Rent can be increased only after 3 years - Sharjah Chamber of Commerce and Industry

The chamber reports:

Al Khadar warned landlords against intentionally disconnecting electricity and water supplies to tenants refusing to pay extra rents levied on them. “The tenant has the full right to abstain from paying the extra hike if they have not completed three years in the same flat,” he said. “This is a ridiculous and inhumane action by the landlords to force the tenants either to pay the extra rent or to vacate the flat. This is illegal and I urge any tenant facing such a problem to lodge a complaint at the Sharjah Electricity and Water Authority (Sewa). In case no immediate action is taken by Sewa, the tenants should file a case against the landlord, following which the judge will order the reconnection of the electric and water supplies at the tenants home on the same day. Within the first three years of signing a contract, a landlord does not have the right to forcefully vacate a flat without the will of the tenant,” he reiterated.

Two things are of interest in this statement. First, Sharjah is actively involved in ensuring that landlords live up to the terms of the contracts with their tenants. Second, tenants and landlords are legally constrained to enter into contracts which fix the rent for no shorter than 3 years. When demand is growing this may create a black market in shorter term contracts. And demand is growing rapidly. As the chamber notes:

Replying to a question regarding the exorbitant hike in the rents and whether there was any authority responsible in controlling the exaggerated hike in the rents, Al Khadar noted that the main reason for the hike was due to the economic development witnessed in the emirate of Sharjah.

In addition, many who work in Dubai choose to reside in Sharjah where rents are lower. Dubai, of course is also growing rapidly.

Besides tenants failure to pay, landlords do have avenues of escape before a contract reaches term:

If the tenant uses the property for any purpose that contradicts moral and religious clauses, or in case the landlord wishes to demolish or reconstruct the leased property after obtaining a licence from the municipality, he has the full right to force the tenant to vacate.

Under these rules, landlords experiencing a divergence between the contract rent and the market rent will be more likely to monitor their tenant behavior, or to convert the building to nonresidential use. The latter effect, of course, is directly contrary to what would happen under laissez faire following an increase in demand; there, more housing would be provided when rents increase.

If you are particularly interested in housing issues go here for a nice example of how legal limits on contracting harm UAE citizens.