Renting in Dubai: How to Terminate Rent Contract Early Without Penalty Due to Challenging Times

The current situation has presented several challenges for all residents of the UAE, but more so for expats who temporarily or permanently lost their jobs due to the economic losses incurred by companies in the country due to the effects of COVID-19.

And with this, every expense has become a bigger burden, especially the cost of rent, which is one of the reasons why some residents have opted to fly back home as they wait for the situation to settle down first, or as they – when all is back to normal. However, legalities prevent them to do so, especially when there’s payment involved. 

Renting in Dubai: How to Terminate Rent Contract Early Without Penalty Due to COVID-19
Credits: lensmatter/Flickr

End Your Rent Contract Early Without Penalty 

If you are among those who wish to return home but are wondering whether it’s possible to end your rental contract earlier in Dubai without incurring any penalties. The short answer is yes. But if you wish to understand the details and procedures on how to do this, continue reading below…

If you’re staying in Dubai, you should know that certain laws govern the processes of getting an apartment or a place to stay in the emirate. Since the issue involves renting an apartment in Dubai, Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (Dubai Tenancy law) and Law No. (33) of 2008 Amending Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (Amended Dubai Tenancy Law) are applicable.

And because of the current situation, the provisions of the Federal Law No. 5 of 1985 on the Civil Transactions Law of the United Arab Emirates (Civil Transactions Law) may apply, too.

Under normal circumstances, a landlord or a tenant may not unilaterally terminate the tenancy contract and it may be terminated mutually by the landlord and the tenant during the term of the contract. This clause is referring to and supported by Article 7 of the Dubai Tenancy Law, which states: “Where a lease contract is valid, it may NOT be unilaterally terminated during its term by the landlord or the tenant. It can only be terminated by mutual consent or under the provisions of this law.”

Further provisions cited under Article 4(1) of the Amended Dubai Tenancy Law and  Article 19 of the Dubai Tenancy Law maintain that as a tenant, you should fulfill the obligations mentioned in your tenancy contract and you may have to pay the two months’ rent as penalty for early termination of the contract.

However, due to the current situation, where economic activities and earning capacities have become limited, local authorities have urged both landlords and tenants to come to an agreement related to changes in the terms of the existing tenancy contract.

The ideal scenario is when both the landlord and the tenant mutually agree to a reduction in rent; early termination of the tenancy contract; rent-free period options; or any other concessions on the grounds of the pandemic.

However, if the landlord does not agree to your request, factoring the current situation and under the premise of force majeure which means ‘unforeseeable circumstances that prevent someone from fulfilling a contract’, as cited under Article 273 (1) of the Civil Transactions Law, you may bring this concern to the Rental Dispute Centre (RDC) in Dubai and file a complaint against your landlord for not agreeing on the early termination of your tenancy contract without payment of any penalty.

To do this, you need to submit a copy of your termination letter to the RDC. The RDC may accept your complaint and may terminate your tenancy contract without payment of penalty to the landlord under Article 249 of the Civil Transactions Law, which states: “If exceptional circumstances of a public nature which could not have been foreseen occur as a result of which the performance of the contractual obligation, even if not impossible, becomes oppressive for the obligor to threaten him with grave loss, it shall be permissible for the judge – under the circumstances and after weighing up the interests of each party – to reduce the oppressive obligation to a reasonable level if justice so requires, and any agreement to the contrary shall be void.”  

To conclude, the UAE law offers consideration for unforeseeable circumstances, which, in this case, is the pandemic and, therefore, based on this, you may be able to terminate the tenancy contract with your landlord unilaterally.

However, even before you resort to legal assistance from relevant agencies, you should bring the issue up with your landlord first because you both may come up with terms that would benefit each other, especially when the current situation has largely affected all residents in the country. This is out of consideration for each other’s capacities amid the extraordinary circumstances everyone is currently experiencing.  

ALSO READ: How to Process “Early Leave” for Private Sector Employees to Return to their Home Countries