Protecting Your Rights over Unlawful Rental Increase in Dubai

Over the past few months, property prices in Dubai have risen sharply, and so are the rental rates on new apartments and commercials spaces.

A lot of my friends who are also expats claimed that their landlord have tried to take advantage of the frothy market and are trying to increase the rent substantially. Most of these increases are against the law, but only a small fraction of the tenants who live and work in Dubai are aware of their rights and the tenancy law.

So, how can a tenant know if the rental increase demanded by the landlord is legal?

For starters, you need to know that there is a government agency responsible in regulating rental fees. This agency is called Real Estate Regulatory Agency or RERA. There are strict laws regulating rental increase, and the best way to educate yourself is to visit their official website – RERA.

There are various tenancy laws in Dubai, but the regular rate that the landlord can demand will range from 5 per cent to a maximum of 20 per cent. However, it can only be implemented if the existing rent is below the standard market rate which is stated in RERA’s rent index.

So, it would be wise to use the RERA’s rental index calculator, which you can also find on their official website. This particular index compares the rental fees of various properties in Dubai and updates the database four times in a year. By using the index calculator, you will find out if the increase is truly fair and lawful.

Actually, the law protects both the landlord and the tenant and RERA regulates the relationship by implementing laws that would be fair for both parties. That’s why I always urge my friends to use the rental index calculator before they confront their landlords. It’s always a good strategy if your complaints have basis.

What are the important laws governing “rental increase” that you should know about?

Article 9 of the Dubai Law No. 26 of 2007 states rent should not be increased prior to completion of two years from the start date of the tenancy contract.

Other essential laws are as follows:

  • A landlord must give a 90 day notice to his tenant if he plans to increase the rent, which has to be based on Real Estate Regulatory Agency’s (Rera) rent index.
  • There should not be any rent increase, if the rent for the real estate unit is up to 25% below the average similar rent.
  • If the rent value was 26% to 35% less than the average similar rent; the maximum rent increase shall be equal to 5% of such value.
  • If the rent value was 36% to 45% less than the average similar rent; the maximum rent increase shall be equal to 10% of such value.
  •  If the rent value was 46% to 55% less than the average similar rent; the maximum rent increase shall be equal to 15% of such value.
  • If the rent value was less than 55% of the average similar rent; the maximum rent increase shall be equal to 20% of such value.
  • A Landlord must provide 90 days notice to a tenant if the lease is not permitted to be renewed by the Tenant
  • Law (26) of 2007 – Article (9) Landlord should not increase such rent value or amend any of tenancy contract conditions until the elapse of two years from date of tenancy contract. Even after two years, if Rent Calculator shows no need of increase, then no need of increase. Only pay the within the market (RERA Calculator) price.

What happens if you find out that the rent increase violates the rent cap?

Rental IncreaseIf you are certain that the increase demanded by your landlord is illegal, then the first thing you need to do is to negotiate with your landlord. Talk to him and find a common ground that could benefit the both of you. You should also show him the Rental Index Calculator, and tell him that this is what the law stipulates. If he sees the rate accepted under the index calculator, then it might even change his mind.

In case, the landlord disagrees with your terms and you’ve reached a deadlock. It’s now time to settle your rental dispute at the Rent Committee, which is a branch of the Land Department of Dubai. This is the government body that has jurisdiction over tenant-landlord issues. But this can be your last resort, if all other avenues have failed in providing a more diplomatic solution to your problem.

For more info, you can visit http://www.dubailand.gov.ae/engdefault.aspx

How to Avoid Being Broke In Dubai?

If you are working in Dubai and you’re earning at least Dh20,000 per month, but you no longer have money in your savings account, then you will most likely be ruining your chances for a good future in the UAE. As a matter of fact, this is a sad reality for thousands of expats who came to the country with dreams of earning big money, but only to end up as broke with hardly enough savings to support their daily needs. Expats who spent years of living the high life or were lured by various discount offers and shopping festivals are the most common candidate for this dilemma.

broke

Usually, people who succumb to temptation like those who want a bigger villa, nicer car and pricier signature items are trading their present for a bad future, according to some financial experts. Take the case of Hans, a German working in Dubai for almost 10 years. He has never been married and has no children, but he has gathered an accumulated debt of Dh250,000 on six separate credit cards. His bills, food and rent take up most of his Dh27,000 paycheck, and this has left him with no savings or money at the end of the month. Hans earns well, but he is struggling due to his debt and his chances for having a good future in the UAE are quite grim.

