Latest news with #rentalproperty
Arabian Business
a day ago
- Business
- Arabian Business
Dubai real estate: What is illegal subletting? Experts warn against shared flats, lease breaches
Subletting or partitioning a rental property in Dubai without approval from the landlord and authorities is against the law. Yet, the practice continues to remain common in parts of the city, real estate experts told Arabian Business, driven by rising rents and demand for affordable housing. Authorities have ramped up inspections in recent months, targeting unlicensed shared housing and warning of safety risks, overcrowding, and violations of building codes. That said, knowing the rules is critical to avoid fines, eviction, and legal disputes – for tenants and landlords alike. So, what exactly is considered illegal subletting or partitioning in Dubai? PP Varghese, Head of Professional Services at Cushman & Wakefield Core, defines illegal subletting as the act of tenants renting out parts of their leased property without proper authorisation from the landlord or relevant authorities. 'Specifically, this includes converting living rooms, balconies, or storage areas into bedrooms, installing makeshift partitions that block emergency exits, or subdividing units beyond their approved capacity. Dubai Municipality's regulations are clear that any structural changes require proper permits and must comply with fire safety, ventilation, and occupancy standards,' he told Arabian Business. Echoing the sentiment, Svetlana Vasilieva, Head of Sales – Secondary, at Metropolitan Premium Properties explained that 'a tenant cannot sublet or share an apartment without written permission from the landlord.' She added that many tenants sublet properties temporarily to avoid breaching contracts during relocation or to share rent costs in high-rent areas. Why does illegal subletting continue? Varghese pointed to economic conditions that make unauthorised subletting attractive to both tenants and landlords. 'The fundamental issue is an economic arbitrage opportunity created by Dubai's rental market dynamics,' he said, adding that residents often prioritise access to soft infrastructure such as retail outlets, public transport, schools, healthcare facilities, and employment hubs. These amenities are typically found in central locations, which also come with high rental prices. 'For tenants, sharing the cost of a centrally located unit makes premium areas accessible at individually affordable rates. For landlords, subdividing units allows them to achieve rental yields significantly higher than standard lease rates – sometimes 150–200 per cent of normal rental income for the same space,' Varghese said. According to Varghese, the economic incentives are 'powerful enough' that some landlords and tenants are willing to accept regulatory risks. Vasilieva also agreed that affordability plays a role. 'There are multiple reasons such as lack of awareness about the regulations, rent affordability – especially in high rent areas by sharing the cost of rent. Often, tenants need to relocate temporarily and in order not to breach the rental contract, the apartment is being sublet for a short period of time,' she said. Which Dubai areas are most affected? Older parts of Dubai report high levels of unauthorised subletting and partitioning, both experts said. According to Vasilieva, areas such as Al Rigga, Deira, and Satwa are among the most affected. She also noted that villas in Jumeirah and larger apartments in Dubai Marina are commonly sublet, especially by younger bachelors and new arrivals. In addition, Varghese explained that the areas most affected are 'typically those that offer the best combination of central location, soft infrastructure access, and rental arbitrage opportunities.' Parts of Bur Dubai, Sheikh Zayed Road, and Jumeirah Lake Towers are also locations with 'see significant illegal subletting activity.' Aside from this, Varghese also listed mid-tier areas with affordable base rents but strong connectivity, including Al Qusais, International City, Discovery Gardens, and parts of Business Bay. 'Interestingly, we're seeing increasing violations in newer developments across various emirates where the economics work favourably – areas that combine reasonable base rental rates with strong connectivity to employment centres and urban amenities,' he said, adding that the pattern consistently follows 'locations where the gap between individual affordability and area desirability creates the most profitable arbitrage opportunities for landlords.' What are the legal consequences? There is a clear legal framework in Dubai on the matter. Article 25 (1)(b) of Law No. 26 of 2007 states that unauthorised subletting is a breach of contract. 'This entitles the landlord to seek eviction of both the tenant and subtenant,' Vasilieva said, adding that if the sublease generates higher revenue than the original tenancy agreement, landlords must file a case at the Rental Dispute Centre to recover the financial difference between the revenue earned from the sublease and the rent stipulated in the original tenancy agreement. 'The landlord may pursue a claim for compensation, these are in addition to any orders issued,' she said. Varghese added that penalties for violations can include fines of up to AED 50,000, with additional fines for overcrowding starting from AED 10,000 per incident. However, there are more repercussions than just a penalty, he added. 'Violations create a documented history with authorities that can complicate future property management and leasing activities,' he said. 'Properties with a history of illegal partitions or overcrowding may face higher scrutiny, lower valuations, and difficulty in sale. Insurance claims may be denied for properties with unauthorised modifications, and owners may face civil liability for safety incidents.' What are the other risks? Another risk is safety concerns – a major issue highlighted by the experts. Varghese explained that illegally partitioned units often result in overloaded electrical systems, blocked fire exits, and inadequate ventilation. 