Sharjah has introduced new real estate laws extending eviction protections and rent freezes to boost tenant rights and market appeal, but is this the right time to invest?
UAE real estate: Is it the right time to invest in Sharjah property? New laws explained, and what experts are saying
Sharjah’s new real estate laws are aimed at boosting tenant protections and solidifying its position as an attractive emirate for both residents and businesses.
The laws, which include extended eviction safeguards and rent freezes, have drawn attention from industry experts who see potential benefits for the emirate’s property market.
Under the new regulations, residential tenants in Sharjah now enjoy a three-year protection from eviction, while businesses receive a five-year safeguard.
First things first, what are the new Sharjah real estate laws?
In late September, Sharjah introduced new real estate laws governing property leasing in the Emirate. The legislation, Law No. (5) of 2024 was issued by Dr. Sheikh Sultan bin Muhammad Al Qasimi, Supreme Council Member and Ruler of Sharjah. These regulations apply to properties leased for residential, commercial, industrial, and professional purposes, setting out rules for both landlords and tenants.
A key feature of the new law is the restriction on rent increases. Landlords are prohibited from raising rents for three years unless all parties agree. If an increase is agreed upon during this period, it cannot be raised again for a further two years. This provision aims to provide stability and predictability for tenants in the Sharjah property market.
The law also establishes clear guidelines for contract certification. Landlords are required to certify lease contracts or renewals and pay applicable fees to the municipality or authorised entities within 15 days of drafting. In cases where there is no certified lease contract, either party can file a claim with the Rental Disputes Centre to establish the rental relationship.
Obligations for both landlords and tenants are clearly defined in the new legislation. Landlords must deliver the property in suitable condition, perform necessary maintenance, avoid interfering with the tenant’s use of the property, and return financial guarantees upon lease termination. Tenants, on the other hand, are required to pay rent on time, use the property as agreed, obtain permission for modifications, maintain the property, and pay for utilities and any damages they cause.
The law outlines specific reasons for eviction, providing clarity on when a landlord can legally terminate a tenancy. These reasons include non-payment of rent within 15 days of the due date, violation of legal or contractual obligations, unauthorised subletting or reassignment, using the property for unspecified purposes, and the landlord’s need to demolish, rebuild, or perform major maintenance on the property. Additionally, landlords can evict tenants if they wish to occupy the property themselves or house close family members.
These comprehensive regulations aim to create a balanced and fair real estate market in Sharjah, protecting the rights of both landlords and tenants while promoting stability and transparency in property leasing transactions.
“Sharjah has long been attractive to residents due to its lifestyle, cultural appeal, and lower cost of living. This appeal grows even stronger when residential rents in neighbouring Dubai become prohibitively high for some families,” Haider Tuaima, Director and Head of Real Estate Research at ValuStrat, told Arabian Business, adding that an “estimated” 30 per cent of Dubai’s registered residents live in the northern emirates, with most choosing Sharjah.
What do the new Sharjah real estate laws mean for UAE residents?
Muhammad Qasim Ikhlaq, Sharjah Branch Manager at Betterhomes, explained that Sharjah’s three-year eviction safeguard “reflects its forward-thinking approach in a fast-paced real estate market. It spares tenants from the hassle of frequent relocations during landlord transitions while offering landlords long-term tenants, reduced vacancies, and consistent returns on their investments.”
However, regarding the commercial aspect, Ikhlaq added that the “five-year rental protection for businesses is a game-changer, positioning Sharjah as a leading commercial hub. It addresses business concerns like sudden relocations, ensuring financial stability and predictability in budgeting, making Sharjah an appealing choice for sustained business growth.”
A key feature of Sharjah’s rental landscape is the three-year rent freeze, which Ikhlaq believes “sets [Sharjah] apart… giving tenants peace of mind by reducing rental expenses—a crucial advantage against inflation.”
Echoing the sentiment, Shane Breen, Head of Sharjah & Northern Emirates at Savills Middle East, offered a more tempered view on the impact of these changes, explaining that the three-year protection offers increased security for tenants, particularly against unscrupulous landlords.
“However, it is unlikely to result in day-to-day changes for renters, as most landlords already follow the existing laws and do not evict tenants without a cause,” he said, adding that the new laws also mandate written leases and introduce deposit rules.
“Written leases have long been a requirement in Sharjah, but the new laws introduce a 14-day time limit for attesting these agreements, with fines imposed for non-compliance. This strengthens tenants protection by ensuring agreements are enforceable, allowing tenants to approach the municipality with full legal rights in case of disputes,” Breen explained.
While the new laws offer significant protections, they may present challenges for long-term residents upon renewal, Breen cautioned.
“The three-year rent freeze offers protection initially, but once the freeze ends and rents revert to fair market rates, it could result in significant increases for tenants at renewals. There have been cases where rents have risen by over 40 per cent after the initial 3-year period, which can be a difficult adjustment for tenants,” he added.
However, Betterhomes’ Ikhlaq added predictable rent adjustments allow tenants to plan their finances more effectively, reducing disputes and ensuring a smooth renting experience.
“The short-term downside for landlords may be the restriction on rent increases, but this is offset by the long-term benefits of reduced vacancy periods, ultimately boosting returns, especially for overseas investors,” he said, adding that Sharjah’s approach to tenant protection, focusing on long-term affordability and stability, is particularly attractive to those seeking security in their rental agreements.
The implementation of eviction control measures and long-term rent stability policies fosters a more secure and stable residential environment, he explained, adding that this not only benefits tenants but also contributes to a healthier, more sustainable real estate market, aligning the interests of property owners and residents alike.
The three-year rent freeze offers protection initially, but once the freeze ends and rents revert to fair market rates, it could result in significant increases for tenants at renewals. Image: Shutterstock
The three-year rent freeze offers protection initially, but once the freeze ends and rents revert to fair market rates, it could result in significant increases for tenants at renewals. Image: Shutterstock
So, which part of this law would attract the most new residents?
“No single aspect of the new laws is likely to drive an increase in new residents, as Sharjah’s appeal primarily stems from its affordability. The demand is already strong, and these changes mainly serve to protect existing tenants,” Savills’ Breen said, adding that these laws are unlikely to affect the current imbalance between supply and demand in the Sharjah market.
“With occupancy rates exceeding 95 per cent in most cases, only an increase in supply will help address the rising demand for housing,” he said.
Adding to this, Ikhlaq expressed optimism about Sharjah’s future and explained that “demand for homes in Sharjah is strong, and I see the potential for more developers to contribute to Sharjah’s growth, building lifestyle communities that mark the beginning of a new era in its real estate market.”
Both experts revealed that “densely populated” areas such as Majaz, Al Khan, and Al Tawun, are dominated by single-owner investors due to their “strategic locations”, while new communities like Muwaileh Commercial, Aljada, Masaar, and Maryam Island are seeing increased demand due to relaxed ownership laws, extending Sharjah’s appeal to buyers and investors.
“The recent introduction of a three-year eviction protection rule is expected to further enhance Sharjah’s appeal, particularly for families and long-term tenants seeking stability. However, there are exceptions to this rule, such as when violations are found, if the landlord intends to demolish the property, or if the landlord or an immediate family member wishes to occupy the property,” ValuStrat’s Tuaima concluded.
For a detailed perspective on the property market, visit: Dubai - VPI Residential Capital Values - September 2024
