Dubai Rent Hikes: What Landlords Must Know
How Much Can Landlords Increase Rent Based on the New Rental Index?
Rent increases in Dubai are strictly regulated to protect both tenants and landlords. If you are a property owner in Dubai and feel that your current tenant is paying significantly less than the market rate, you cannot arbitrarily increase the rent. The extent of the increase is determined by the Emirate's rental index, which sets percentage limits.
How does the rental index work?
The rental index created by the Dubai Real Estate Regulatory Agency (Rera) is based on the average rents of similar type and located properties. The current index shows the market average price for properties in a particular area, which forms the basis for rent increases. The regulations stipulate:
1. No increase is permitted if the rent is up to 10% below the average rental price.
2. A 5% increase is allowed if the rent is 11-20% below the average.
3. A 10% increase is permitted if the rent is 21-30% below the average.
4. A 15% increase is allowed if the rent is 31-40% below the average.
5. A 20% increase is allowed if the rent is more than 40% below the average.
This regulation ensures that rent increases are gradual and do not overly burden tenants.
How should tenants be notified?
If you wish to increase the rent, you must notify the tenant in writing at least 90 days before the lease expiry unless otherwise specified in the contract. If the tenant disagrees with the increase, they can approach the Rental Dispute Centre to resolve the issue.
What rights do landlords and tenants have?
The rights and obligations between landlords and tenants are governed by the following regulations:
a. Decree No. (43) of 2013: Establishes the maximum percentage increase in rent.
b. Law No. 26 of 2007 and its amendment, Law No. 33 of 2008: Lays down the conditions for lease renewal, including the rules for notice of increase.
What happens if the tenant and the landlord do not reach an agreement?
If the tenant and landlord cannot agree on the new rent, the Rental Dispute Centre may decide on a fair rental rate. The court considers the rental index, the property's condition, and the market environment.
Important considerations
1. Advance notice: Always inform the tenant of the intention to increase rent in a timely manner.
2. Monitor market prices: Regularly check the rental index published by Rera.
3. Dispute resolution: If disputes arise, seek expert legal advice or consult the Rental Dispute Centre.
The regulation of property rental in Dubai operates under a transparent and well-defined system that allows tracking of market trends in rentals while safeguarding both tenants and landlords. This regulatory system contributes to the stability and predictability of the rental market, which is the foundation of the rapidly developing real estate market in the Emirate.