'In emergencies, these unregulated layouts can be life-threatening,' he said, adding that the Civil Defense has 'repeatedly flagged illegal partitions as a fire hazard.' Vasilieva further explained blocked ventilation and emergency exits are among the most common safety risks in such units. Are tenants aware of what is legal? 'It's a responsibility of the landlord to inform the tenants what is allowed in a shared house,' Vasilieva said, stressing that clear terms and conditions should be outlined in tenancy agreements. 'Many new expats don't realise that sharing a flat is only legal when the landlord consents and partitions are approved,' Varghese said, adding that lack of awareness often leaves tenants vulnerable to eviction, even if they have paid rent on time. However, regular inspections carried out by Dubai Municipality has reduced the opportunities for illegal subletting. 'Dubai Municipality conducts regular inspections and responds to public complaints. Enforcement has strengthened, but given the demand for low-cost housing, some illegal setups persist,' he explained, concluding that recent efforts to digitise building permits and track inspections are helping to close enforcement gaps.
CTV News
a day ago
- Business
- CTV News
Buyers of B.C. rental property not on the hook for $65K payment to evicted tenants: judge
A B.C. landlord who sold a rental property failed to convince a judge the buyers – who never moved into the home – should be on the hook for compensating wrongfully evicted tenants, according to a recent decision. Justice Anita Chan ruled on the dispute Friday, upholding a decision of B.C.'s Residential Tenancy Branch awarding $65,000 in compensation to the former renters. In 2022, Mohan Sull, the landlord, was renting the North Vancouver home to Thomas and Rozette Trevitt for $5,650 a month, the court heard. Sull entered into an agreement to sell the property and served the tenants with a two-month notice of eviction because 'the buyers intended to occupy the property,' according to the decision. But the buyers never moved in. 'The buyers undertook extensive renovations. The city in March 2023 issued a stop-work order. The buyers did not obtain the proper permits until May 2024. I understand the property is still fully gutted with no one residing there currently,' the judge wrote. The ousted renters successfully challenged their eviction on the grounds that the 'stated purpose of the notice to end tenancy was not accomplished,' the decision said. Buyers were not 'purchasers;' sale was conditional Sull was seeking a judicial review of the arbitrator's decision on a number of grounds, including that it was the buyers – not him – who should have to pay. 'The buyers had possession of the property and did not occupy it. The landlord argues he has no control over the property and he ought not to be held liable,' Chan wrote, summarizing the crux of Sull's submission on that point. The judge's decision explained that the arbitrator had already considered and dismissed this argument, finding that the buyers did not 'meet the definition of purchasers' in the Residential Tenancy Act. The legislation defines a purchaser as someone who has agreed to purchase 'at least half of the full reversionary interest in the property' and the arbitrator found that criteria was not met in this case, according to the judgment. That was because the deal was a five-year 'option to purchase' agreement. The buyers put down $100,000 and agreed to pay a monthly interest fee of $5,800 for the next five years or until they decided to complete the purchase of the property. 'If there was an agreement to terminate the contract, the down payment and any additional payments were to be returned to the buyers,' the decision explained. Even if the buyers were 'purchasers,' the arbitrator found the landlord was not legally entitled to evict the tenants. A landlord who has sold a property can end a tenancy but only if 'all the conditions on which the sale depends have been satisfied,' the decision explained. Because of the nature of the agreement, the sale of the property was 'at its core' a conditional sale unless and until the option to purchase was exercised. 'The arbitrator emphasized that the wrongful act was not that the buyers had not occupied the property, but rather that the tenants ought not to have had their tenancy terminated in the first place,' the decision said. The judge agreed on this point. 'The landlord was not entitled to provide the two-month notice to end tenancy, as there was no unconditional sale of the property,' Chan wrote. Unenforceable clause Sull also argued to the arbitrator and again to the judge that the eviction was legal and justified because of a clause written into the lease that read 'tenant and owner both agree to give two full calendar months written notice, when they plan to end the lease.' The problem with that argument, the judge noted, was that it was an 'impermissible opting out of the mandatory provisions of the (Residential Tenancy Act) because 'a landlord cannot end a tenancy by providing two months' written notice for any reason.' The legislation lays out specific circumstances in which a landlord can end a tenancy and leases which 'attempt to avoid or contract out' of those legal obligations are 'of no effect,' according to the decision. 'The arbitrator found that (the) clause was an attempt by the parties to increase the circumstances by which the landlord can end the tenancy,' the decision said. The judge agreed with this assessment and found the arbitrator's decision, as a whole, was reasonable in the circumstances. Wrongfully evicted tenants in circumstances like these are generally entitled to compensation equivalent to 12 months of rent. In this case, that worked out to $67,800 but the judge noted an award of $65,000 as the maximum allowable for a dispute settled by the Residential Tenancy Branch.