How can you protect your finances in Dubai?

When you come to Dubai to live and work, then you must have a positive mentality. You need to maximize your earnings by listing all your financial priorities. So, what would be your priorities?

  1. Get a pension plan – In 2012, Dubai has become the first Gulf state to have a pension fund specifically for expatriates. This will guarantee that expat workers will receive their ESB (End of Service Benefits). Financial experts also think that a pension fund can help protect expats in their retirement years. However, before you get a pension plan, you need to check if you’re dealing with a reputable company (beware of high costs and long lock-in periods).
  2.  Avoid getting too many credit cards – Expats are tempted to get as many credit cards as they can, because it is relatively easy to acquire one in Dubai. When you have credit cards at your disposal and you go to a mall, chances are that you will end up shopping for items you don’t really need.
  3.  Always include savings in your budget – It would be wise to set your savings up to 30 percent of your total net income. In the UAE there is not social buffer like in Europe, no unemployment and no pension. That is why there is no tax. From the moment you land and until the moment you take off, put 30% away. If it means going without your latte, then go without the latte, the alternative is leaving and having built nothing for the future.
  4. Diversify your investments – this only means that you should not only put your money in the bank, but you should also invest in other fruitful ventures like buying a property that would generally increase in value over time. It would also be a great idea to put some of your money in stocks or mutual funds that could provide you with a good long-term growth potential.
  5. Get a life insurance – I am against insurance savings packages due to large costs and lock-in periods. Instead invest directly (it is cheaper) only take out insurance for your needs, it is much cheaper and more flexible. Also consider critical illness, who knows you may fall seriously ill and still have to look after your family. Tip.. if you buy a property, banks will insist on life insurance. The banks tend to be expensive. Save money by using your current life insurance or take out a new one. Check to see that this is allowed with the bank, consider another bank if they do not, you may save a small fortune on this tip.

My Advice:

Seek the services of a credible financial advisor or a firm who has years of experience in the financial industry, especially those who are also living in the UAE for quite some time now. These experts will give you some good options which you can choose to secure your future in the UAE. Also, you need to balance your wants against the needs and demands of your family.

The First Online Real Estate Auction in Dubai Via eMart

The Dubai Land Department through their official online portal (eMart) has just announced that they will be releasing 17 real estate properties for online auction which will be held on December 4, 2013. These properties will include both commercial and residential properties, with a full list of attributes including a detailed map, which will give prospective buyers an in-depth look on each property. The Land Department has come up with this initiative to simplify all procedures for stakeholders and real estate operators.

According to Sultan Butti Bin Mejren – the Director-General of the Land Department of Dubai, “eMart will provide some unique advantages that will streamline all real estate processes in the emirate and it will greatly benefit the stakeholders in the real estate industry.” Eventually, eMart will significantly enhance the size of real estate transactions in Dubai.

He confirmed that the initial 17 properties which they had launched through the online portal is a clear indication of the security and transparency of the eMart. He also added that this important step is aimed to increase the real estate transactions and operations in the future. This will also paved the way for other initiatives that can elevate the overall performance of the site, so it can meet the demands of the industry in today’s standards.

real estate auctionThe eMart has several real estate services, which includes sale, purchase, auction, and rental of properties. It can also give prospective buyers the option to immediately hold a property while they are still viewing the details. It also allows them to complete the purchase of a certain property which they can conveniently pay through the Land Department of Dubai. The buyers also have the option to pay the property via Noqodi (payment gateway used to pay government services in the UAE).

This new development will move the government of Dubai towards smart governance, and this new information technology will simplify and facilitate government services to residents, citizens, businesses, visitors, employees, and governmental departments across multiple electronic channels.

