Dubai: Can landlords increase rent by Dh20,000 all at once to match current market rate?

The rent increase and decrease related to residential properties in the emirate is decided by the Real Estate Regulatory Agency

Ashish Mehta

Published: Sun 3 Nov 2024, 8:57 AM

Last updated: Sun 3 Nov 2024, 8:59 PM

Question: I own a villa in Dubai that I've rented out. However, compared to other villas in the area, I'm getting about Dh20,000 less. Can I raise the rent all at once to match the current market rate?

Answer: In Dubai, rent increases for properties are regulated based on specific guidelines, particularly during lease renewals. Under Article 1 of Decree No 43 of 2013 Determining Rent Increase for Real Property, the percentage increase may depend on average rent increases of the rented properties in the particular designated area.

When renewing real property rent contracts, the maximum percentage of rent increase for property in Dubai shall be as follows:

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no rent increase if the rental of the property unit is up to 10 per cent below the average rental value for similar properties
five per cent if the rental of the real property unit is 11 per cent to 20 per cent below the average for similar unit
10 per cent if the rental of the unit is 21 per cent to 30 per cent less than the average rental value of similar properties
15 per cent if the rental of the property is 31 per cent to 40 per cent below the average rental value for similar units
20 per cent if the rental of the unit is more than 40 per cent below the average rental value of similar properties.

The average rental value refers to the average rent for similar properties in Dubai. These averages are established by Dubai's official Rent Index managed by the Real Estate Regulatory Agency (Rera). This is outlined in the Article 3 of the Dubai Rent Increase Law.

“For the purposes of application of Article 1 of this Decree, the average rental value of similar units shall be determined in accordance with the 'Rent Index of the Emirate of Dubai' approved by the Real Estate Regulatory Agency.”

It is important to know that the rent increase and decrease related to residential properties in Dubai is decided by the Rera.

Article 10 of the Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai states that “Rera shall have the authority to establish criteria relating to the percentage of rent increase in the Emirate in line with the requirements of the prevailing economic situation in the Emirate.”

When it’s time to renew a rental agreement, landlords and tenants can negotiate new terms, including any rent increase, before the lease expires. If an agreement cannot be reached, the rental tribunal may determine a fair rent based on specific criteria.

Additionally, if either party wants to change the rent terms, they must notify the other party at least 90 days before the rent ends, unless they have agreed otherwise. This is under Articles 13 and 14 of the Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in Dubai.

Article 13 states: "To renew a rent contract, the landlord and tenant may, prior to the expiry of the rent contract, amend any of its terms or reconsider increasing or reducing the rent. If the landlord and tenant fail to reach an agreement in this regard, the tribunal may determine the fair rent, taking into account the criteria stipulated in Article (9) of this Law.”

Article 14 says: "Unless otherwise agreed by the parties to a rent contract, where either party wishes to amend any of its terms pursuant to Article (13) of this Law, that party must notify the other party of this intent no less than 90 days before the date on which the Rent Contract expires.”

Based on the above-mentioned regulations, as the landlord, you are allowed to increase the rent by giving the tenant at least 90 days’ written notice before the renewal date, as long as the Rera index supports the increase. If you and your tenant cannot agree on the new rent, you may need to bring the matter to the Rental Dispute Centre, which will decide on the increase based on fair market criteria.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

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