UAE Property: 'Should I waive the penalty if my tenant can no longer afford the rent?'

Question: I own a one-bedroom apartment that I rent out. My tenant renewed only three months ago but has now lost his job and says he needs to leave the UAE.

The tenancy contract says early termination requires two months' rent as a penalty. He has asked me to waive it because he has a family and says he genuinely cannot afford it. I'm sympathetic, but I'm also paying a mortgage and I'm worried the apartment could sit empty while I find another tenant.

What would you do? Am I being foolish if I let him leave without enforcing the penalty? DH, Dubai

Answer: There's the legal answer and then there's the answer I would give you after many years of dealing with landlords and tenants, and they aren't always exactly the same.

Let's start with the contract. If you have an agreed early termination clause requiring two months' rent, that is the basis from which the two of you negotiate. A tenant losing their job doesn't automatically erase their contractual obligations. But of course, I wouldn't immediately turn this into a dispute.

Ask the tenant when they realistically need to leave and whether they'll co-operate with viewings (presumably you will want to find an immediate replacement). Then, speak to a good local brokerage firm to establish how quickly the apartment could be re-let and at what level of rent.

Suppose your existing tenant helps you secure a replacement who moves in immediately after he leaves. If you suffer little or no financial loss, insisting on the full two-month penalty may achieve very little other than making an already difficult situation for him worse.

On the other hand, if the property is likely to sit vacant for six weeks and you'll incur cleaning, maintenance/preparation costs, or perhaps agency fees, it's therefore perfectly reasonable to negotiate compensation.

If I had to be practical and you pressed me for my view, I would release him early provided he allows viewings, returns the apartment properly, settles utilities and rent up to the agreed handover date and perhaps pays a reduced termination amount if there's a genuine vacancy period.

One piece of advice though: whatever you both decide ensure you put everything in writing. I've always believed the best landlord-and-tenant outcomes aren't necessarily the ones where somebody squeezes every last dirham out of the contract. They're the ones where both sides walk away feeling the agreement was fair.

You have a mortgage to pay, so this isn't charity. But if you can replace the tenant quickly and help somebody through a genuinely difficult period without leaving yourself out of pocket, I'd call that sensible property management rather than weakness.

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Q: I own an apartment in Dubai that I bought as a long-term investment. My service charges have increased over the years, but the condition of the building seems to be going in the opposite direction.

The gym has had broken equipment for months, there are regular problems with the lifts, the swimming pool has been closed several times and the common areas look tired.

I don't mind paying reasonable service charges if the money is being spent properly, but as an individual owner I feel I have absolutely no influence.

Can I refuse to pay until these issues are fixed, and how can I actually find out what I'm paying for? LM, Dubai

A: Straight off the bat, I wouldn't refuse to pay. This puts you in a weak position and ultimately you will be falling foul of the law.

Service charges in Dubai's jointly owned properties are regulated and the budgets are subject to Rera's approval. The charges can include security, cleaning, maintenance, utilities for common areas, insurance, management costs, master-community charges and contributions to any reserve funds.

Your first step should therefore be to establish what the approved charge actually is. You can check this through the DLD Service Charge Index, Mollak or Dubai REST. DLD specifically states that management entities should not demand service charges before they have been approved by Rera.

After you have thoroughly checked this out you can go ahead and separate the two issues of how much you're being charged and what standard of service you're receiving.

A high service charge isn't automatically unreasonable if you're in a building with extensive facilities, cooling of common areas, several lifts, pools, landscaping and 24-hour security. But owners are entitled to question why facilities they are funding are not being fully maintained.

Document the problems. Dates, photographs, emails and previous complaints are far more useful than simply saying the building is badly managed.

Raise them formally with the management company first. If the standard of common-area maintenance remains unacceptable, DLD says owners can submit a complaint through Dubai REST using the Real Estate Violations System.

From an investment perspective, I'd take this seriously. Poor building management doesn't just irritate residents, over time it can affect rents, tenant retention and of course resale values. Two identical apartments in neighbouring buildings can perform very differently simply because one building is well run and the other isn't.

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@evadxb.com