Renewing a property contract on a yearly basis can be a hassle, whether for the Tenant or the Landlord. Every Landlord is working on keeping existing Tenants or starting to search for a new one to occupy the property.
At Urban, we understand every Landlord's nightmare, and we work to resolve them. Here's Urban's stress-free guide to help landlords manage the transition.
Exploring your options
Retention is key. Retaining a tenant is every Landlord's priority, especially in an affordable market like the Dubai real estate market.
That means not having to lose any income, re-market your property, or vetting the next person you want to take care of your home. A happy tenant is unlikely to move for a slight difference in rent due to the probative cost in time and money of moving.
To evaluate the market and make the right decision, always check similar units to yours in the same building/community on listing portals.
Being aware of the value of your property will give you a better idea of the potential income you could earn, retain, or lose.
Keep in mind costs that could pop up when you're looking for a new lodger. End/beginning of tenancy maintenance, touch-ups which can vary depending on how well the previous Tenant took care of your home. Additionally, many agencies charge an average of AED 150 to photograph and market your property professionally.
Urban tip: Landlords, you can keep your tenants happy by offering other perks: not just addressing the property's issues on time. When you renew your lease with Urban, offering your tenants the ability to pay digitally and installments. What's in it for you? Tenant retention and a shiny new dashboard to overlook your property and cash flow.
Maintaining your property
Whether you are renewing or renting to a new tenant, you will have to spend money on maintenance.
If you are renewing your lease, you are looking at annual up-keep maintenance, A/C cleaning, and maintenance.
Even if you are looking for a new tenant, all maintenance works need to be done before their move-in (additional services such as pest control, disinfection, and painting will also add to the bill)
Urban tip: Sign up for an annual maintenance contract (AMC) prices can start from AED 1,500/year.
Can I increase my rental income?
There are many ways to boost the rent value of your property, and it starts with you.
With no shortage in the supply of Dubai's real estate market, rents are ever-changing. Upgraded and newer properties and highly desirable.
Before you start negotiations with your Tenant, check the RERA (Real Estate Regulatory Agency), part of Dubai's Land Department, rental index calculator (available on the Dubai REST application). This government entity explains how much you can increase your rent, depending on your neighborhood, price, and laws set in place.
For example: If you have a 2-bedroom apartment in Dubai Marina and your current tenancy contract is AED 100,000 annually.
The current average rental income range is AED 103,000 – AED 125,000.
If you're coming to a renewal, you can increase your rent by 5%.
Here are the rent brackets (set by RERA):
· An 5% increase is applicable, where the rent is 11%-20% less than the average of similar units in the area.
· An 10% increase is applicable, where the rent is 21%-30% less than the average of similar units in the area.
· An 15% increase is applicable, where the rent is 31%-40% less than the average of similar units in the area.
· An 20% increase is applicable, where the rent is less than 40% the average of similar units in the area.
· Where the rent is within the range, no increase is applicable.
Try and create a win-win scenario. A rent increase can be difficult to digest, so if you aren't fussed about the number of cheques or ponying up for a parking spot, you can sweeten the deal.
Urban tip: Let's not wreck the relationship. This person is staying in and taking care of your home. We recommend having a 3rd party negotiate on your behalf; if they end up staying, you will want to keep a good relationship with your Tenant. Urban's negotiating experts can assist you.
Giving a proper notice period to your tenants
To increase the rent, you must give your Tenant a 90 days' notice. If no notices are given, the tenancy contract is automatically renewed at the same annual rent amount with the same terms.
If you're not looking to renew your tenancy contract, a 12 months' notice has to be given. This type of notice is called an eviction notice and can only be done so under specific circumstances.
In the case that your Tenant decides not to renew, they should be giving you a 90 days' notice (unless otherwise stated in your contract). If they don't, a two months rent penalty can be levied.
Renewing your lease
All RERA/agency charges are the burden of the Tenant when renewing.
Once both parties have agreed on a rental price and the terms of the contract, here's what happens:
- You will need to have a whole new tenancy contract and Ejari; this needs to be filled and signed by both parties
- You need to provide your passport and Emirates ID copies to the Tenant
- They should register your tenancy contract with RERA and give you the cheques!
Urban tip: Encourage your Tenant to process your renewal with Urban. You can collect your rent via credit/debit card/bank transfer/cheque and have all your lease documents in one place. What's more? You'll have a complete overview of your portfolio and, most importantly, your cash flow!
Ready to renew or lease in a whole new way?