NEW TENANCY LAW IN SHARJAH: A COMPREHENSIVE ANALYSIS

Sharjah’s Law No. 5 of 2024 on tenancy has introduced significant changes in the regulation of residential, commercial, and industrial leases, strengthening tenant and landlord rights, promoting transparency, and aligning Sharjah’s rental framework more closely with those of Dubai and Abu Dhabi. This analysis explores the key provisions, comparisons with other emirates, and the impact on Sharjah’s real estate market.

HISTORICAL BACKGROUND

Historically, Sharjah’s real estate regulations were simpler compared to other emirates like Dubai and Abu Dhabi. However, with the rapid growth of its real estate market, the Sharjah government has taken proactive steps to modernize its laws and create a fair, transparent, and business-friendly environment. The latest legislation seeks to address the gaps in the previous laws and cater to the demands of a more dynamic real estate market.

KEY PROVISIONS OF SHARJAH'S NEW TENANCY LAW (LAW NO. 5 OF 2024)

1.     Rental Caps and Rent Increases

The law establishes rent control measures by implementing a three-year rent freeze from the start of the lease term, meaning landlords cannot raise the rent during this period. After this freeze, rent increases must adhere to market conditions, as determined by the Executive Council, and cannot be arbitrary.

2.     Lease Certification

Under Article 4 of the law, all leases must be attested by the Sharjah Municipality within 15 days of their signing. Failure to certify leases may lead to penalties. This ensures that all agreements are formalized and compliant with the law.

3.     Lease Duration

The law typically mandates that lease agreements are fixed for one year unless the parties mutually agree otherwise. Renewals, unless renegotiated, will generally follow the same terms as the original lease.

4.     Grounds for Eviction

According to Article 16, a landlord can evict a tenant under certain conditions:

(a). Non-payment of rent.

(b). Property misuse or damage.

(c). Engagement in illegal activities.

(d). Personal or immediate family use by the landlord.

For evictions, landlords must provide tenants with a three-month notice, except in cases of illegal use or non-payment where immediate eviction is permissible under Article 17.

5.     Dispute Resolution and Court Proceedings

Sharjah’s law designates the Rental Disputes Committee as the body responsible for handling disputes. This provides a streamlined process for conflict resolution, reducing the number of cases that escalate to court. The Rental Disputes Committee offers tenants and landlords a faster and more cost-effective alternative to lengthy court proceedings.

6.     Maintenance Obligations

Under Article 10, landlords are required to carry out major maintenance work, while tenants are responsible for minor repairs unless the lease specifies otherwise. If landlords neglect these obligations, tenants have the right to file complaints with the Rental Disputes Committee.

7.     Subletting and Alterations

Subletting is generally prohibited unless expressly permitted by the landlord in writing, as specified in Article 12. Tenants are also restricted from making significant alterations to the property without written approval, ensuring the property is maintained in its original condition.

COMPARISON WITH DUBAI AND ABU DHABI TENANCY LAWS

1.     Rental Duration

(a). Sharjah: Leases are typically fixed for one year, although variations exist.

(b). Dubai: More flexible, with short-term (six months) and long-term (one-year) leases common.

(c). Abu Dhabi: Often favors long-term leases, especially in residential sectors.

2.     Grounds for Eviction

(a). Sharjah: Evictions include non-payment, property damage, and landlord’s personal use.

(b). Dubai: Expands on grounds with property sale and renovations

(c). Abu Dhabi: Similar to Dubai, with a focus on renovation, illegal use, and non-payment as grounds for eviction.

3.     Rent Control and Increases

(a). Sharjah: Implements a three-year rent freeze under Law No. 5 of 2024.

(b). Dubai: Uses a rental index to determine permissible rent increases based on market conditions.

(c). Abu Dhabi: Rent increases must align with market trends, but strict caps are not applied.

4.     Security Deposits

(a). Sharjah: Typically one month’s rent; the return of deposits is less strictly regulated.

(b). Dubai: One or two months' deposit, and tenants can demand its return upon lease conclusion.

(c). Abu Dhabi: Deposits are generally one month, returned upon satisfactory inspection of the property.

5.     Ease of Filing Court Proceedings

(a)  Sharjah: The process of filing disputes is more streamlined, with the Sharjah Rental Disputes Committee acting as the primary dispute resolution body.

(b)  Dubai: The Rental Dispute Settlement Centre (RDSC) offers both conciliation and judicial proceedings, making it a more structured and streamlined process.

(c)   Abu Dhabi: The Rental Dispute Resolution Committee handles rental disputes but may involve more complex legal steps compared to the simplified processes in Sharjah and Dubai.

CONCLUSION

The New Tenancy Law in Sharjah balances the rights of landlords and tenants, with enhanced protections against unjust rent increases and arbitrary evictions, as well as streamlined dispute resolution. Sharjah’s legislative updates bring its real estate sector closer in alignment with Dubai and Abu Dhabi while preserving unique provisions tailored to the local market. This new law strengthens Sharjah’s position as an attractive, legally stable destination for residents and investors, supporting a transparent and competitive real estate environment.