In Dubai’s bustling real estate market, understanding rent increases can be challenging. The Real Estate Regulatory Authority (RERA) offers essential tools to ensure fairness, including the RERA rental increase calculator. This article explains how this tool works and how to deal with illegal rent increases.RERA provides protection for investors and buyers through its dispute resolution mechanism. In the event of a dispute between a buyer and a developer, RERA acts as a mediator and works to resolve the issue in a fair and impartial manner.
What is the RERA Rental Increase Calculator?
The RERA rental increase calculator helps prevent excessive rent hikes and maintain market stability. Introduced by H.H Sheikh Mohammed bin Rashid Al Maktoum under Decree No. 43 of 2013, it ensures rental increases stay within legal limits.
How Does the RERA Rental Increase Calculator Work?
The calculator uses the annually updated RERA rental index, which lists average rental values for various property types and locations in Dubai. To use it, follow these steps:
- Enter Property Details: Specify if the property is residential, commercial, industrial, or staff accommodation.
- Provide Contract Expiry Date: Input the expiry date of the tenancy contract.
- Select Location: Indicate the main area of the property, such as Deira or Bur Dubai.
- Identify Property Type: State whether the property is an apartment or villa.
- Specify Area: Input the community or sub-community.
- Detail Bedrooms: Mention the number of bedrooms.
- Input Current Rent: Enter the current annual rental amount.
The calculator compares your property’s rent with market rates, determining if a rent increase is permissible and by how much.
How Much Can My Rent Increase By?
The permissible increase depends on how much the current rent deviates from the market value:
- No increase if the current rent is less than 10% below market value.
- 5% increase if the current rent is 11-20% below market value.
- 10% increase if the current rent is 21-30% below market value.
- 15% increase if the current rent is 31-40% below market value.
- 20% increase if the current rent is more than 40% below market value.
When is a Rent Increase Allowed?
Landlords must provide a 90-day notice before the contract renewal date for a rent increase to be valid. If this notice is not given, tenants are not obligated to accept the increase.
Dealing with Illegal Rent Increases
If a landlord attempts an illegal rent increase:
- Verify with the RERA Calculator: Confirm the permissible increase.
- Communicate with the Landlord: Present the calculator’s findings and try to resolve the issue.
- File a Dispute: If unresolved, file a dispute with the Rental Dispute Settlement Centre.
RERA Calculator 2024 Updates
On March 1, 2024, RERA updated the calculator to better reflect market prices, providing more accurate guidance for rent negotiations.
WORKING OF RERA INDEX CALCULATOR
The increase in the annual rental index depends on several factors, such as property type, location, number of rooms and other parameters. However, the increase is divided into the following categories:
- There is no increase in rent if the rent is 10% lower than the estimated market value
- If the rent is 10 to 20 percent lower than the market value, the maximum increase can be up to 5%
- The maximum increase may be up to 10% if the rent is 20 to 30 percent less than the market value in the area
- Up to a 15% increase in rent if the rental value is 31 to 40% lower than the market value
- If the rent is 40% less than the market value, the rent increase may be up to 20%
Case in point: If you want to rent a two-bedroom apartment in Dubai Hill Estate, the average rent value in 2023 is between AED 86,000 and AED 106,000 annually. However, if you are already living on rent in a two-bedroom apartment in Dubai Hill Estate and your rent is 40 percent lower than the market value (AED 51,600 to 63,600), your landlord can increase your rent by up to 20%.
Additionally, you can add the current annual rent value in the RERA rental index calculator and the contract end date. After entering the required information, it will give you the amount that needs to be increased in the annual rent when you renew the tenancy contract.
Case in point: If the rent is AED 60,000 for a two-bedroom apartment in Dubai Hill Estate under the current tenancy contract, the landlord can increase AED 9,000. That said, the annual rental values don’t include electricity and water bills or any other fees, such as Dubai Municipality Housing fees.
The RERA rent calculator makes these complex calculations easy. Let’s learn how to use the RERA rent increase calculator.
Key Considerations
The calculator doesn’t consider:
- Age of the Building
- Building Condition
- Available Facilities
- Floor Level
Understanding and using the RERA rental increase calculator can save both landlords and tenants from disputes, ensuring fair rental negotiations. For more details or to use the calculator, visit the Dubai Land Department’s official website.
Understanding Rental Laws in Dubai
Knowing the rental laws in Dubai is critical as the number of expats settling in Dubai is increasing each year. The tenants unaware of their rental property rights in Dubai are vulnerable to unethical contractual changes by the landlord. Landlords increasing the rental amount is the most common contractual dispute with their tenants.
Before signing a rental contract, tenants must understand the factors which lead to rental increases and their rights regarding contractual disputes. The Real Estate Regulatory Agency (RERA) with the Dubai Land Department regulates real estate laws in Dubai and is the best reference source to understand property rental laws in Dubai.
