Tenancy Law in Abu Dhabi and its Amendments
The Tenancy Law in Abu Dhabi is a crucial aspect of society as it determines the rights and responsibilities of individuals and serves as a guiding principle for interactions and conflict resolution. It plays a pivotal role in regulating the relationship between tenants and landlords, who are referred to as the parties involved. The Rent Law undergoes periodic amendments to ensure its alignment with current conditions, the requirements of the labor market, and social needs.
What is the rental law and what does it include?
The Rent Law encompasses a set of regulations and laws that govern the rental agreement between the landlord and the tenant. The lease contract includes comprehensive information about the property, such as its specifications, the personal details of both the tenant and the landlord, the rental fee, the duration of the lease, and any special conditions agreed upon by both parties. Additionally, the contract specifies the purpose of the rental, whether it is for residential, commercial, or real estate purposes. In case of any disputes, the contract and the rental law safeguard the rights of the involved parties by considering the contract details and the merits of the case.
In 2006, Abu Dhabi Law No. 20 was enacted to regulate the relationship between landlords and tenants in scenarios involving rent increases or eviction. Prior to Amendment No. 4 of 2010, landlords did not possess the authority to request tenants to vacate the property upon contract termination. However, circumstances may have changed following this amendment.
Some of the significant amendments to Law No. 20 of 2006 (Rents Law) in Abu Dhabi are as follows:
- Abu Dhabi Law No. 4 of 2010: This amendment granted landlords the right to request the eviction of tenants upon contract termination and to refuse contract renewal. It also introduced a 5% rent ceiling, which previously allowed for a 5% rent increase upon contract renewal without prior notice. However, this percentage has been removed in this amendment.
- The decision of the Head of the Judicial Department No. 10 of 2002: This decision pertains to rental dispute settlement committees and the procedures applicable before these committees. Rental Dispute Settlement Committees, chaired by a judge, were established under the provisions of this law. These committees have the authority to expedite decision-making regarding disputes between landlords and tenants and to establish temporary procedures for either party. The committee conducts proceedings in Arabic and provides an interpreter for individuals who are not fluent in Arabic.
- Abu Dhabi Executive Council Decision No. 4 of 2011: This decision outlines the procedures for issuing lease contracts in the Emirate of Abu Dhabi. It mandates that landlords and tenants register their lease contracts with the Abu Dhabi Municipality, ensuring that all data related to the leased property and the lease contracts are recorded. Lease contracts can be in Arabic and English or in Arabic if registered in the Abu Dhabi Municipality Authentication System.
As per the provisions, the Abu Dhabi Municipality recognizes lease contracts documented in accordance with this decision. Any amendments made to the lease contract are considered invalid, and the contract is deemed canceled if such modifications are not registered in the documentation system of the Abu Dhabi Municipality.
Resolution No. 12 of 2013 established the regulations for occupying residential units in the Emirate of Abu Dhabi. According to this resolution:
- Residential property is defined as a property or part of a property that is intended to be rented and used as a residence, providing basic daily necessities such as a kitchen, at least one bedroom, and a bathroom.
- It is prohibited to accommodate two families in a single housing unit.
Administrative Decision No. 1 of 2012, regarding Executive Decision No. 1 of 2011, regulates housing occupancy and the use of property allocated to citizens in Abu Dhabi.
This decision specifies that the following types of buildings cannot be rented:
- Buildings constructed on farms.
- Public housing and additional housing units.
- A public house that has been demolished and rebuilt with a permit issued by the government.
- Residential units are built on residential land licensed by the owner for special social cases.
In terms of rent regulations, the 5% rent ceiling has been removed, allowing owners to set rental prices based on market rates. However, the Rent Act does impose rules regarding notice periods in certain situations. If a landlord intends to evict a tenant or modify the rent amount or terms, they must provide a minimum of two months’ notice, specifying the proposed changes in writing. For commercial real estate, the minimum notice period is three months. If the landlord fails to request eviction or rent increase during the notice period before the contract renewal, the contract is automatically renewed with the same conditions and rent.
Executive Council Chairman Decision No. 32 of 2012 regarding building lease contracts
Executive Council Chairman Decision No. 32 of 2012 pertains to building lease contracts. The decision states that the annual rent increase specified in the lease contract, as mentioned in Article 16 of Law No. 20 of 2006, should not exceed 5%. This limit applies to rent assessed as of November 10, 2013, based on the agreement between the parties.
Administrative Decision No. 97 of 2012 outlines the registration mechanism for lease contracts in the Emirate of Abu Dhabi. The decision requires a registration document for lease contracts, containing information about properties used for residential, commercial, or industrial purposes. It should also include records of occupants for residential properties, as well as data of the owner and tenant. The municipality prepares a unified guide for the registration procedures, which may be amended as needed. Additionally, registration fees are applicable for lease contracts, with the following structure:
- When changing tenants for the same property, the parties must create a new contract with the following fees:
- AED 1,000 for each building on one plot, and AED 5,000 for renting the unit.
- AED 1,000 for each villa built on one plot, and AED 5,000 for renting the unit.
