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Can new landlord give Abu Dhabi tenant 13% rent rise 6 weeks before lease ends?

We have been renting a villa in Abu Dhabi since October 1, 2012. In May this year we found out that our landlord intended to sell – we only found this out when agents came knocking on our door to show prospective buyers around. We had not been informed in writing by the landlord, or the agents involved, of his intention. Now, with just six weeks left on our current lease, we have been told by the agents that the sale has gone through and that if we wish to stay in the villa and sign a new agreement then the new owner intends to increase the rent from the current Dh115,000 to Dh130,000. Where do we stand? CB, Abu Dhabi

Your new landlord is asking for an increase of approximately 13 per cent but what he has to remember is that he should give you two months’ notice to raise the rent. If this deadline is missed then your landlord is not entitled to any increase at all. Late last year, the Abu Dhabi government scrapped the 5 per cent neutral cap on leased properties leaving the new demanded rent entirely up to the landlord’s discretion. You will probably have a fight on your hands but the law is clear on how a landlord can raise the rent. Clearly, what you have to consider is the extra cost of moving, not just the actual rent but fees, etc, coupled with the hassle factor involved too, compared with the extra percentage cost of the higher rate increase.

On the face of it, this increase may seem steep especially if you have not had a salary increase of this amount, if at all this year. If you feel that you can get a better deal elsewhere, then call their bluff by trying to negotiate a better deal, alternatively hold firm about the two months deadline but be prepared to take it further to the rent dispute committee at the municipality.

I seek your advise on the following two queries:

1) I stay in a hotel apartment converted residential building. My Dewa bill is fixed and on a monthly basis my building management company charges me municipality fees (5 per cent of the annual rent). I wanted to know where there is no Dewa bill, can a building management charge municipality fees.

2) At the time of signing the agreement, I was unaware that the following fees are to be paid at the time of renewal of contract: management Fees - 5 per cent of the rent – 2 per cent service fee and Dh1,000 administration charges. This is over and above rent escalation if any. Can a property management company charge all these charges apart from rent escalation. AH, Dubai

A municipality or housing fee is chargeable to all and slowly everyone will have to pay this. Although you say there is no Dewa bill, there is a bill for the entire building, so I presume that the DEWA invoice cost is just divided by the number of apartments to calculate the individual(s) contribution. The same would be true of the housing fee. The building management would be charged this fee, so they would distribute this levy to all within the building.

Then renewal fees are always the subject of discussion and disagreements. It is fair to say that at the time of renewal, the body or entity that has to administer this has to be involved with a certain amount of work and this would attract a fee. Most real estate agents charge approximately Dh500 to Dh1,000 for this service.

The management fee should be paid by the landlord if his property is being managed and I do not know what a service fee is or what it would cover. Any charges should be communicated to you in advance so that full transparency is given. It would appear that these “extra” charges seem excessive especially when you consider the cost of the actual rent too. I would confront them by questioning these changes and what they represent and ask why is a management fee chargeable to the tenant and not the landlord?

Mario Volpi is the managing director of Prestige Real Estate in Dubai (prestigedubai.com). He has 30 years of property industry experience in the emirate and London. Send any questions to mario@prestigedubai.com

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice

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