Dubai: Are Landlords Allowed to Raise Rent by Dh20,000 in One Go to Align with Market Rates?

Question: I own a villa in Dubai that I've rented out, but I'm currently receiving about Dh20,000 less than other similar properties in the area. Am I allowed to increase the rent all at once to align with the current market rates?

Answer: In Dubai, rent increases for properties are governed by specific regulations, particularly during lease renewals. According to Article 1 of Decree No. 43 of 2013, the allowable percentage increase is determined based on the average rent of similar properties in the designated area.

Here are the maximum permissible rent increases during renewal, based on how much below the average rent your property is:

No increase if the current rent is up to 10% below the average.
5% increase if the rent is 11% to 20% below the average.
10% increase if the rent is 21% to 30% below the average.
15% increase if the rent is 31% to 40% below the average.
20% increase if the rent is more than 40% below the average.

The average rental value is defined by the Dubai Rent Index, managed by the Real Estate Regulatory Agency (RERA). Additionally, Article 10 of Law No. 26 of 2007 gives RERA the authority to set criteria for rent increases in response to economic conditions.

When it comes to renewing a rental agreement, landlords and tenants can negotiate new terms, including any potential rent increase, before the lease expires. If an agreement cannot be reached, the Rental Dispute Centre can determine a fair rent based on specific criteria.

Importantly, landlords must provide tenants with at least 90 days’ written notice if they wish to change the rent terms. This requirement is stipulated in Articles 13 and 14 of Law No. 33 of 2008. If you wish to increase the rent, ensure that it aligns with the RERA index and provide the required notice. If you and your tenant are unable to agree on the new rent, the matter can be taken to the Rental Dispute Centre for resolution.

News Source: Khaleej Times