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Regardless if you are living in Dubai or overseas, here a are a few pointers for Landlords in Dubai.

  • Only use a RERA Registered Broker / Agent if electing to use an agent
  • If using a Registered Agent / Broker, ensure you have appointed them on the approved Form (D1) and ensure the Agent knows the market, likely rent return for the area, and the Agency has a tenant ‘pre-screening’ procedure in place. Make sure you stipulate your communication updates and consultation with each other on the Form. If the Agent does not do what they agreed to do, terminate them and find another agent. Lost rental income is loss of your money.
  • Many Landlords make the mistake of waiting up to 2-3 months to get a tenant willing and able to pay for the rent level the Landlord desires. If you look at say a two year period, and the Landlord is wanting 120,000 AED p.a. rent, it is better to gain 110,000 AED per year, thus for say a two year term equates to 220,000 AED, as opposed to 90,000 AED for the first year and 120,000 for the second year, which shall return 210,000 AED for exactly the same two (2) year period – this is because the property is vacant for 3 months and only 75% of the rent expected is returned in the first year. In the vacant period, there is watering (if with gardens) cleaning twice weekly due to dust and the need for a well presented property, and often swimming pool maintenance, common area maintenance, all of these being costly requirements whilst there is no rent return.
  • A Landlord must provide 90 days notice to a tenant if the lease is not permitted to be renewed by the Tenant, this is only acceptable if the Owner or his/her immediate family are moving into the property. The Termination Notice must be served on the Tenant on the approved Form
  • The Landlord must keep the property in a safe condition and ensure the tenant gains benefit from the rented property unless otherwise agreed between the two parties.

All Dubai Landlords should be familiar with Law No. (26). of 2007which is the Law governing the relationship between the Landlord and the Tenant.

Essential Documents for Landlords

  • Proof of Ownership of the property
  • a copy of their passport
  • a written instruction on the approved Form for the Agent to Act (FORM D1)
  • If the Agent is engaged for full Property Management, again written appointment to act FORM D3 applies stating the parties, cost, term, conditions of the appointment.
  • It would also be advisable for a Landlord to provide their Property Management Agent or tenant with a list of approved maintenance people permitted to work on the property in case of emergency. E.g. Plumber, air-conditioning specialist, electrician, general repairman, swimming pool maintenance.
  • The Owners’ Association (if applicable) rules and regulations for the Tenant or the Master Community Declaration rules and regulations if applicable
  • The Owner should also carry property insurance in the unfortunate event if the property is burnt down or damaged. A tenant cannot take out property insurance on the property.

Landlords are advised Property Management service is not the same as appointing a Rental Agent nor should an Owner appoint an Owners’ Association Manager for this specialized service. These are distinct specialities in real estate just the same as you would not permit an Optometrist work on your teeth, this is the job of a Dentist!

A Landlord may sell his/her property during the life of a tenancy agreement. However, the tenant has the right to occupy the property for the life of their tenancy agreement.

If a Landlord instructs their Sales Listing Agent to approach the current tenant with the view of negotiating an acceptable proposal to vacate the property if a new owner wants to occupy the property, then this may form a vital part of a Sale Contract providing the Tenant is willing and not unduly pressured.

For example, if a tenant is occupying a property on a lease for 120,000 p.a and there is 9 months to complete the tenancy, then the tenant would have to be given 3 months notice prior to the end of their lease to vacate. This would mean that the tenant not only goes through the stress and expense of relocation, but also must take on a new lease in another property anyway gaining nothing other than knowing they can stay for 9 months to the end of their lease. The new Owner would automatically give the required 3 months notice as the new Landlord. If, during a negotiation, a tenant was offered 80,000 to relocate, this would be appealing for a tenant as they would have their new lease potentially subsidized (being offset by up to say 80,000 AED compensation), the cost could be split between the new Owner and the Seller.

‘Best Practice’ dictates that if a tenanted property is to be sold, the Seller should provide a copy of the current tenancy agreement to the Sales Listing Agent and ensure that a ‘Special Condition’ clause be inserted in the contract by the Agent. This should detail the requirement for having the Landlord (the Seller) and the Tenant provide a ‘Property Condition Report’ specifying any problems and a transfer of the Tenant’s security deposit from the old Landlord to the new Landlord and alerting the Tenant to the same.

This practice shall set clear agreements pertaining to the tenancy which is forming part of a sale agreement. Tenants need to be factored in this process and acknowledged the right of tenancy and respected, new Owners need to be aware of their responsibilities and yet protected against inheriting an unforeseen problem or undeclared expense, and the Landlord (the Seller) must act honestly, respectfully and responsibly transferring the tenancy Landlord obligations.

In real estate, everything is negotiable, and the outcome depends on the negotiator’s skills, knowledge, preparation, courtesy, consideration and several other factors relating to the people, the circumstances and of course, timing of the negotiation. Aiming for the WIN / WIN / WIN is central to this type of situation and can work for all very effectively.

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