The online real estate auction which is considered as the first of its kind in the UAE is a vivid example of competitiveness and transparency, because all the bids that are submitted to the online portal via Internet-enabled devices and mobile phones will be regulated and must meet the conditions of registration. This is clearly the vision of the Government of Dubai which aims to promote the real estate industry in the emirate.

Diabetes – A Lifestyle Disease Not Only In The GCC

According to medical experts, there are approximately 382 million people in the world are now living with diabetes. The vast majority of these individuals have type-2 diabetes, which can be caused by lack of exercise and obesity. The disease is spreading among developing countries, especially those who adopt urban and western lifestyles. So far, the latest record is 371 million cases worldwide, and this data was confirmed by the International Diabetes Federation. It is estimated that in 2035, the number of cases will go up by 55% which would amount to 592 million cases.

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Is Getting a Home Insurance in Dubai the Best Option For You?

home insurance in dubaiHome insurance is not the most popular type of insurance policy in Dubai. This is due to the current peace and order situation in the emirate. In fact, Dubai is a relatively peaceful city with no significant cases of theft and burglaries. However, it’s still advisable to get a home insurance, because it will also protect you from other unforeseen incidents like leakages and flooding, fire, accidental damages and vandalism. So, having a home insurance will not only protect you from burglaries and theft, but it will also protect your property from several eventualities that might happen in the future.

Basically, a standard home insurance policy can insure the contents of your home. But the policy can also be tailored according to your preferences. You can include a tenant’s liability coverage that will cover for cases where the tenant is legally liable for the damage in your property. You can also extend your policy and add accident insurance coverage for domestic helpers. In most cases, plan holders will also integrate compensation for use of alternative accommodation. This particular policy will provide you the means to receive an amount from the insurance company, in case your home becomes uninhabitable.

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What You Need To Do First Before You Move To Dubai

Living In DubaiDubai is considered as one of the most popular destinations in the world, and the number of expatriates or would-be investors is mounting very fast.  In fact, people who dream of moving or working in the UAE were inspired by stories of a tax-free lifestyle. It looks like everyone wants to experience something new and Dubai for them has everything they ever wanted. However, Dubai is not as easy as it once was and securing a residence permit can be quite daunting these days.

However Dubai can still offer some decent tax benefits for those who want to move in. You can still enjoy a high standard of living in the emirate, as long as you can find decent employment or a lucrative venture that can provide for all your needs. So, if you’re dreaming about Dubai, then you should consider these things first.

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Understanding Sharia Law When Investing In Dubai

Sharia Law in InheritanceThe real estate opportunities in the UAE are mounting very fast and a lot of foreign investors are interested in buying properties in the country. There are several reasons why UAE has become a dream destination for foreign investors. One in particular is Dubai and its booming economy through tourism and trade. It also boasts some man made marvels like Burj Khalifa which hold the record as one of the tallest buildings in the world. Dubai is also known for its luxurious hotels and breathtaking nightspots. Not to mention, the economic and architectural progress of other emirates within the country. These factors have catapulted UAE as one of the most privileged real estate hubs in the world.

However, before you decide to invest in the UAE, it’s essential for you to know and understand Islamic Law or better known as “Sharia Law.”

So What Exactly Is Sharia?

Sharia is the religious law or moral code of Islam and it deals with many topics including politics, crime, personal matters and economics. For this particular purpose, we are going to tackle on the most pressing issue that most foreign investors are concerned about – inheritance under Sharia Law. Investing in the UAE can be a lucrative venture, but most investors should be thinking on how they can protect their assets, especially if the owner/s of a particular property dies.

In Islamic Law, there are four important duties that need to be performed when the owner/s of a property dies and these are the following:

  1. Pay the debts of the deceased.
  2. Funeral and burial expenses must also be paid in full.
  3. Execute the will of the deceased, which usually gives the testator (owner/s of the will) the right to dispose one third of the estate they own according to their wishes.
  4. Distribute the remaining estate to immediate family and relatives as per rules of priority (Quota).

