Dubai's real estate realm is abuzz with anticipation as the Real Estate Regulatory Authority (RERA) rolls out its latest update to the city's rental index. Experts predict significant shifts in the housing landscape especially for tenants who have resided in properties for over two years. This article delves deep into the implications of the latest changes, providing insights into Dubai's ever-evolving real estate market.
The updated Real Estate Regulatory Authority (RERA) index for Dubai, effective from March 1st, aligns future renewals more closely with current market rents as indicated by the RERA calculator. This update advises landlords and tenants on permissible rent increases based on community-specific benchmark rates.
The increase in the calculator is expected to affect long-term tenants, particularly those who have been in their current accommodations for more than two years. With this update, these tenants are likely to face a more significant rent hike upon renewal compared to what they would have experienced before the revision. It is anticipated that some tenants may opt to relocate or downsize in response, while others may seize the opportunity to transition into property ownership. Central villa communities and waterfront apartment communities, which have witnessed significant rent escalations over the past two years, are likely to experience the most substantial impact.
Industry experts anticipate rental increases ranging from 10% to 20% in certain areas following the index revision. However, some remain optimistic that the updated calculator could eventually contribute to a reduction in rents in the long run.
The previous calculator created a considerable gap between renewal prices and market rates, resulting in stagnant market dynamics. This stagnation, particularly evident in highly sought-after villa communities, led to a scarcity of available properties. With increased renewal costs, the market is poised for movement, potentially fostering greater housing supply in these communities and subsequently moderating open-market rents.
The RERA Rental index- everything you need to know:
To simplify leasing processes and provide transparency to tenants, the Dubai Land Department has introduced an online rental index, aiding in understanding potential adjustments in rental fees. The Real Estate Regulatory Authority (RERA), a division of the Dubai Land Department that oversees the real estate sector, introduces the RERA rent calculator. A user-friendly tool, available free of charge and designed to offer tenants insight into possible rental adjustments upon lease renewal. It ensures that any rental increases adhere to legal boundaries for both landlords and tenants, facilitating informed decision-making for both parties.
RERA Rental Increase Law in Dubai:
Tenants and landlords are encouraged to make use of the Rental Increase Calculator during lease negotiations. Tenants, both new and existing, are advised to consult the Rental Price Index using the RERA rent calculator, while landlords are encouraged to utilize it to assess the appropriateness of rent increases.
Landlords can only increase rent once a year and must notify tenants 90 days in advance as per local regulations. The online RERA rent calculator can verify if an increase falls within the permissible range.
Notably, the maximum allowable rent increase is determined based on the current rent's deviation from the market value:
• No increase is applicable if the current annual rent is below 10% of the calculated market value.
• A maximum rental increase of 5% applies if the current annual rent is between 11% and 20% under the calculated RERA market value.
• A maximum rent increase of 10% applies if the current annual rent is 21% to 30% under the calculated RERA market value.
• A maximum rent increase of 15% applies if the annual rent on the property is 31% to 40% under the calculated RERA market value.
• A maximum rent increase of 20% applies if the annual rent on the property is more than 40% below the RERA calculated market value.
Dealing with Illegal Rent Increases - What are My Options?
Regrettably, despite legal provisions and the availability of the rental increase calculator, some landlords may attempt to raise rent unlawfully or beyond permissible limits. If the rental calculator indicates an excessive or prohibited increase, and the landlord persists despite discussions, tenants should utilize the rental calculator as evidence to support their case while engaging in further dialogue with the landlord.
If attempts to resolve issues with your landlord are unsuccessful, you can file a complaint with RERA at the Rent Disputes Settlement Centre located in Deira, Dubai.