The legal landscape for property leasing in Dubai has recently been shaped by a noteworthy ruling from the Dubai Civil Court. In a significant case concerning a private school, the court has affirmed the automatic renewal of its lease for a further ten years, ensuring stability for the institution through to May 31, 2037, at an annual rental rate of AED 2.073 million.
Judicial Resolution of Lease Dispute
The court’s decision addressed a dispute where the plaintiff, the tenant, sought to confirm their right to renew the lease of land upon which the school operates. Originally contracted in July 2002 for 25 years, the lease stipulated automatic renewals for consecutive periods of ten years, with a rent increase capped at 25% of the last year’s rate. This mechanism was designed to provide clarity and security for both parties involved.
Ownership Transition and Issues Raised
Following the transfer of property ownership to the defendant, who became the new landlord, the tenant continued to operate the school while fulfilling their rental obligations. The new owner had previously initiated proceedings to raise the rental amount, adjusting it to AED 1.659 million annually, effective until the end of the current lease term in May 2027.
However, in June 2026, the landlord issued a notice rejecting renewal, demanding the tenant vacate the premises at the expiration of the lease. This notice controversially proposed a new three-year extension at a staggering AED 9.5 million per year, a proposition the tenant contested as a violation of the pre-agreed contract terms.
Court’s Rationale and Orders
The court decisively ruled that the lease agreement’s explicit provision for automatic renewal was binding. It recognised that the landlord was aware of these terms upon acquiring the property, thereby obligating them to honour the contractual conditions. Consequently, the agreement will remain in effect, extending until May 31, 2037, with the specified annual rent of AED 2.073 million—reflecting a permissible 25% increase over the previous amount.
In a robust assertion of tenant rights, the court mandated that the landlord must not impede the tenant or impose any obstacles to the school’s operations as regulated by relevant authorities. The ruling also included an order for the landlord to cover the court fees associated with the case while denying other requests from the tenant, including an absolute ban on eviction actions, given that the contract allows for termination under specific circumstances such as failure to pay rent or breach of contract terms.