‘Can my Dubai villa owner charge a 5% fee for renewing my tenancy?’ Q

I have been renting a villa for the past 15 years. I pay the annual rent according to the market value and in mutual agreement with the management office. I also pay a small annual administration fee for the Ejari registration.

Recently, the landlord changed the property manager and the new agency wants to charge a management fee of 5 per cent to renew the contract.

Is the new manager allowed to introduce a fee into the contract after so many years?

Wouldn’t that amount to a unilateral change to terms of the tenancy agreement?

And if it is not allowed to do so, how can I convince or prove that it can’t do this?

I am not keen on filing a case with the Rental Dispute Settlement Committee as this will also cost a considerable amount of money. MW, Dubai

AFor what reason has this new management fee of 5 per cent been levied? If it is an administration cost to prepare the contract, then I can understand that a fixed fee of perhaps Dh1,000 or Dh1,500 plus VAT would be a reasonable sum, but 5 per cent is excessive.

The management company needs to justify this cost to you and then you can decide whether you wish to continue to pay this fee or not.

You say that you would not like to go to the RDSC as this will cost too much.

Unfortunately, if you don’t get a judgment in your favour, the 5 per cent that the management company is requesting will continue to be charged.

So, I believe that the 3.5 per cent fee that is required to file a case is money well spent, especially if the judge finds in your favour. When a change to a contract is put forward, irrespective of whether 90 days’ notice has been given, there needs to be agreement on both sides to the changes and if there is not, the only way to resolve the issue is to file a case at the RDSC.

The Real Estate Regulatory Agency rent calculator index has not been updated. The rents reflected show data that is two years old.

Because of this, landlords like me cannot increase rent. The rental valuation certificate allows only for a maximum increase of 20 per cent for existing tenants.

I understand that tenants need to be protected but if they are very rigid based on an outdated Rera rental index, how can landlords deal with it? MC, Dubai

It is true that the rental market appears to be stacked in favour of the tenant, but this stance is replicated all over the world.

I suppose it has to be this way, otherwise the alternative would be anarchy, allowing landlords to set their own rates. This will not be good for the long-term view of any rental market.

The balance may have been adjusted towards a more level basis by the introduction of the Dubai Land Department’s valuation service, which can help landlords in certain situations.

The Rera rental calculator used to be updated quarterly and then it went to being updated once a year.

The DLD has been working on rating buildings to give a more accurate assessment for both residential and commercial properties.

Once implemented, it will bring about a fairer assessment of rental values, taking into consideration facilities, quality of materials used, views and property sizes.

In the meantime, be safe in the knowledge that despite existing rental values not necessarily keeping up with vacant unit rental values, the Dubai property market has performed extremely well since the Covid-19 pandemic, so there is some consolation regarding capital appreciation.

Mario Volpi is sales director at AX Capital. The opinions expressed do not constitute legal advice. Please send any questions to m.volpi@axcapital.ae