Help! I'm stuck with rental 40% below market value!

[Jim International City]

Can someone please help clarify something for me.

I let my 2 International City apartments out last January on a 1 year contract to a company who then tenanted them. However, the rent is now 40% below market value and when the contract ran out I intended to readvertise the properties.

Now my agents tell me that according to Dubai property law, we cannot get new tenants, as despite the contract running out in January, we can be taken to court by our tenants (the owners always lose) if we don't renew the contract, and I can only then up the rent by 5% in the 2nd year of the contract. The agents then said we're tied with tenants until the 4th year before we can get market value.

Now I know the law was brought in to stop unscruplous landlords, but this seems incredibly unfair. Can someone please advise if the above is correct.

 

[georgihh]

Can someone please help clarify something for me.

I let my 2 International City apartments out last January on a 1 year contract to a company who then tenanted them. However, the rent is now 40% below market value and when the contract ran out I intended to readvertise the properties.

Now my agents tell me that according to Dubai property law, we cannot get new tenants, as despite the contract running out in January, we can be taken to court by our tenants (the owners always lose) if we don't renew the contract, and I can only then up the rent by 5% in the 2nd year of the contract. The agents then said we're tied with tenants until the 4th year before we can get market value.

Now I know the law was brought in to stop unscruplous landlords, but this seems incredibly unfair. Can someone please advise if the above is correct.

Just tell your agent to vacate the flat as you are going to stay in it from now on.
This is the only chance to get your flat back.
Tough if you are not in Dubai is a bit difficult

 

[kennyhubbard]

Hi Jim,

I understand that the government here will be releasing a rental list in the near future giving giudelines on what rents may be charged in what areas.

Based on this, you may increase the rents of your apartments if it is in line with the stated market rates.

Furthermore, you can alway increase the rent anyway, and then let the tenant take it to the rental committee. It will cost them 5% and if your rents are indeed below market value(you may have to prove this),then the committee may well rule in your favour.

Not sure exactly when it will be released but I am sure it will be in the near future.

Regards

Kenny

 

[nabeelc]

awww, too bad for you.

leave the tenants in peace.

 

[Wannaberich]

Jim what you said is right.Its unfair on the landlord.The only way to get them out is to give notice that you will be living there(6 months notice I think).However,you would actually have to live there cos if you dont I believe DEWA will disconnect you.Personally I wouldnt take that option.
Maybe you could offer the tenant a refund on part of the rent if he leaves?Although what you gain by re-renting at a higher price you lose some by giving a refund,at least when you sign your new tenant for the second year you will be gaining.
Another option is to 'lose him' in the desert.

 

[kennyhubbard]

Hi Dobuy,

The only catch with telling the tenant you gonna live there is that you may not "change" your mind and rent it out for at least 1 year.

If the tenant finds out that this is what you have done, he can approach the rent committe for compensation.

Regards

Kenny

 

[Wannaberich]

Hi Dobuy,

The only catch with telling the tenant you gonna live there is that you may not "change" your mind and rent it out for at least 1 year.

If the tenant finds out that this is what you have done, he can approach the rent committe for compensation.

Regards

Kenny

I know Kenny,thats why this isnt really an option.

 

[Roshan]

Hi Dobuy,

The only catch with telling the tenant you gonna live there is that you may not "change" your mind and rent it out for at least 1 year.

If the tenant finds out that this is what you have done, he can approach the rent committe for compensation.

Regards

Kenny

How about keeping the flat vacant for a month on the pretext of relocating. Shifting sometimes takes time. By that time the tenant would have found other alternatives.

Just an idea. Don't know if it's practical.

Regards

Roshan