Rera General Laws - Real Estate Regulatory Authority

Introduction to the Real Estate Regulatory Agency (RERA) and General Laws

About RERA

The setting up of Dubai Real Estate Regulatory Agency (RERA) was decreed by His Highness Sheikh Mohammed Bin Rashid Al-Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai, on July 31 2007 as a service agency under the Dubai Land Department to regulate Dubai’s Real Estate sector. RERA is a government entity, with its own financial and administrative independence and vested with full legal authority to regulate the real estate sector.

RERA’s main objective is to establish the foundation for a globally attractive real estate sector that satisfies and guarantees all stakeholders the right and expectations.

RERA has four main areas of operation, which include Policy and Strategy Development, Regulation & Registration, Research & Studies and Programmes & Projects.

Law No26, 2007- Concerning Regulating the Relation between Landlords and Tenants

Introduction to Law No.26 of 2007

• Issued by Sheikh Mohammed Bin Rashid Al- Maktoum, Ruler of Dubai to Regulate Relationship between Landlords and Tenants in the Emirate of Dubai
• This law shall be applicable to leased properties in the Emirate including open and agricultural lands, excluding hotels and free accommodation provided by natural or judicial persons to their employees.

Introduction to Lease Agreement

1. The tenancy contract should be written
2. Signed by tenant and landlord
3. Describing property details
4. Include the purpose of tenancy
5. Name of landlord and tenant
6. No. And type of land, name of the area
7. Period of the tenancy
8. Rent Value
9. Method of payment

10. Registered with the Agency (RERA) after submitting the following documents (Agreement signed in 2008 and before):

• The original lease agreement and copy of this agreement
• Passport copy of the tenant

Note; Lease Agreement signed in 2009 should be registered by the landlord on “Ejari software”

Sub-leasing the Leased Property under Law No.26 of 2007

• Tenant shall not sublet or assign the leased premises to a third party for any reason whatsoever without the written consent of the Lease holder
• Sublease contract between tenant and subtenant shall expire by expiry of tenancy contract between landlord and tenant, unless landlord expressly agrees on the extension of sublease contract period.

Rent Value Decree No.1, 2009

Except agreed on different notice period with tenant, the landlord should not increase or decrease the rent value or amend any of tenancy contract conditions unless 90 days notice served to the tenant, however; for tenant who leased property units in 2008, if the rent in 2008 was equal to or 25% or less below the average similar rent.

The maximum rent increase percentage of property units in the year 2009 for tenants who were leasing such units in 2008 shall be as follows:

• If the rent value in 2008 was 26% to 35% less than the average similar rent, the maximum rent increase shall be equal to 5% of such value.
• If the rent value in 2008 was 36% to 45% less than the average similar rent, the maximum rent increase shall be equal to 10% of such value.
• If the rent value in 2008 was 46% to 55% less than the average similar rent, the maximum rent increase shall be equal to 15% of such value.
• If the rent value in 2008 was less than 56% of the average similar rent, the maximum rent increase shall be equal to 20% of such value.

Tenant shall pay rent value as agreed with landlord. However if such agreement is not there and cannot be proved, then the rent value must be the same as paid for similar property in the market

The similar rent value of the property unit means pursuant to “The Rent Index of the Emirate of Dubai” applicable on the date of renewing the tenancy contract and the Real Estate Regulatory Agency shall review and update the Rent Index of the Emirate of Dubai periodically.

Landlord Obligations

• Landlords shall be committed to handover the premises in good condition that enables tenant to obtain the benefit subject of the contract. However it could be agreed to lease uncompleted property provided that the tenant completes the same and prepares it in good condition to obtain the requested benefit, and the parties shall decide the party who will be liable for the costs of this completion.
• Landlord shall during validity of contract, be liable for handling maintenance of property and shall rectify any defects or faults that affect tenant’s targeted benefit from the premises, unless the two parties agree otherwise.
• Landlord shall not make any change in the premises, it’s utilities or ancillaries affecting the intend benefit, and landlord shall be liable for such changes caused by him, or by any person authorised by him, and for any damages, faults or shortages caused to the premises for reasons not relating to the tenant.
• Landlord must provide tenant with all approvals required by competent authorities in the Emirate if he wishes to execute decoration works, or other works, what requires such approvals, provided that the tenant has necessary documents evidencing applying for such approvals.
• Landlord is prohibited from disconnecting services to the premises or prevent tenant from benefiting from the premises. However in the event of occurrence of such incidents, the tenant shall refer to police station in the same area to prove the case or to stop such prevention, and also to file a case before the committee, enclosing supporting reports for compensation of any damages.