- Lease contracts issued before this decision are exempt from registration fees only collected upon renewal.
Abu Dhabi Council Approval No. 13 of 2016 addresses housing fees.
It states that 3% of the housing value will be calculated on the 13th of the housing units in Abu Dhabi, in addition to the annual rental fees. These fees are imposed on everyone, and the tenant is responsible for paying them. However, they are considered service fees as they fall under the property owner’s responsibility.
Abu Dhabi Council Decision No. 14 of 2016 relates to lease agreements for buildings and the reinstatement of the annual rent ceiling of 5%.
Initially, the rent law had a provision allowing a 5% annual rent increase, but this provision was cancelled on November 9, 2013. However, according to Abu Dhabi Council Resolution No. 14 of 2016, the annual rent ceiling was reintroduced as of December 13, 2016. Under this decision, the two parties to a lease contract can modify the rental allowance by mutual agreement. If the rent increase has not yet been completed, the landlord has the right to raise the annual rent.
Amendment No. 20 of 2017 to the Rent Law
Amendment No. 20 of 2017 to the Rent Law introduces several important provisions:
The decision clarifies the jurisdiction of the Rental Dispute Settlement Committee in Abu Dhabi. If the value of the claim in a dispute is less than 50,000 dirhams, the committee’s decision is final and binding on both parties. However, if the claim exceeds 50,000 dirhams, either party may appeal the ruling within 15 days of its issuance, or within 15 days of receiving the ruling if it was issued in absentia. If the claim value exceeds AED 300,000, there is a further right to appeal the appeal ruling within 30 days.
Laws governing the lease term:
Regarding the lease term, the lease contract remains valid until the end of the specified period. The contract can be renewed for additional periods as agreed between the parties. If, upon the contract’s expiration, the tenant continues to occupy the premises without objection from the landlord, it is considered a renewal of the contract with the same duration and conditions.
Suppose either party does not wish to renew the contract. In that case, they must provide written notice to the other party at least two months before the lease termination date, whether it is a residential, commercial, or professional contract.
- The landlord is not permitted to request the tenant’s eviction solely due to the contract’s expiration before November 9, 2012. The Chairman of the Executive Council has the authority to extend this date through a decision based on the circumstances.
- The committee can order eviction before the specified date if it determines that the tenant is causing significant damage to the property. However, the tenant must have occupied the property for at least two years, and in such cases, the committee can grant a maximum of six months for the tenant to vacate the premises.
- The decision emphasizes the importance of registering lease contracts related to property in Abu Dhabi. It highlights the need for property owners to register their properties with the Abu Dhabi Municipality and for both landlords and tenants to ensure their lease contracts are registered in the municipality’s “Tawtheeq” system. Only registered contracts can be submitted to the Rental Dispute Settlement Committee in case of disputes.
It is crucial for both parties, whether landlords or tenants, to sign and register their lease contracts to protect their rights under the rental law.
According to the decision, if the disputed claim value is below 50,000 dirhams, the ruling of the Rental Dispute Settlement Committee in Abu Dhabi is final and binding on both parties. However, if the claim value exceeds 50,000 dirhams, the parties have the right to appeal the ruling within 15 days from the issuance of the ruling or the following day if it was issued in absentia. Additionally, if there is an appeal, the parties can further appeal the appeal ruling within 30 days from the day following the ruling or from the day following the notification of the ruling if it was in absentia. This applies when the claim value exceeds AED 300,000.
Regarding the lease term, the lease contract remains valid until the specified period ends. It can be renewed for additional periods as agreed upon by both parties. If, at the end of the contract period, the tenant continues to occupy the premises without any objection from the landlord, it is considered an automatic renewal of the contract for the same period and under the same conditions.
If neither party wishes to renew the contract, they must inform the other party in writing at least two months before the lease termination date. This applies to residential, commercial, and professional contracts.
The landlord is not allowed to request the tenant to vacate the property solely based on the contract’s expiration before November 9, 2012. The Chairman of the Executive Council has the authority to extend this date based on their discretion.
The committee has the right to request the eviction of the tenant before the specified date if it determines that the tenant has caused significant damage to the property. In such cases, the tenant must have occupied the property for a minimum of two years, and the committee’s decision allows a maximum of six months for the tenant to vacate the leased property.
Based on the decision of the Chairman of the Executive Council, rules and procedures for registering lease contracts related to property in the Emirate of Abu Dhabi have been established.
The following procedures should be followed:
- It is essential to ensure that the property owner has registered their property with the Abu Dhabi Municipality by verifying the registration certificate.
- It is recommended to thoroughly review the lease contract, paying attention to all terms and conditions, especially those related to the rental period, maintenance, and other fees.
Both landlords and tenants should be aware that, in the event of a dispute between them, a dispute request cannot be submitted to the Rental Dispute Settlement Committee unless the lease contract is registered in the Abu Dhabi Municipality’s “Tawtheeq” system.
Therefore, it is advisable to ensure that the lease contract is duly signed and registered to obtain a permit, as the rental law serves as a guarantee for the rights of both parties, whether they are landlords or tenants.