Over the past few months, property prices in Dubai have risen sharply, and so are the rental rates on new apartments and commercials spaces.
A lot of my friends who are also expats claimed that their landlord have tried to take advantage of the frothy market and are trying to increase the rent substantially. Most of these increases are against the law, but only a small fraction of the tenants who live and work in Dubai are aware of their rights and the tenancy law.
So, how can a tenant know if the rental increase demanded by the landlord is legal?
For starters, you need to know that there is a government agency responsible in regulating rental fees. This agency is called Real Estate Regulatory Agency or RERA. There are strict laws regulating rental increase, and the best way to educate yourself is to visit their official website – RERA.
There are various tenancy laws in Dubai, but the regular rate that the landlord can demand will range from 5 per cent to a maximum of 20 per cent. However, it can only be implemented if the existing rent is below the standard market rate which is stated in RERA’s rent index.
So, it would be wise to use the RERA’s rental index calculator, which you can also find on their official website. This particular index compares the rental fees of various properties in Dubai and updates the database four times in a year. By using the index calculator, you will find out if the increase is truly fair and lawful.
Actually, the law protects both the landlord and the tenant and RERA regulates the relationship by implementing laws that would be fair for both parties. That’s why I always urge my friends to use the rental index calculator before they confront their landlords. It’s always a good strategy if your complaints have basis.
What are the important laws governing “rental increase” that you should know about?
Article 9 of the Dubai Law No. 26 of 2007 states rent should not be increased prior to completion of two years from the start date of the tenancy contract.
Other essential laws are as follows:
- A landlord must give a 90 day notice to his tenant if he plans to increase the rent, which has to be based on Real Estate Regulatory Agency’s (Rera) rent index.
- There should not be any rent increase, if the rent for the real estate unit is up to 25% below the average similar rent.
- If the rent value was 26% to 35% less than the average similar rent; the maximum rent increase shall be equal to 5% of such value.
- If the rent value was 36% to 45% less than the average similar rent; the maximum rent increase shall be equal to 10% of such value.
- If the rent value was 46% to 55% less than the average similar rent; the maximum rent increase shall be equal to 15% of such value.
- If the rent value was less than 55% of the average similar rent; the maximum rent increase shall be equal to 20% of such value.
- A Landlord must provide 90 days notice to a tenant if the lease is not permitted to be renewed by the Tenant
- Law (26) of 2007 – Article (9) Landlord should not increase such rent value or amend any of tenancy contract conditions until the elapse of two years from date of tenancy contract. Even after two years, if Rent Calculator shows no need of increase, then no need of increase. Only pay the within the market (RERA Calculator) price.
What happens if you find out that the rent increase violates the rent cap?
If you are certain that the increase demanded by your landlord is illegal, then the first thing you need to do is to negotiate with your landlord. Talk to him and find a common ground that could benefit the both of you. You should also show him the Rental Index Calculator, and tell him that this is what the law stipulates. If he sees the rate accepted under the index calculator, then it might even change his mind.
In case, the landlord disagrees with your terms and you’ve reached a deadlock. It’s now time to settle your rental dispute at the Rent Committee, which is a branch of the Land Department of Dubai. This is the government body that has jurisdiction over tenant-landlord issues. But this can be your last resort, if all other avenues have failed in providing a more diplomatic solution to your problem.
For more info, you can visit http://www.dubailand.gov.ae/engdefault.aspx