Tenancy renewal fee and the associated costs you should know about
People who have been living in Dubai are pretty familiar with the routine 90-day notice period for tenancy contract renewals and the difficult decision of having to choose between renting a new property or renewing their tenancy contract. So, to aid your decision-making process, we’ve compiled this handy guide to the tenancy renewal fee and associated costs.
RENEWING THE TENANCY CONTRACT
If either the landlord wants to increase the rent or the tenant wants to move to a new home, giving a 90-day notice to the other party is mandatory. A landlord can increase the rent of their property after one year, but any potential increase must be compliant with the parameters set by RERA’s Rental Index.
You can always use the RERA Rent Calculator to determine if the renewal amount is in line with the market average. If it is considerably higher than the average property price for your type of unit in the area, you are legally allowed to contest it.
Once both parties agree on the rental amount and payment structure, they can renew the tenancy contract for another year.
Before renewing the lease of your current home, read on for some potential costs you should keep in mind.
TYPES OF PROPERTY RENEWAL COSTS
Dubai has an extensive inventory of different types of properties, from affordable apartments to high-end villas. The Dubai Real Estate Regulatory Agency (RERA), a regulatory arm of the Dubai Land Department, ensure that all property transactions are fair and that tenants don’t have to pay exorbitant amounts of money to get their tenancy contract renewed. Here’s a breakdown of RERA’s rental property laws.
Let’s have a look at all the tenancy renewal fee and related costs that can come into play.
RENT PAYMENT
It is essential to mention that tenants must pay the rent as per the agreed terms with the landlord. The tenant has to submit post-dated cheques for the total annual rent unless otherwise agreed. The number of cheques should be mutually agreed upon between the landlord and the tenant. If there is any change in the annual amount of their property for rent in Dubai, it has to be mutually agreed upon between the two parties. Additionally, it should be accurately reflected in the tenancy contract.
EJARI RENEWAL FEES
You also have to take care of Ejari registration and renewal. Otherwise, you can receive a fine of up to AED 50,000 by RERA. You can get your Ejari registration renewed for AED 155 if you do it through the REST application or AED 219.75 if you opt to get it done through the Real Estate Services Trustees Centres. You can learn all about Ejari registration here.
SERVICE CHARGES
If you are the property owner yourself and haven’t cleared all of the service charges, you won’t be able to apply for Ejari renewal. Hence the property can’t be granted access to water and electricity services. This law has been recently introduced to clear the growing amount of unpaid service charges. If you are unsure about these costs, here’s everything you need to know about Dubai service charges.
HOUSING FEES
Another property renewal cost is the housing fee, which is 5% of the annual rent and paid to the Dubai Municipality. This cost is paid in 12 payments and is added to the tenant’s Dubai Electricity and Water Authority (DEWA) bills every month.
MAINTENANCE FEES
Another property renewal cost that landlords must take care of is the maintenance fees charged by developers like Emaar, Nakheel and Dubai Properties every year. Some landlords also transfer these fees to the tenant, so if you are renewing your tenancy contract, look out for these costs.
Besides these costs, if the landlord and tenant have involved a property agent or agency in drafting and renewing the tenancy contract, an admin fee may be due. However, the broker or agent can’t charge any brokerage fee, maintenance fee or any additional charge.
FAQS
WHAT IS THE PENALTY FOR TERMINATING A LEASE EARLY IN DUBAI?
The penalty for early termination of tenancy contracts in Dubai depends on the termination clause included in the original agreement. If there is no termination clause, the tenant has to give at least 60 days’ notice for termination. The landlord can decide the penalty amount based on the circumstances, but they are entitled to the rental payments as per the law.
CAN THE LANDLORD AND TENANT RENEW THE TENANCY CONTRACT WITHOUT INVOLVING THE AGENT?
Since the tenancy contract renewal process is online and requires minimal paperwork, it is very easy for landlords and tenants to renew their contracts without involving any property agent.
CAN THE REAL ESTATE COMPANY OR AGENT CHARGE COMMISSION FOR EJARI RENEWAL?
The company managing your tenancy contract shouldn’t charge any commission or renewal fees for your Ejari renewal. They may charge an agency fee, but only if mutually agreed upon and added to the contract.
And with that, we conclude our post on the tenancy renewal fee. We hope it proves to be helpful.
If your 90-day notice period has begun, decision time is looming. But don’t fret. MyBayut is here to help with all the information you need. Here are all the things to consider about tenancy contract renewal in Dubai.
If you can’t decide the new area to move to, our guide to the popular Dubai areas to rent based on your salary is well worth looking at, so you can make a more informed decision.