Residential tenants in Dubai are starting to see some relief being offered by their landlords, with some offering one- or two-month rent waiver to ease the strain.
But such relief is still being provided on a “case-by-case” basis, with tenants having to prove that their incomes have suffered as a consequence of the COVID-19 outbreak. Market sources say landlords’ offices have been flooded with such requests, and these will keep piling up in the next month or so.
But one thing is clear – not all landlords are being generous despite whatever proof their tenants can come up with on their changed financial status.
“For every landlord willing to listen, there are many who will send messages and emails to their tenants to ensure they have sufficient cash in their accounts and avoid paying late fees,” said one leasing agent.
Rental holidays A rent-free month or two is still the exception, but many landlords are willing to consider extending a “rental holiday”. “A deferred payment of current rent [dues] and more flexible payment terms - of up to 12 cheques - would be the most common solution being offered,” said John Stevens, Managing Director at Asteco.
For every landlord willing to listen, there are many who will send messages and emails to their tenants to ensure they have sufficient cash in their accounts and avoid paying late fees. - Leasing agent “Some landlords may have financial commitments to banks that need to be met, or the tenants’ lease could be expiring in the next few months. There are many variables that affect a landlord’s decision to offer concessions.”
Legal rights
Also, tenants will be able to use COVID-19 created changes to their professional status as a factor in lease agreements. Especially when they have suffered a job loss and are considering changes to their residential situation.
A judgment by Dubai’s Rental Dispute Settlement Centre says that a tenant dismissed from a job qualifies as “exceptional circumstances” and thus can justify termination of his lease contract with the landlord.
In other words, the landlord cannot impose any penalty for “early termination being imposed on the tenant,” according to an update issued by the law firm Baker McKenzie.
The judgement states: "The RDC is of the view that the [job] termination of the claimant (tenant) is an event of emergency circumstances, which the claimant cannot mitigate nor predict. The lease has become burdensome to the tenant to the extent that it is impossible to continue with the lease agreement."
Those words – categorical in what they state - would offer more than temporary relief for many in the coming weeks.
Keep at it
Real estate sources say some persuasion could still work with landlords. “Even if their initial reaction is to dismiss all requests for rent relief, landlords will realise that it’s best to retain their tenant rather than search for new ones,” said one leasing agent.
“Resumption of flights will tell the real story of what demand will likely be in the weeks ahead, and whether changes on the job and income situation will force more people to consider shifting to lower rent options. Landlords had better be prepared.”
Provide the proof According to Prathyusha Gurrapu, Head of Research and Advisory at Cushman & Wakefield Core, “Many employers are providing proof [of changes to salaries] to employees upon request, which they can pass on to landlords.
“We have witnessed, in some cases, of landlords agreeing to a one- or two-month rent relief. Or at least reviewing the arrangement on a month-to-month basis depending on each individual’s situation.
“A one-two month rental waiver would be a more significant solution as many tenants are looking at salary cuts, leave-without-pay or lay-offs. Rent deferrals can only help up to a point.”
A TIME TO NEGOTIATE
By September, most market sources say there will be a further softening in rents on the residential side. But the negotiations seem to have already started as tenants keep pushing their landlords for changes on their rental outgo.
“While there was limited activity over the last few weeks due to movement restrictions, we are now witness to a higher number of negotiations as many tenants see a reduction in incomes,” said Prathyusha Gurrapu of Cushman & Wakefield Core. “We foresee this to continue, with a rise in relocations as tenants look to reduce their rental outflow.”