Renewal of Residential & Commercial Leases in ADGM (Real Property Regulations 2024)

Purpose:

This legal update is intended to educate tenants and landlords  about  key  considerations,  rights,  and responsibilities related to termination and renewal of lease contracts under the ADGM Real Property Regulations 2024.

 

1.  Short-Term Residential Leases

Key Points (Sections 60 & 61, Part 8):

• Lease Renewal: Renewal is only by mutual agreement of the landlord and tenant. The law does not automatically grant renewal rights.

• Registrar Notification: Landlords must notify the ADGM  Registrar  of  any  renewal  or   amendment within 90 days before the lease   expires. Failure to do so may result in  the   property being marked as vacant, which can   create administrative gaps for tenants.

• Rent Increases: Residential leases allow a rent increase only if notified in writing 90 days before the lease ends, and the increase cannot   exceed 5% of the current rent.

• Eviction & Termination: No statutory eviction notice is provided beyond what is agreed in the lease.  Tenants  and  landlords  should  clearly   define notice periods and acceptable grounds for   eviction.

 

Practical Guidance:

1. Include a renewal clause specifying:

o Whether renewal is optional or automatic   (in any case the landlord will file a request   to the registrar),

o Conditions for renewal,

o Timelines for exercising the renewal right.

 

2. Include a rent increase clause to clarify:

o Maximum allowable increase,

o Method of calculation,

o Required notice period.

 

3. Include an eviction clause stating:

o Required notice periods for both parties,

o Grounds for eviction,

o Responsibilities  related  to  Registrar   notifications for the renewal.

 

2. Commercial Leases

Key Points:

• ADGM law does not provide specific statutory protections for  commercial  leases  regarding   renewal, rent increases, or eviction.

• All commercial lease terms must be agreed and documented in the lease. This includes:

o Renewal rights (optional or mandatory),

o Rent adjustment mechanisms,

o Eviction notice periods and grounds.

• Registration with the ADGM Registrar is still required for  all  commercial  leases  and   amendments.

 

Practical Guidance:

• Clearly define renewal terms and notice periods to avoid disputes.

• Include rent increase  clauses  to  secure predictability.

• Define eviction/termination clauses  for  both

parties.

• Assign responsibility for registration and fee payment.

 

In the absence of clear provisions in ADGM Real Estate Regulation, the issues related to renewal, rent adjustments, eviction, and registration responsibilities should be clearly documented in the lease contract to ensure  clarity  and  security  for  both  tenants  and landlords. Careful drafting and awareness of these requirements are essential to protect your interests and avoid disputes.

 

Our team is ready to assist you to review the lease contract and ensure the interests of both parties are clearly secured.