Therefore, Muslim property owners in the UAE who follows the Sharia Law can only dispose 1/3 of their overall estate under their testamentary will. That’s the maximum share that they can delegate to their chosen heir/s, because the remaining portion of their estate will be lawfully given to other family members and relatives.

Actually, there are different types of heirs and these are the following:

  • Primary Heirs – this group will consist of the spouse, son or daughter, and both parents of the deceased.
  • Quota-Heirs – this can be grandparents, wife/wives and husband, daughters, brothers, sisters and others. Usually, this group has a designated share or quota on the estate or property.
  • Residuaries or Members of the Asaba – this can be a combination of both male and female relatives who will inherit a share after the Quota-heirs inheritance have been distributed.

So, if an owner of an estate leaves no direct relative, then his/her property will directly go the state treasury. But Sharia Law only applies to Muslims in the UAE, however for non-Muslim expats and foreign investors living in the country are allowed under “Personal Affairs Law” to use the laws of their own countries in settling and distributing their properties that are situated in the UAE.

How Can You Protect Your Real Property or Estate In The UAE?

In order for you to protect your property in the UAE, you need to have a legal and valid will and it should be notarized by a UAE court. Expatriates and foreign investors who have several properties throughout the UAE must create their own will as soon as possible. This will exempt them from Sharia Law. Also, it would be wise to appoint a specialist or a credible lawyer who is qualified to draft your will in accordance to the laws of your home country. This will give you and your family the peace of mind that Sharia Law does not come into effect, in case something happens to you in the UAE.

It’s also important for you to distinguish between federal (UAE law) and local law. So, if you’re residing in Dubai and something happens to you, then the law in Dubai will take effect. However, if someone contests you will, then federal law takes over. You need to understand that federal law trumps local law in Dubai. So, you might be asking – how can I truly protect my property and the welfare of my family? Well, the only remedy available to you is to setup trusts or you can also engage in various off-shore solutions. However, this is a complex area and it’s essential for you to hire professional lawyers who are capable of advising you expertly.

Writing Wills: Its Importance and Methods You Can Use To Set Your Will

WillsThere are many reasons why people make a last will and testament, but the most obvious one is to ensure that his/her personal possessions and assets are lawfully distributed to the people that matters most. This could be his/her family, relatives or someone close to the testator (the one making the will).

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The Benefits of eMart and Its Significance to the Real Estate Market in Dubai

emart portalSmart Property Marketplace or better known as eMart is now an active portal launched by the Dubai Land Department. This new online portal will provide a platform for auctions, sales and property rentals in the UAE. It will also serve as an exchange center to facilitate real estate information. An initiative like this will guarantee credibility and transparency in all transactions carried out by the Land Department.

As of 2013, the “World Bank’s Doing Business Index” has ranked the Land Department of Dubai as the fourth best in the world when it comes to property registration and real estate. The LD is also ranked by the index as the best in the Arab world for its outstanding services. With the new eMart initiative, brokers and investors in the real estate industry will truly benefit from fast and accurate online services offered by the portal. This will also facilitate and streamline search operations, thus providing a credible resource for investors in Dubai.

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85% Mortgage Loan in Dubai Will Only Be Effective Until End of the Month

Mortgage Loan Rules in DubaiAll mortgage pre-approval letters issued by UAE banks will only be valid until the end of November. Therefore, mortgage pre-approval letters will no longer be valid on December 1. This information has been divulged by a mortgage consultant in a top local bank in Dubai. So, if you want to avail of the 85% home finance, then you only have approximately 20 days to complete your transaction. By December this year, banks will be following the new guidelines on mortgages that were set by the UAE Central Bank late last month.

Basically, this new mortgage lending regulation will only allow banks to loan up to 75% of the property value to expatriates and 80% to Emiratis. These new rules will be published in the official Gazette by January 2014, but banks are obligated to enforce these new guidelines one month before the said publication. Also, home buyers will no longer be able to use their credit cards in meeting their downpayment requirements as well as seek personal loans when the new regulations take effect.

Continue reading 85% Mortgage Loan in Dubai Will Only Be Effective Until End of the Month