. EJARI is an online program developed by RERA for recording tenancy contracts for all property types in Dubai, i.e. both commercial and residential properties. The EJARI system has been created pursuant to Law no. 26 of 2007 regulating the Relationship between Landlords and Tenants in the Emirate of Dubai and its various amendments (‘Tenancy Law’). The EJARI system has been enforced to bring about all parties connected to the property lease and management companies, including companies that own and manage properties and to ensure a safe and encouraging environment for both investors and tenants alike.
Pursuant to the Tenancy law, it is mandatory to effect and register tenancy contracts through the EJARI system. The Tenancy Law defines a Lease or tenancy Contact as, ‘Lease Contract: A contract pursuant to which a Landlord is bound to allow a Tenant to use Real Property for a specific purpose, over a specific term, and in return for specific consideration. There are always continuous improvement and innovation be effected and in furtherance to these objectives, there are new changes proposed for the coming year.
New amendments and updates are being proposed to be affected in Dubai. The new amendments seek to bring in a fixity in terms of rental increase. The New amendment seeks to keep rents fixed for a three-year term, stating that landlords may not increase the rent until the said term of three years’ elapses, starting from the date of effecting the tenancy contract between the parties.
Another change sought to be brought in by the new law includes provisions to bring in the possibility of directly resorting to the execution judge in case of rental defaults and addressing further such requirements in order to provide an enhanced enforcement mechanism.
The new amendments are being proposed for a variety of reasons, such as to encourage and stimulate investments in real estate properties as the Dubai rental sector constitutes one of the leading and dominant sections of the real estate market. Another objective has been to bring instability in terms of constant rental increases; the new amendment proposes to provide relief to tenants who will not be required to constantly change their rental accommodation due to annual rental increase. With the new law, the rental increase can be prosed only on completion of a three-year term.
The statements issued by RERA also state that, quite similar to the existing procedures, rental increase upon completion of a three-year term will be as per the RERA average rental calculation pursuant to the RERA rental index calculator, and this might proceed as an automatic step without the need for notification. In all ways, the new provisions will be bringing in enhanced procedures and more ease of transaction.