In Dubai, the rental increase is subject to the provisions of Decree number 43 of 2013, determining the rent increase for real property in the emirates of Dubai (the “Decree”).
Pursuant to the said Decree, the similar average rent shall be determined in accordance with the “Rental Index” approved by the Real Estate Regulatory Agency (RERA) (Article 3). RERA is a regulatory arm of the Dubai Land Department (DLD) which regulates the relationship between a landlord and a tenant. The Rental Index is as determined by RERA, which reserves the exclusive right to specify the average rent and accordingly the percentage of rent increase in Dubai. Pursuant to the Decree, the maximum increase permitted for the rental increase is that of twenty per cent against the rent index. In order for a rental increase of twenty per cent to be applied legally by the landlord, the said property should be more than forty per cent below the average rent amount as determined by the RERA index.
Rental Index Calculator:
As discussed above, RERA is responsible for maintaining and updating the ‘Rental Price Index' in Dubai, which constitutes a database that documents the average rental prices for all types of property in Dubai. This index is then updated on a yearly basis in order to apply to all the rental transactions in Dubai. The rental index allows users to calculate the possible rent increase and also to find the average market rent of any given area in Dubai. This is a free service that can be used by any user and thus helps to maintain both transparency and a fair balance in the market in matters concerning rental increases.
Percentage of Increase:
Pursuant to Article 1 of the said Decree, the percentage of rent increase in Dubai is determined as:
When renewing real property lease contracts, the maximum percentage of rent increase for real property in the Emirate of Dubai will be as follows:
- no rent increase, where the rent of the real property unit is up to ten percent (10%)
- less than the average rental value of similar units;
- five percent (5%) of the rent of the real property unit, where the rent is eleven percent (11%) to twenty percent (20%) less than the average rental value of similar units;
- ten percent (10%) of the rent of the real property unit, where the rent is twenty one percent (21%) to thirty percent (30%) less than the average rental value of similar units;
- fifteen percent (15%) of the rent of the real property unit, where the rent is thirty one percent (31%) to forty percent (40%) less than the average rental value of similar units; or
- twenty percent (20%) of the rent of the real property unit, where the rent is more than forty percent (40%) less than the average rental value of similar units
In case of a rental increase, the landlord is required to provide the tenant with a ninety days' notice before the expiry of the tenancy notifying of the rental increase. The landlord is not allowed to raise the rent, if this mandatory notice period has not to be allowed to the tenant. Further, the rental increase should also be justifiable subject to the applicable percentage of the increase as stated in this article. When the landlord does not follow these provisions, the tenant is allowed to reject the rental increase. Further, the tenant should file a complaint before the Rental Dispute Settlement Centre (RDSC) if amicable resolution is not possible.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.