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Dubai landlords serve even 12-month notices for tenants to vacate – and then get higher rents

Demand is such there is even a premium for villas in Dubai that are ‘vacant on transfer’

In Dubai’s property rental market, a 90-day notice is standard practice. But what about 12-month notices?

That’s right, these extended notices are being issued by property sellers/landlords as they find unprecedented demand for built property in Dubai. Through issuing 12-month notices, these property sellers/landlords want to ensure when a deal is signed with the new buyer/tenant, the latter need not wait around for the property to be vacated.

There are other reasons for these extended notices. Existing tenants realise that it may better suit their budgets if they renew their lease rather than seek a new home, as Dubai rentals across prime and mid-tier locations see gains of 20 per cent plus on average over the last 12 months. Most estate agents see this continuing well into next year, as the city’s resident base continues to expand.

But on renewals, landlords face a tricky situation. Even if they demand a substantial hike for a renewal, chances are that the new lease will not match what they might get bringing in a new tenant.

“Landlords are aware that tenants who are on lower rents are staying put,” said Richard Waind, Group Managing Director at Betterhomes LLC. “Even with the RERA calculated rent increases, it can still be cheaper than renting a new apartment with all the increases.

Much has changed since the early weeks of this year. At the time, a majority of tenant-residents in Dubai were on the lookout for new homes rather than renew their current lease. More homes had been delivered as well by this time, whether in upscale Dubai Hills or the new residential hotspots at MBR City or Damac Hills. And the same was happening at mid-market locations of JVC and Al Furjan.

But supply of new homes is falling far behind the demand that’s coursing through all of Dubai’s residential clusters.

Summer changes everything

It wasn’t only the temperature that rose in the summer gone by. Rent gains had started to pick up significantly by July, which forced tenants to rethink what they should be doing. That’s when the renewal rush started.

Premium for ‘vacant’ homes

At the same time, demand for property in Dubai sustained right through the June-to-end August phase. And they wanted immediate delivery of the newly acquired homes for their own stays.

“Less than 30 per cent of available villas today are vacant on transfer (VOT),” said Waind. “As VOT villas will sell for a premium, there are lots of landlords today serving notice for their tenants to vacate and then trying to sell.

“Landlords can only serve notice for tenants to vacate for three reasons – to sell, to move in themselves or the immediate family moving in, or doing substantial and required renovations. We are seeing landlords looking to serve notice in order to increase rents – but we advise that they risk fines and sanctions from RERA.”

Source: Gulf News