KT For Good: Get rent cuts in Dubai, thanks to new initiative
The recent resolution was issued owing to the slowdown of business activity amid the pandemic.
For residents and businesses reeling under the impact of the Covid-19 pandemic, paying rent is one big financial obligation to worry about. But UAE authorities were quick to step in and offer relief.
In Dubai, tenants of both commercial and residential properties may request rent cuts or early contract termination without having to pay compensation to the landlord - thanks to an order issued by the Rent Disputes Centre (RDC).
Through the administrative order, signed by Judge Abdulqader Mousa Mohamed, head of the RDC, two committees were formed to look into rental cases related to the cancellation of tenancy contracts and decreasing rent value. Another committee shall also be formed to take charge of appeals filed to challenge the rulings issued by the two primary teams.
Lawyer Abdul Monem Bin Suwaidan of Bin Suwaidan Advocates and Legal Counsels told Khaleej Times that the recent resolution was issued owing to the slowdown of business activity amid the pandemic. Many businesses, like restaurants, enterprises and commercial groups, have reported a decrease in earnings. Residents have suffered salary cuts, with some even losing their jobs. The order offers the rent relief people need in the time of Covid-19.
To avail of the relief it offers, a claimant will have to approach the committee and file the case, citing reasons why he/she wouldn't be able to pay the rent. These may include debts, labour problems, lack of customers, and losses due to poor revenues.
After looking into these justifications, the committee then evaluates the claimant's condition and may issue a ruling that will cancel the contract directly, without obliging him to pay any compensation.
A business owner renting a restaurant for Dh1 million may find himself unable to pay his dues, but thanks to this resolution, he can have two options, Bin Suwaidan explained.
"One option is to file a lawsuit and request the rent value to be reduced. He must submit the necessary papers to the committee, showing what his business had gone through and the losses it incurred due to the market and that it was none of his intention defaulting. The second option would be to pull out of the commitment and request that the contract be cancelled before the due date."
Tenants of residential units have an equal right to avail of the order, the lawyer said. "They have to substantiate their financial conditions and any pay cuts. There could be people who might take advantage of the granted exceptions so the committee wants to ensure that the claimants are really affected by the coronavirus-imposed situation.
"Such lawsuits were not available in the past. Back then, the committee would cancel the contract and would oblige the tenant to pay a certain compensation to the landlord (for example two or three months, worth of rent, to end the contract)."
Job loss as 'force majeure'
Termination of employment, as well as pay cuts, can be considered 'force majeure', one of the exceptional circumstances that can enable the tenant to seek rent relief, said lawyer Hani Hammouda of Kefah Al Zaabi Firm for Advocacy and Legal Consultancy.
"The tenancy contract could well add to the financial woes of the tenant who lost his job. Other reasons could be a transfer of the employee out of Dubai to work at another branch of the company. A salary cut or a decrease in housing allowance, among other reasons, could well be cited when filing a lawsuit. The claimant should provide the necessary documents or proof thereof. The committee has laid down certain criteria to end the contract or decrease the rent."
A tenancy contract may be cancelled because of a 'force majeure' or by implementing the theory of 'emergency circumstances' that could not have been foreseen or expected at the time when the contract was signed, he explained.
Hammouda hailed how the RDC initiative helps the community weather the crisis and find solutions to the problems arising from the pandemic situation.
"Such initiatives consolidate the contractual relation between the two parties in a proper way or end the contracts in a way that is satisfying to both of them. It shows that the RDC does not stand alienated to the society or economy. But rather it tries to tackle the origin of the problems and find swift solutions agreeable to all," he said.
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