The Real Estate Regulatory Authority (RERA) plays a crucial role in ensuring transparency and accountability in Dubai’s real estate market. For those exploring properties to buy in Dubai, RERA provides essential guidelines and regulations to protect homebuyers, ensuring fair transactions and boosting investor confidence. By regulating the market, RERA helps maintain Dubai’s reputation as a premier destination for real estate investments.
Can a Landlord Increase Your Rent?
The Real Estate Regulatory states that the landlord must provide a 90 days notice regarding any changes to the rent contract, breaking the contract or increasing the rent amount.
As the tenant, it is imperative to document the date a landlord has requested to change the rental amount. Tenants can legally refuse a rental amount increase if a 90 days notice was not provided by the landlord.
Moreover, upon reaching an agreement with the landlord on the rental amount increase, carefully review the entire contract for any additional changes made by the landlord. The tenant can file a case with the Rent Disputes Settlement Centre at the Dubai Land Department (DLD) upon refusing to agree with the new terms of the contract.
With high rental dispute cases unfolding in the Emirate, the Dubai government released a rent decree in December 2013 regulating rental price hikes by landlords. Tenants should review this Decree (43) regarding rent property increases before deciding to file a rental dispute case with the DLD.
Per Decree 43
A landlord cannot increase the rental amount if the property unit is confirmed less than 10% of the average rent of similar units within the same area. The landlord can increase the rent amount by 5% if the current rent value is 11-20% less than the average rent of similar units in the same area.
A 10% increase is legal under Dubai law if the rent value is 21-30% less than the average rent of similar properties in the same area. A 15% increase can be tacked onto the rent if the rental value is 31-40% less than similar units within the same community.
The maximum rental increase is 20% if the current rental value is 40% less than similar units within the area.
RERA Increase Calculator
As the tenant, it is wise to be aware of real estate market conditions to predict the possibility of rent increasing. Landlords will legally justify their rental price increases based on the rental prices of similar properties in the area. The rental increase calculator by the Dubai Land Department is the best source to calculate rent increases in an area.
The results of a rental increase inquiry are immediately available upon providing the property type, area, bedrooms, and current annual rent.
Dubai’s Rising Property Rents
Dubai has witnessed an increase in property rents, as per the report by dubizzle. The overall rents in the real estate sector accounted for a rise of more than 20%. With such a rise, landlords can increase the rent in Dubai. That said, they must follow the Dubai rent increase regulations by RERA.
Before the tenants sign the contract with the landlord, they must read the terms and conditions properly. It will help determine several questions. For instance, can landlords increase rent in Dubai? How much can they increase?
Since tenants must know their rights, let’s go through the laws and regulations governing the rental price hike in Dubai.
Do Landlords Have the Right to Increase Rent Suddenly?
According to the RERA tenancy laws in Dubai, landlords can increase rent. However, this must only happen after the two years of contract establishment. Plus, the rent increases in Dubai must be according to the rules set by RERA.
If the landlords want to increase the rent, they must send a 90-day prior notice to the tenants. Additionally, they can’t cancel the contract or evict the tenants from the property without providing a 90-day notice.
Landlords have the right to increase the rent, but that must be according to the rental index. Here’s the index on how much rent landlords can increase in Dubai.
How Much Rent Can Landlords Increase in Dubai?
Landlords can increase rent according to the RERA rental index calculator. It has the following conditions to demand a rental increase:
- No change in rent value if it is equal to or 10% less than the average rent value
- 5% increase if the rent is less than the average index by 11 to 20 percent
- 10% increase if the rent is less than 21 to 30 percent of the average index
- 15% increase if the rent is less than the average index by 31 to 40 percent
- 20% rent increase if it is more than 40 percent less than the rental index
For instance, if the tenant lives in a one-bedroom rental apartment in Business Bay and has a current rent of AED 50,000, the landlord can increase the rent. Considering the average rent of a 1-bed apartment in Business Bay is AED 67,000 to AED 81,000, as per the rent index, the current rent of AED 50,000 is around 31 to 40 percent lower.
In this case, landlords can increase the rent by 15%, which is AED 7,500 more than the current rent. Tenants and landlords can determine the increased value according to the rental index.
Upon receiving the notice, tenants can refuse the rental increase within thirty days of the landlord’s notice. Besides, tenants can claim their rights and report the case to the Rental Dispute Committee (RDC) if the landlord demands increased rent before two years.
FAQs
Can Landlords Increase Rent Every Year?
No, landlords can’t increase the rent every year. Renters can report a sudden increase in rent in Dubai to RERA according to the rights of tenants in Dubai.
What is the Maximum a Landlord Can Increase Rent in Dubai?
Landlords can increase the rent up to 20% if the current rent is 40% less than the average market value. You can determine the average market value as per the RERA rental index.
How Often Can a Landlord Increase Rent in Dubai?
Landlords can increase the rent on the contract renewal. Otherwise, they can send notice 90 days prior after the tenancy contract is two years old.
These were all the conditions and laws on rent increase. Can landlords increase the rent suddenly in Dubai? No, they need to provide a 90-day notice.