Dubai: Real estate agencies who demand fees from tenants wanting to renew their rental contracts are breaking the law, Gulf News has learned.
Dozens of readers have complained in recent weeks that real estate agencies are demanding fees or commissions when they choose to stay another year in rented accommodation. Marwan Bin Galita, CEO of the Dubai Real Estate Regulatory Authority, said the move is illegal.
"Agents who are charging tenants who want to renew the tenancy contracts for another year are violating the rules and regulations and will be liable for strict penalties," Bin Galita said.
"Rera has not had any complaint in this regard, but tenants who face such demands should head to Rera and submit complaints. Our team will investigate the cases," he said.
"We have to know if this is common industry practice and fight it," he said.
He said according to real estate rules charges during renewal cannot be higher than Dh160 and must relate to the cost of printing of contracts, changing dates and signing and distributing copies.
But tenants complained to Gulf News that one prominent real estate agency charged Dh500 and more to renew contracts for another year.
"I have lived in the building for the past three years and I renew every year without any additional fee or commission. But this year the real estate agent asked for Dh1,000 commission for renewal," said Khurram Arshad, from Sharjah.
When Arshad argued with the agent, he was told that the firm was suffering financially and needed the extra cash.
Consuelo Tuazon, another tenant in Dubai, said he was asked for extra money to renew his contract and only ten days prior to the date of renewal.
"I have lived in the building for 10 years under the same management. But now it is getting worse because I paid all my dues last year but till now I have not received my contract," he said.
Bin Galita said, "The commission is perfectly reasonable [initially] when the work is done for customers, including marketing the property, arranging viewings, obtaining references, preparing an inventory, preparing a new tenancy agreement, collecting the first month's rent and setting up a standing order for future rent payments.
"(But) agents charging the same commission, that is one month's rent to renew a tenancy when the tenant decides to renew for a further period, is not only unreasonable but also illegal."
Vineet Kumar, head of business development at Asteco, said: "Asteco is aware that such unfortunate malpractice is taking place in the market. However we are confident that Rera is doing everything to ensure these companies abide by not only the law, but best industry practices.
"We have noticed that some brokers are still not executing Ejari compliant leases which are mandatory as per Rera policy. Tenants should be aware, before they sign the lease agreement, what the terms of the lease are and, in case of dispute, is the lease recognised by Rera. The leasing fee is a one-off and has to be paid only for the first year," Kumar said.
Pointing to the legal perspective, Kumar added: "Renewal rates have to be agreed between the two parties, which have to be in line with the Rera rent index and any changes to the rent have to be followed by the guidelines issued by Rera. There are small administrative costs involved when renewing the lease."