Rents capped at 5% in Abu Dhabi under new law

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Rent rises in Abu Dhabi have been capped at five percent per year under a new law passed by UAE President Sheikh Khalifa Bin Zayed Al Nahyan on Saturday, according to the official news agency.

Sheikh Khalifa, issued Law No. 6 of 2009 making amendments to Law No. 20 of 2006 regulating the landlord-tenant relationship, WAM said.

It sees restrictions on rent increases on residential, commercial and industrial properties, and those used for professional services, remaining at the the previous five percent cap.

The law is applicable to existing contracts of three years or less for already signed contracts and those that are agreed after the law takes effect.

However, with rents falling by up to 20 percent many landlords will be unable to increase the rents by even this much.

The law places an onus on both the tenant and the landlord to adhere to the rent specified in a written tenancy contract, which must lay down obligations of landlord and tenant, the statement on WAM added.

Any future decisions on reductions or increases in rents will be made by the Executive Council.

However, tenanta have the right to file a complaint with the Rent Committee if they do not agree with the decision.

The Rent Committee will be allowed to lower the rent rate specified in the contract and impose a fine on landlords who exceeded the rent cap, or for non-compliance with the committee's decision to correct the amount of rent being charged.

Under the law tenants who want to vacate their leased property will have to give two months notice prior to the expiry of the contract, however a landlord is only allowed to ask a tenant to vacate a property after four years.

And the tenant has the right to renew any tenancy contract that is less than four years, for one or more terms, under same terms and conditions.

Agricultural land and buildings, plus land and properties owned by the government, and land and properties designated for petroleum services are exempt from the new law.

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Posted by: sherief Abdullah

Dear Sir,

I am a resident in Abu Dhabi and earning very little income to support my family. I havent got an hike in my salary for more than 2 years and has to pay every year a 5% increase it would be good if the rent for all the residents whether staying in old or new building keep a standard rate of Dhs 36000 - 40000 per year so that more and more people take apartments and more people get benefitted.

Posted by: Raphy

Just a small clarification required pls....incase the rent is increased every year by 5% can it still be termed as "under same terms and conditions."?? I hope that the right of the landlord to evict the tenants after 4 years should not be applicable in such cases.

Posted by: Abu Abdallah

Vacating after 4 years maturity is really alarming for people with families and kids. In light of the scarcity of housing resources in Abu Dhabi and the conditions created by the real-estate-mafia, the landlords will simply send eviction notices to all tenants who have either completed four years or are about to. This will bring poor families end-up hitting the roads, in their useless search(I've been thru it three times and I know the pains!!!). In situations where the employers have frozen any pay-rises, stopped new hirings, rapidly laying-off employees, the new rule will simply add to the worries of employees who are barely making ends meet. The expectation was to keep the rents the same, till a) the market comes back to normal and/or b) the ample availability of affordable housing (without intervention of the real estate mafia and cruel agents/middlemen)....PLEASE HELP!!!

Posted by: paul

Sure, you can oblige all tenants to pay off the rent for four years when they vacate the property. How exactly do you propose stopping people going on holiday or a business trip and just not returning? You really haven't thought this through have you? And besides, why should the tenant pay the remaining 2-3 years' rent, when the landlord will have the empty apartment to rent out again? That means the landlord will collect rent twice. Would you happen to be a landlord by any chance...

Posted by: Abu Zahra

The law should also take care of the interests of the Land lords such as no tenant is allowed to vacate the property before 4 years unless he pays the rent for all the 4 years. It shoud also ensure that in case of a downturn in the economy the reduction in rents should not exceed 5% to avoid any free fall similar to Dubai.

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