CTV News
2 days ago
- Business
- CTV News
B.C. landlord must pay evicted tenants $65K, court rules
A B.C. landlord who sold a rental property failed to convince a judge the buyers – who never moved into the home – should be on the hook for compensating wrongfully evicted tenants, according to a recent decision. Justice Anita Chan ruled on the dispute Friday, upholding a decision of B.C.'s Residential Tenancy Branch awarding $65,000 in compensation to the former renters. In 2022, Mohan Sull, the landlord, was renting the North Vancouver home to Thomas and Rozette Trevitt for $5,650 a month, the court heard. Sull entered into an agreement to sell the property and served the tenants with a two-month notice of eviction because 'the buyers intended to occupy the property,' according to the decision. But the buyers never moved in. 'The buyers undertook extensive renovations. The city in March 2023 issued a stop-work order. The buyers did not obtain the proper permits until May 2024. I understand the property is still fully gutted with no one residing there currently,' the judge wrote. The ousted renters successfully challenged their eviction on the grounds that the 'stated purpose of the notice to end tenancy was not accomplished,' the decision said. Buyers were not 'purchasers;' sale was conditional Sull was seeking a judicial review of the arbitrator's decision on a number of grounds, including that it was the buyers – not him – who should have to pay. 'The buyers had possession of the property and did not occupy it. The landlord argues he has no control over the property and he ought not to be held liable,' Chan wrote, summarizing the crux of Sull's submission on that point. The judge's decision explained that the arbitrator had already considered and dismissed this argument, finding that the buyers did not 'meet the definition of purchasers' in the Residential Tenancy Act. The legislation defines a purchaser as someone who has agreed to purchase 'at least half of the full reversionary interest in the property' and the arbitrator found that criteria was not met in this case, according to the judgment. That was because the deal was a five-year 'option to purchase' agreement. The buyers put down $100,000 and agreed to pay a monthly interest fee of $5,800 for the next five years or until they decided to complete the purchase of the property. 'If there was an agreement to terminate the contract, the down payment and any additional payments were to be returned to the buyers,' the decision explained. Even if the buyers were 'purchasers,' the arbitrator found the landlord was not legally entitled to evict the tenants. A landlord who has sold a property can end a tenancy but only if 'all the conditions on which the sale depends have been satisfied,' the decision explained. Because of the nature of the agreement, the sale of the property was 'at its core' a conditional sale unless and until the option to purchase was exercised. 'The arbitrator emphasized that the wrongful act was not that the buyers had not occupied the property, but rather that the tenants ought not to have had their tenancy terminated in the first place,' the decision said. The judge agreed on this point. 'The landlord was not entitled to provide the two-month notice to end tenancy, as there was no unconditional sale of the property,' Chan wrote. Unenforceable clause Sull also argued to the arbitrator and again to the judge that the eviction was legal and justified because of a clause written into the lease that read 'tenant and owner both agree to give two full calendar months written notice, when they plan to end the lease.' The problem with that argument, the judge noted, was that it was an 'impermissible opting out of the mandatory provisions of the (Residential Tenancy Act) because 'a landlord cannot end a tenancy by providing two months' written notice for any reason.' The legislation lays out specific circumstances in which a landlord can end a tenancy and leases which 'attempt to avoid or contract out' of those legal obligations are 'of no effect,' according to the decision. 'The arbitrator found that (the) clause was an attempt by the parties to increase the circumstances by which the landlord can end the tenancy,' the decision said. The judge agreed with this assessment and found the arbitrator's decision, as a whole, was reasonable in the circumstances. Wrongfully evicted tenants in circumstances like these are generally entitled to compensation equivalent to 12 months of rent. In this case, that worked out to $67,800 but the judge noted an award of $65,000 as the maximum allowable for a dispute settled by the Residential Tenancy Branch.
