DIFC says will refer rent disputes to RERA

Move could stop landlords in Dubai freezone from hiking rents at short notice
Dubai International Financial Centre
By Daniel Shane
Tue 20 Aug 2013 08:43 AM

Disputes over residential rents at Dubai International Finance Centre (DIFC) will be referred to the emirate’s property watchdog, lawyers have said, despite the freezone operating under a legal framework separate from that of the UAE.

Previously, renters have had little legal recourse during disputes with property owners as the laws governing the financial centre make scant reference to tenant-landlord relations. This has meant that unlike other districts in Dubai, where rent increases are capped by the Real Estate Regulatory Agency (RERA), landlords have had free reign to hike rents and evict tenants at short notice.

One residential tenant, whose landlord had attempted to increase their annual rent by 30 percent at less than a month’s notice, was told by lawyers at DIFC’s pro-bono service that RERA would be called in to mediate over the dispute if necessary.

“The DIFC Courts will consider themselves not competent to hear disputes on tenancy issues if they are related to personal use of the premises and not use by any company licensed to operate in the DIFC,” wrote one lawyer at the centre in an email to the tenant. The identities of neither can be published as the correspondence was confidential. “Such disputes brought forward to the DIFC Courts will be referred to the Dubai Rental Committee.”

They advised that DIFC would revert to “the laws of any jurisdiction which appears to be the one most closely related to the merits of the case”, which in this case would be the Dubai laws that regulate relationships between landlords and tenants.

Under Dubai Law No. 26 of 2007, rental increases cannot be decided solely by landlords, but must also be made under the discretion of RERA. In addition, Article 14 of Dubai Law No. 33 of 2008 states that any decision over an increase in rental rates or to evict a tenant, must be made at least 90 days prior to the expiry of the rental agreement.

Craig Plumb, head of MENA research at real estate consultancy Jones Lang LaSalle said referring disputes to RERA would “reduce the distinction between the DIFC and on-shore locations elsewhere in Dubai”.

“In terms of residential tenants, this would be good news, as it would restrict the ability of the owner to increase rentals excessively,” Plumb added.

Neither DIFC nor RERA were immediately available to comment publicly on the matter.

Residential sales prices and rents have risen steadily as Dubai’s property market has recovered from the 2008-2009 financial crisis that saw values tumble by as much as 60 percent. According to the the Knight Frank Prime Global Rental Index, rents in the emirate increased by 18.3 percent in the year to March.

 

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.