Job Loss or Salary Reduction due to Covid-19? Get help to have your Rent reduced or have your Penalty waived.

Covid-19: Job Loss? | Need Help to Reduce your Home or Business Rent? | Need to Terminate your Lease and Waive Penalty?

It has been a norm in Dubai to fix rent during duration of tenancy and 2 months penalty for early ending of rental contract, but help is around.

Tenants in Dubai can now approach the Rent Dispute Committee (RDC) located within the Dubai Land Department, Baniyas road in Deira and request for intervention citing job loss or salary reduction showing proof of same on letter from their companies.

A case is then opened and the judge after studying the facts can decide and pass judgement to help reduce rent or waive the 2 month rent penalty which is usually mentioned in contract or is considered as standard if a tenant breaks his tenancy prior to it coming to and end.

RDC is now hearing cases brought in by commercial tenants who no longer can sustain to keep their businesses running due to covid-19 situations and are either requesting a rent reduction or seeking help to exit their leases and not have to pay penalty for early termination. 

Once RDC gives their judgements, the same can apply on residential leases as well and can come a long way to bring relief to tenants who have either lost their jobs or have seen their salaries reduce from 30 to 50% or some even in complete unpaid leaves for indefinite periods.

What does the law say on early termination when a tenant loses his job?

The recent landmark verdict by RDC clearly says that no landlord can impose a penalty on a tenant in case of sudden job loss. RDC is seeing a large increase in such cases rising seeking its intervention to get penalties waived due to job loss where the tenant is already facing a bleak future to survive and then has to undergo the burden of penalties implemented by certain unwilling landlords.

According to RDC, a sudden job loss is a valid reason for a penalty waiver due to exceptional circumstances arising from covid-19 and as job losses are rising, RDC intervention has come as a big savior from already shocked and suffering tenants and RDC is fast-tracking cases as there has been a sudden rise in cases where business are trying to shut down or tenants continue to lose their jobs.

In cases of salary reduction as well, RDC has been given authority to implement their decisions on rent reduction to a certain extent. RDC can also intervene in cases of commercial properties as well by either asking landlords to reduce rents to support businesses to sustain or allowing them to limit losses by waiving penalties for early termination.

RDC gives landlords an option for a rent reduction or penalty waiver during the resolution phase before registering the complaint as a case. The landlord must approve rent reduction as applicable. If in the case where the landlord does not approve, then the case is registered as a dispute to be subjected to RDC judgment which is then applicable to both, landlord and tenants.

What are the penalties for early termination?

In Dubai, early termination as a rule of thumb requires a penalty of 2 months' rent and is often mentioned clearly in the contract, in cases where it is not mentioned, landlords can claim a penalty for the remaining months.

The penalty can only be waived in case of job loss or can be negotiated depending on the situation, rent reduction is advised in case of salary reduction, and is often in the best interest of the landlord to have the property returned so he can rent it again instead of getting into a protracted legal case with the courts in case a tenant absconds.

Months of May and June saw a wide increase in cases of terminations although the job losses already started earlier right during the lockdown. The most affected were the ones living in shared accommodation, the economy will further decide future situations.

How easy it is to seek help from RDC?

Easy enough, RDC has set up a subcommittee to help fast-track case resolutions as they see a daily rise in such cases.

A tenant shared their experience saying a WhatsApp group was set up with all parties where everyone had a chance to share their views and judgment was given in 4 days in case of a rent reduction case.

In cases filed with RDC, the losing party bears the cost of fees which is 3.5 percent of the rental value as court fees. In most cases, it is the tenant who approaches the RDC for resolving a dispute.

It is often advised to try and resolve the situation directly with the landlords but in some cases where it does not work, approaching RDC is the only option left.

Some landlords co-operated by allowing tenants to pay rent every other month keeping the rent the

same as landlords also complained about the inability to waive rents due to ongoing bank mortgages on their properties.

Some landlords are flexible

Tenants are lucky in cases where landlords are willing to help with flexible payments, rent reductions, or penalty waivers when they see a job loss but not every tenant is lucky to have such good landlords and have to face threats of legal action when rent is not paid so in such cases RDC is the only hope left instead of absconding which is not good for the tenant as it spoils their chances of returning back to UAE as there will be cases filed by their landlords.

Tenants advised not to bounce cheques

Tenants should try and avoid having their cheques bounced as not only this adds to their costs by bank charges but also penalties of cheques returned as mentioned in their contracts. RDC can also at times waive such penalties while balancing the effects of such decisions on both, tenants and landlords.

Can RDC also impose penalties?

In case of rents not being paid and overdue even before the covid situation arose, RDC has powers to add penalties on tenants as rent delays have caused financial issues to landlords whose interest also needs to be taken into consideration.

Most common judgments from RDC

The most common judgments given by RDC so far are termination of leases and freeing the tenant from lease agreements which have become a burden in their current situations.

RDC Payment options?

RDC payments can be done via various channels such as bank transfers, Noqodi wallet using recharge options, or payments via credit cards, al Ansari exchange. Various banks have also partnered with RDC to facilitate payment options for paying court fees.

RDC Contact Number

RDC can be reached on the customer support number 8004488 for any queries, required documents and to understand the procedure to seek help.

RDC Address

Dubai Land Department, Opp Sheraton and NBD Head Quarters on creek road, Baniyas Road, Deira Dubai.

Conclusion

So for tenants who are not able to resolve amicably with their landlords, RDC is the authority who can help.

If you need more help, feel free to contact Grandeur Homes Real Estate Brokers LLC by email: sanjay@ghomesdxb.com

Source: Gulf News | Date: July 3, 2020

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