As several UAE residents are faced with a pay cut, been asked to proceed on unpaid leave for a few months or lost their jobs, the biggest question that confronts them is how to meet their next rental payment. Rent accounts for the biggest financial commitment for the majority of expats in the UAE.
Real estate experts insist that it is best to be transparent with your landlord about the change in your financial or job circumstances. Although UAE landlords are not legally obliged to accept your rent relief request, some of them are being reasonable if the tenant can furnish proof of change in circumstances from the employer.
“Be transparent with your landlord for a change in contract terms that are already contracted. Show a letter from the employer which shows you have faced a salary cut, been furloughed or been asked to go on unpaid leave. If the landlord feels there is a genuine reason why your situation has changed, then some of them can be reasonable to be more flexible. Even landlords are now getting a deferral of six months on their mortgage installments from banks,” said Sanjay Chimnani, Managing Director, Raine & Horne, a Dubai-based real estate agency.
If your next rent cheque is due
If a tenant is in the middle of a lease and they have faced a salary cut or lost their job, they will have to provide evidence to the landlord that their circumstance has changed. They can request for a rent reduction or a deferral on the next rental cheque. But the landlord is not obligated to do it. It depends on the personal relationship you have with your landlord.
A good way to negotiate with the landlord is by expressing your intent to extend the lease in writing
“A good way to negotiate with the landlord is by expressing your intent to extend the lease in writing. If you can convince the landlord that you have a long-term view of living in the UAE, then it is in the landlord’s interest to be flexible. You can then request the landlord to defer your rent cheque by 30 or 45 days,” suggested Chimnani.
If your lease is up for renewal
Meanwhile, if your lease is up for renewal, check current market rents for comparable properties on portals like Property Finder and Bayut. Your landlord must match this rent and tenants can ask for between 30 and 60 days rent free. “If you have been a steady tenant, the landlord has a good incentive to match rents advertised on portals and throw in a few months as rent-free. Landlords must retain good tenants and therefore 1 to 2 months’ rent free is not an unreasonable ask,” explained Chimnani.
Flexibility on property prices listed on portals
Although property portals provide dynamic and real-time rental price data, don’t go by the cheapest listing advertised, instead consider something equivalent to the unit you are currently staying in or looking to rent next. “There is a 5 to 7 percent flexibility on property prices listed on portals. Consider the listed price for a property with similar specifications to get a fairly good idea of how much to negotiate with your landlord,” advised the property expert.
The rent guidance on the Real Estate Regulatory Agency’s rental calculator is done only once a year and the rates shown are for an area in general.
Tips to negotiate your house rent with the landlord
- Provide proof of change in your financial circumstance
- Check comparable unit prices on property portals
- Express your intent to extend lease by another year
- If you are a long-standing tenant, demand 1 to 2 months free of rent in the lease
- Be honest with your landlord
- Cite how UAE banks are deferring mortgage payments for landlords
Opt for a flexible monthly rental
With the existing job uncertainty, several people in the UAE are averse to taking long-term leases. If your lease is expiring soon, you can, instead, opt for flexible monthly rentals. With no tourists coming to Dubai, all holiday home operators have opened their inventory to short-term rentals ranging from one month all the way up to six months. The unit comes fully furnished and cleaning service is provided once or twice a week for a small fee.
Average monthly rent for a holiday home in Dubai Marina, inclusive of Du and DEWA
“Your average annual rent for a 1-bed apartment in Dubai Marina is about Dh65,000 to Dh70,000, translating to roughly Dh6,000 a month. For that exact price, you can rent a fully furnished holiday home along with utilities. Plus, you pay monthly and have no commitment. Subject to negotiation, most holiday home operators are providing Du and DEWA free. There is a 5 percent VAT, but you pay that as housing fee on your annual lease anyway. There is a one-time dirham fee, which is Dh10 per day for the first one month only. Tenants can pay on a monthly basis, but if they have negotiated a longer-term contract and decide to exit the lease, they will only need to pay a 10-day penalty,” explained Chimnani.
If you want to terminate contract
Although the Abu Dhabi and Dubai governments had banned all rental evictions for March and April, there have been no fresh guidelines for May. Therefore, if you are facing dire financial conditions, it is good to be honest with your landlord and either terminate your contract and find an alternate place to live.
“Technically, a tenant cannot terminate a contract. It has to be done in consultation with the landlord. If your circumstances have changed beyond repair, tell your landlord that you would like to give up the apartment on a certain date and settle accounts up until that date. But, the landlord is not obliged to accept your request. It involves negotiation and varies on a case-to-case basis. The landlord might accept your situation and terminate the contract with no cost to both parties, or retain your security deposit, or demand to be compensated for 15 days. Be transparent with your landlord in terms of documentation that your employer can provide,” suggested Chimnani.
“Typically, a lot of the residential leases are done in August every year. People who come in to the UAE with families sign house leases before schools open. A lot of the renewals happen in July-August. That’s when we will get a clear picture of how many families have left the UAE or decided to downgrade their accommodation. The extra supply will put pressure on house rents,” Sanjay Chimnani said.