Yahoo
3 days ago
- Business
- Yahoo
Scott Trench: Don't Buy a Rental Property Unless You Have This Financial Cushion
Most people buying their first rental property are wildly underprepared, and not in the way they think. You can binge all the real estate podcasts you want, but if your financial foundation is shaky, the whole thing can tilt. That's the warning Scott Trench from BiggerPockets brought to 'The Money Guy Show,' where he laid out a case for not jumping into real estate just because it's trendy or sounds 'passive.' Read Next: Check Out: Before you make your first down payment, there's one thing you absolutely need: a cushion that can actually carry weight. Also see the easiest and hardest ways to invest in real estate. Build a Strong Financial Foundation Before thinking about touring properties or calculating your future cash flow, you need a healthy margin between what you earn and what you spend. Not just enough to squeak by, but actual breathing room. Trench called this the 'spread,' and if there's not several thousand dollars left over after taxes each month, you're not ready. That might sound harsh, but it's reality. Because roofs cave in, pipes burst, furnaces die in the middle of winter and sometimes tenants will refuse to pay. If you're one unexpected expense away from having nothing in your bank account, a rental property won't fix that; it'll make it worse. Trench argued that real estate investing should follow, not precede, a solid financial base, which includes emergency reserves, a steady income and a lifestyle that doesn't devour every cent you make. You don't need to be rich, but you do need to be stable (and boringly consistent). That's the kind of foundation that keeps a rental from becoming a liability. Be Aware: Why HELOCs and Risky Leverage Are Red Flags Some investors treat their home equity like an ATM, pulling out a home equity line of credit (HELOC) to fund their first rental. Trench thinks that's a mistake. 'A big pet peeve of mine is when people take out a HELOC on their primary to buy a rental property,' he said. Why? Because that debt isn't free. A $60,000 HELOC paid back over five years means coughing up around $1,000 a month before interest, Trench explained. Sure, the rental might cash flow a bit, but not enough to cover that. Instead of generating income, the property now pulls money from your life every month. In fact, according to FINRA, taking out a HELOC to invest includes extra risks than just investing, as you're 'placing a huge bet that the investment will increase enough for your to realize a profit after paying back your loan principal, interest and other loan and investment-related costs.' Leverage can be a useful tool, but only when the foundation is rock-solid. Otherwise, you're just stacking risk on top of risk and hoping the market stays strong. Start Where You Can, but Plan To Upgrade Not everyone can afford a $500,000 turnkey rental in a great school district. 'Someone who's just getting started out making $75,000 a year is not going to have the option to buy … in the $500,000-plus range,' Trench said. That doesn't mean you can't invest at all; it just means you need to start smaller, maybe with a lower-cost property. But that's step one, not the end goal. These properties might come with more hands-on management, DIY repairs and tenant headaches. They can work, but Trench suggested thinking long term. The plan should be to gradually trade up: fewer repairs, more stable tenants, better neighborhoods. In essence, use it to build momentum, then move toward properties that make your life easier, not harder. Go Local If you can buy in your own city or somewhere you know well, do it. Trench said local investing gives you better control, fewer surprises and less reliance on strangers to manage your asset. Out-of-state deals can work, but only if you're serious about scaling and committed to building a trustworthy team on the ground. Final Thoughts Trench isn't trying to scare anyone off real estate; he just made the case for doing it with your eyes open and your finances in order. A solid cushion, smart use of leverage, realistic property choices and a long-term mindset aren't flashy, but they're what separate sustainable investing from costly regret. If you're serious about building wealth through real estate, start slow, stay local if you can and make sure every move strengthens your financial footing rather than shaking it. More From GOBankingRates 9 Downsizing Tips for the Middle Class To Save on Monthly Expenses This article originally appeared on Scott Trench: Don't Buy a Rental Property Unless You Have This Financial Cushion Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CTV News
6 days ago
- CTV News
CTV National News: How tenants left P.E.I. landlord with at least $80K in damages
Watch A P.E.I. landlord says she is on the hook for over $80,000 damages after her tenants moved in 12 people and at least 14 animals into her unit. Maria Sarrouh reports.
