Rents capped at 5% in Abu Dhabi under new law

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.