Obligations of the Tenant

• Tenant must pay rent value on due dates and preserve premises as his own property. He also shall not make any changes, renovations or maintenance works without landlord’s permission, after obtaining necessary approvals from relative authorities. This shall not violate tenant’s obligation to execute agreed upon maintenance or that which is ordinarily done by tenants.
• Landlord may obtain maintenance deposit amount from tenants to guarantee maintenance of premises at the end of tenancy contract, provided that landlord shall undertake to refund the deposit, or any remaining amount upon expiry of contract.
• Tenant shall be obliged upon expiry of tenancy, to return the premises to landlord in the same condition as handed over to him at the time of contracting except, shortages resulting from normal use or for reasons beyond his control. However in case of any dispute the matter shall be referred to the committee for decision.
• Unless tenancy contract otherwise provides, the tenant shall pay all fees and taxes due for government authorities for benefiting from the premises, in addition to any other fees or taxes due for subleasing.
• The tenant shall not, upon eviction of premises, remove any fixed improvements unless they agreed otherwise by both parties.
• Unless otherwise agreed in the tenancy contract, the tenant shall not assign benefit or sublease premises without obtaining landlords approval.

Eviction

Landlord may demand eviction of tenant prior to expiry of tenancy period in the following cases:

• If the tenant fails to pay rent value, or part thereof, within thirty (30) days of landlords notification for payment.
• If tenant sublease premises, or part thereof, without landlords written approval and in such case eviction shall be applicable to subtenant, and his right to refer to tenant for compensation shall be served.
• If tenant uses, or allows others to use, premises for illegal or immoral activities.
• If tenant causes changes that endanger safety of the premises in a way that it cannot be restored to its original condition or if he causes damages to the premises purposely or due to his gross negligence to take proper precautions or if he allows others to cause such damages.
• If the leased property is a commercial shop and the tenant left the same without occupation and without legal reason for 30 continual days or 90 non-continual days in one year; unless the parties agreed otherwise.
• If tenant uses leased premises for purpose other than those mentioned in the tenancy contract or if he uses premises in a way that violates planning, building and land using regulations
• If the premise is endangered to collapse, provided that the landlord must prove such condition by a technical report attested by Dubai Municipality.
• If tenant fails to observe legal obligations or tenancy contract conditions within (30) days from the date of notification by landlord to abide by such obligations or conditions.
• If development requirements in the Emirate require demolition and reconstruction of the property in accordance with government authorities instructions.

Landlords may demand eviction of tenant upon expiry of tenancy contract in the following cases:

• If premises require renovation or comprehensive maintenance which cannot be executed while the tenant is occupying the premises, provided that a technical report attested by Dubai Municipality is to be submitted to this effect.
• If landlord wishes to demolish premises for reconstruction or to add new constructions that prevent the tenant from benefiting of the leased premises, provided that necessary licences are obtained
• If the owner of the property wishes to sell the leased property
• If landlord wishes to recover premises for his personal use or his first degree next of kin, and the committee approved the same, then the landlord shall not rent premises for others before two years, for non-residential and 3 years for commercial, from date of recovery of premises, otherwise the tenant shall have the right to request the committee to order proper compensation for him

However, in all above mentioned four cases, landlord must notify tenant through notary public registered mail with reasons of eviction at least 12 months prior to expiry date of tenancy contract.

General Laws No.26 of 2007

If landlord or tenant dies, tenancy relationship shall devolve to their heirs, unless tenant’s heirs decide to terminate, provided that the termination shall become effective after 30 days from notifying landlord of such decision or on expiry of tenancy contract, whichever occurs first.

Filing an eviction case shall not relieve tenant from paying rent value for the whole period of the case and till the issue of judgment and execution thereof

If the committee orders termination of tenancy contract and the premises was occupied by subtenant, in accordance with a contract signed with the tenant and approved by the landlord, then the subtenant shall have the right to continue occupation of the premises with same conditions.

Note: The above written laws are correct when this information was published in April 2009

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