Tenancy contract is the contract signed between the Tenant and the Landlord. It is also referred to as Ejari. An Arabic term which means “my rent”.
If you are new in Dubai or you are planning to relocate in this beautiful city below are the things you need to check before signing the Tenancy Contract.
Moving to a new place can be challenging if you don’t know much about the process particularly in renting an apartment or villa and the charges that come along with it.
After a long search, now you finally found your dream home.
Now, what’s the next step?
Contract Signing.
Ten (10) Most Important Things a Tenant should consider before signing a Tenancy Contract in Dubai.
1. Renewal Notice
You need to check the notice period for Tenancy Contract Renewal. Standard notice is 90 days if either party wishes to renew a lease or wants to amend any terms or conditions stated in the contract. It can be 60 0r 30 days depending on the agreement.
Please note that the annual rent can either increase or decrease depending on RERA Rental Index.
If the Landlord wishes to increase the rent, he/she needs to give 90 days’ notice.
2. Termination Notice
For contract termination, it can also range from 90, 60 or 30 days’ notice depending on the agreement between the Tenant and the Landlord. Normally, two (2) months ‘rent penalty will apply. But it can be negotiated. Penalty can be reduced to 1 month rent or no penalty shall apply if mutually agreed by both parties.
3. Security Deposit Fee
For security deposit, 5% of the annual rent will be paid if rented property is unfurnished and 10% of the annual rent if property rented is furnished.
Security deposit is refundable.
Note: You can expect a full refund of the security deposit provided the unit was handed over in the same condition upon move in.
4. Agency Fee or Commission Fee
Brokerage companies may charge a minimum fee for agency fee or commission fee. But the standard fee is 5% of the annual rent plus VAT or it might be higher as agreed before signing the contract.
5. Admin Fee
Admin Fee varies depending on the brokerage company but the common charge is AED 1050 including VAT. Some agencies charged higher than AED 1,050.
Please check if there’s a clause for the admin fee. When renewing a contract, there might be an admin fee normally AED 1050 including VAT.
6. Minor Maintenance Fee
Minor maintenance refers to the repair or replacement of items such as cooker hood filters, fly screens, flexible pipes, hoses, sink plugs, bulbs, damage to electrical sockets and such other items considered minor associated with day-to-day usage and it is the responsibility of the Tenant. The cost of the minor maintenance shall not exceed 500 AED or 1000 AED or as agreed between the Tenant and the Landlord.
7. Major Maintenance Fee
Major maintenance includes structural, electrical, plumbing and air conditioners and is the responsibility of the Landlord except for damage caused by the Tenant.
8. Utility Bills
On top of the annual rent, the tenant is usually responsible for all the utilities connected in the property unless agreed and stated in the contract to include all bills on the rent. Otherwise, below are the normal utilities need to be paid by the Tenant.
A. DEWA (Dubai Electricity & Water Authority) – There’s a security deposit of AED 2,130 which is refundable upon moving-out from the apartment. Monthly bills will be based as per consumption.
B. AC(Chiller) – Aside from water and electricity, the tenant needs to pay for chiller or cooling system provided in the building. Some buildings or villas chiller is included. Security deposit is also required to register under the tenant’s account. The security deposit of AED 2,100 is also refundable upon move-out and monthly bills will be also based as per consumption. Empower is one of the most popular provider of cooling system in Dubai.
C. GAS – Gas connection is also required in Dubai depending on the area and the building. Some buildings used the normal cylinder gas used for cooking. But in other buildings, centralized gas is provided and the Tenant needs to register with security deposit. Security deposit fee depends on the provider but the normal fee is AED 500.
D. Internet/Telephone Service – The monthly charge depends on the package a Tenant will choose. Two major providers of internet and telephone in Dubai are DU and Etisalat.
9. Parking Slot
Before signing the contract, always check with the agent if parking space is included. Usually 1 parking space is allotted if someone is renting a studio, 1 bedroom, 2 bedroom and 2 parking spaces for 3-bedroom apartment or more. Normally, the available parking slot allocated in a certain unit is mentioned in the Title Deed.
10. Charged for bounced cheque
Bounced cheque fee comes if the Landlord/owner or the managing company deposits the rental cheque and it bounces for several reasons like insufficient funds, signature mismatch, etc.
Charges for bounced cheques varies depending on the brokerage companies or fees set by the bank. It can be 1000 AED per bounced cheque for any reasons.
To avoid this charge, the tenant should always make sure enough funds are available before due date of rent payment.