Dear adviser, I am a tenant in a building in Dubai since last 5 years, each year renewing the contract. During current renewal from 1st January 2015, I am interested to renew the contract for 6 months only instead of full year (until June), & informed the landlord 6 months in advance that this is my last renewal. The landlord informed by phone that if I am not renewing for full one year, I should pay 15% penalty. My question: is it legal for landlords to charge such penalty and under which rule?
Thank you for your email.
Unless you are renting on a short term basis all other leases are for a minimum of 1 year. As you wish to terminate your lease early there is normally a penalty equivalent to 2months rent for breaching the lease. This is on the assumption that the remainder of the rent is being refunded. This penalty should form part of your agreement at the beginning of the tenancy. If no such clause exists then it is down to pure negotiation on your part as to what is deemed fair for compensation for you to breach your contract.
I hope this has helped.
The above answer has been brought to you by Mario Volpi who is the Managing Director of Ocean View Real Estate in Dubai. Mario has 30 years of property industry experience in Dubai and London.
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