On February 10, His Highness Sheikh Khalifa Bin Zayed Al Nahyan issued Law No 4 of 2010 which amends Law 20 of 2006 relating to the Rent of Properties and the Regulation of Landlord and Tenant Relations in the Emirate of Abu Dhabi.

The new law contains two important amendments which may significantly affect the rental landscape in Abu Dhabi. Landlords and tenants should be aware of these changes and how they will affect their existing leasing arrangements.

Removal of Five Year Right of Occupation

Previously, tenants had a right to renew their lease on the same terms and conditions until they had been in occupation for at least five years. This right of renewal was subject to the tenant complying with their lease terms, and was subject to annual rent increases being capped at 5%. Assuming that the tenant complied with their lease, a landlord could only end the lease prior to the expiry of the five year period under fairly limited circumstances.

The amending law has now abolished this protection, and from 9 November 2010 tenants will only have a right to remain in their premises until the expiry of their lease term, and they will not have a right to renew their lease (other than with the landlord's agreement). It should be noted that the operative date of 9 November 2010 may be extended by the Chairman of the Executive Council.

The 5 per cent cap on annual rent increases will, however, remain in place. This cap also applies to incoming tenants, who may not be charged more than 105% of the previous tenant's rent. In practice, it is difficult to ensure that landlords do not charge incoming tenants more than the cap. As there is no obligation on landlords to register leases of less than four years, incoming tenants will normally not be aware of what was previously charged.

Rental Dispute Committees

The second significant change concerns the rental dispute committee structure. Previously there was a two committee structure, being the Committee for the Settlement of Rent Disputes, and the Appeal Committee. Both of these committees were established, and administered by, the General Secretariat of the Executive Council.

This committees have been retained, however they are now administered by the Judicial Department, and the committees are to be chaired by judges. Judgments issued by the Committee for the Settlement of Rent Disputes can be appealed to the Appeal Committee if the amount of the dispute exceeds 100,000 AED.

A new feature though is the establishment of a further appeal committee, to be called the Cassation Committee, which will be chaired by a Court of Cassation judge. Judgments of the Appeal Committee may be appealed to the Cassation Committee where the amount of the dispute exceeds 500,000 AED.

These developments strengthen the dispute resolution system for tenancy disputes in Abu Dhabi by placing experienced judges in charge of the committees and recognising that significant disputes should have a further right of appeal at a Court of Cassation level.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.