All about tenancy renewal fee and the associated costs
People living in Dubai are familiar with the routine 90-day notice period for tenancy contract renewals and the difficult decision 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 contract renewal fee and associated costs.
RENEWING THE TENANCY CONTRACT
If 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 follow the parameters set by RERA’s Rental Index.
You can always use the RERA rental calculator Dubai to determine if the renewal amount aligns 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 properties, from affordable apartments to high-end villas. The Dubai Real Estate Regulatory Agency (RERA), a regulatory arm of the Dubai Land Department, ensures that all property transactions are fair and that tenants don’t have to pay exorbitant money to renew their contracts. Here’s a breakdown of RERA’s rental property laws.
Let’s look at all the tenancy renewal agreement fees and related costs that can come into play.
RENT PAYMENT
It is essential to mention that tenants must pay the rent according to the agreed-upon terms with the landlord. Unless otherwise agreed, the tenant must submit post-dated cheques for the total annual rent. The number of cheques should be mutually agreed upon between the landlord and the tenant.
If the amount of their property for rent in Dubai changes, it has to be mutually agreed upon between the parties and accurately reflected in the tenancy contract.
EJARI RENEWAL FEES
You also have to take care of registering and renewing Ejari. Otherwise, you can receive a fine of up to AED 50,000 by RERA. You can get your Ejari registration renewed for AED 120 if you do it through the REST application or AED 215 + VAT if you opt to get it done through the Real Estate Services Trustees Centres.
You can learn all about Ejari online 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 tenancy extension agreement cost is the housing fee, which is 5% of the annual rent and is 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) monthly bill.
MAINTENANCE FEES
The next Ejari contract renewal cost that landlords must pay 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 when you renew your tenancy contract, look out for these costs.
Besides, if the landlord and tenant have involved a property agent or agency in drafting and renewing the tenancy contract, you might have to pay an admin fee. However, the broker/agent can’t charge any brokerage fee, maintenance fee or additional charges.
FAQS ABOUT TENANCY CONTRACT RENEWAL FEE
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 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, landlords and tenants can easily 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 renewing Ejari. 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 contract 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 on a 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.
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