I have just seen the new law passing the re-instated Abu Dhabi “Rent Cap” and I am a little worried. It looks like on the face of it that Landlords can kick tenants out if they want to raise the rent over 5%.
I wrote another LinkedIn Article about this back in 2016 here.
A little bit of a history lesson first: in 2006 the new rental law fixed rent rises on property at 7% per year, this was revised in 2010 to 5% and has been called the “Rent Cap”. This was an emergency measure designed to curb rampant rent increases which peaked in late 2008 and was making rents unsustainable. The Rent Cap was removed in November 2013 and rents were allowed to rise in-line with the market. Rents flattened out in 2015 and began to fall in 2016. In November 2016 the Department of Municipal Affairs and Transport announced that the “Rent Cap” would be re-instated. I have now seen that new law, and it is very short. It states that:
The annual rate of increase in the rent set forth in the contract, if any, provided for in Article (16) of Law No. (20) of 2006 Regulating Relationship between Landlords and Tenants in the Emirate of Abu Dhabi, may not be more than five percent (5%), as of the issuance date hereof.
The 2006 law had a provision in it stating that landlords could only evict tenants for a limited number of reasons, such as they wanted to live in the property themselves, it was being knocked down etc. This was designed to stop landlords kicking tenants out who were paying low rents, to get new tenants in who would pay the market rent. This part of the law was removed in 2013 and has not been reinstated by this new law.
So if a landlord wants to raise the rent to the current market rent, if that rent is above a 5% increase, he cannot do this with his current tenant in the property – could he then simply evict the current tenant and find a new one willing to pay the market price?
The truth of the matter is, yes he certainly can kick the current tenant out – but now the government is monitoring (through the Tawtheeq system) what rents people are paying, would they stop him charging more than 5% to the new tenant? Only time will tell if the system stops them but the picture below shows an interesting new line in the new Tawtheeq Application Form. Will this work? We will have to wait for the market to turn around to find out.