Rental Cap Decree
Judicial Committee Decree
Comment


On December 23 2007 Decree 27/2007 on Rentals in the Emirate of Dubai came into effect. It was shortly followed on December 30 2007 by Decree 30/2007 Appointing a Special Judicial Committee on Tenancy Dispute Resolution. This special judicial committee decree was published in the Official Gazette on January 31 2008 and came into effect on the same date.

Rental Cap Decree

Decree 27/2007 stipulates that for existing tenancy contracts that are set to be renewed in 2008, the rent increase will not exceed 5% of the annual rent, provided there were no rent increases in 2007. The decree thus sets a cap of 5% for such rent increases.

New tenancy contracts entered into in 2007 will be subject to no rent increases in 2008.

However, the decree sets an exception for tenancy contracts of more than three years in duration which are due to expire in 2008. In these cases, the Dubai Rent Committee will have the discretion to increase the rent of the respective property to the same rent amount as other similar properties.

Judicial Committee Decree

Decree 30/2007 provides that a special judicial committee called the Judicial Committee on Dispute Resolution will be set up and given the exclusive authority to consider and decide on all disputes relating to real property located in designated areas in which foreign freehold ownership of property is permitted (designated freehold areas). In particular, the committee will decide on disputes relating to:

  • ownership interests in real estate in designated freehold areas, including disputes concerning usufruct rights over real property and any related rights in rem;
  • the actions of real estate brokers; and
  • leases of more than five years. 

The specific reference to leases of more than five years clearly suggests that disputes arising from leases of five years or less are an exception to this new committee’s exclusivity in designated freehold areas. These disputes will continue to be referred to the Dubai Rent Committee for determination.

The Judicial Committee on Dispute Resolution will comprise a chairman and at least five members appointed by the chairman of the Executive Council of Dubai.

The committee will convene with the presence of a majority of its members and will pass its resolutions by a majority vote of the members present and voting. Committee decisions will be final and will not be subject to appeal.

The committee’s decisions will be enforced by the Execution Division of the Dubai courts.

The decree further stipulates that the committee will base its judgments within the limits drawn by Dubai laws and regulations, with special emphasis on real estate legislation.

Comment

The new decrees represent yet another move towards streamlining the local real estate market in Dubai. They are a sign of the government’s drive towards ensuring the sustainability and continuing growth of the real estate market by introducing new policies and adopting international best practices, particularly in designated freehold areas.

For further information on this topic please contact Tony Maalouli at ProConsult Advocates & Legal Consultants by telephone (+971 50 625 8284) or by fax (+971 4 329 8733) or by email ([email protected]).