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Dealing with rental deposits and service charges

2015-09-02 07:18:18

o you have found your new apartment or villa — the price seems fair, location is good and you're ready to move in. So far so straightforward. Now comes the matter of agreeing on the rental deposit and associated costs, and this is where many people say they are unclear about their rights.

The reality is that in Dubai, this part of the transaction can be a bit frustrating. When it comes to the deposit, there is no legally stipulated amount, although 5 per cent of the rental price for an unfurnished unit, and 10 per cent for a furnished unit is the norm. A tenant may wish to negotiate, but will not find it easy. If you really want the property, you might have to go with the sum requested. This amount is refunded to the tenant upon moving out.

Landlord rights

At the end of the day, a landlord has the right to ask for a deposit to cover any damages to the property during the time the tenant lives there. And this is something to really think about. Make sure a conditions report is completed before you move in, that you and the landlord both sign agreeing on the state of the property. If there are a few chipped kitchen tiles or pieces of scratched furniture, ensure it is noted down, otherwise it will be impossible to prove you didn't cause the damage two years down the line. A good tip is to also take photos or a video of the property on move-in day. These measures will help both you and the landlord feel at ease.

When you do move out, it is reasonable to expect your deposit back within in a week or two or as stipulated in the tenancy agreement. Unfortunately, again there are no controls on this so you might have to do some chasing. This area is heavily regulated in other markets, so hopefully the Real Estate Regulatory Agency (Rera) will set some guidelines in the future.

For now, I would recommend having it as a clause in your rental contract. If a dispute arises between you and your landlord over damages or repayment of your deposit, try and settle it amicably first. However if the dispute continues, then the legal option is to bring the case to the Rental Dispute Settlement Centre at the Dubai Land Department. This body is authorised by the Dubai Government to abide by a judicial system that can deal with rental arguments and settle issues in a quick and transparent manner.

If tenants want to end things on a good note, they should ensure they leave the property clean and tidy. For instance, don't leave behind bags of rubbish, and clean the kitchens and bathrooms. Small things can make a big difference when it comes to these kinds of business relationships.

One good news for tenants in Dubai is that more landlords now allow to pay rent in two or four cheques. In some areas where many units are lying empty, landlords are even accepting six or 12 cheques, although these are usually properties with higher overall rents. But don't be afraid to ask for a better price.

Fix the fees

Another subject that can cause confusion and potential dispute is service fees. These are costs approved by Rera that an owners association (OA) can charge on owners for the maintenance and upkeep of communal areas in a development, such as landscaping, community swimming pool and elevators. A common problem is that people move into a neighbourhood without knowing that their landlord is liable to pay certain service fees and then find out he hasn't.

It is the responsibility of the landlord to give all this information to the tenant well in advance, but equally, tenants should push to get all the details before accepting the keys. In fact, wherever applicable, they should ask for a copy of the service fees agreement.

Keep faith

If a landlord does not want to pay upkeep charges, it will be quite difficult to get him to pay. A tenant moving into a residential unit can only hope that the landlord will do the right thing and cover maintenance charges. We hear of tenants complaining about gyms with machines not working or pools with faulty cleaning systems, and the truth is they have little recourse if this is the case.

There are buildings in some areas that are allowed to go to rack and ruin, but thankfully they are the exception. I think moving forward, Rera will set in place tighter controls in this department. Market forces will also mean that it is not in the landlords' interests for a building not to be shipshape as they won't be able to demand high rent.

If a building is jointly owned and there is an OA, there is still not much recourse for a tenant with a complaint. However, both landlords and tenants enter into an agreement with a certain amount of trust and for the most part, people do keep their end of the bargain and behave in a fair and reasonable manner.

Our advice would be to always get things in writing, do your homework and ask questions so that you know completely where you stand. The key to stress-free property leasing or renting in Dubai is transparency, transparency and transparency.