Question: I own a villa in Dubai that I’ve rented out. According to the latest rental index, my tenant is paying significantly less than the average rent in the area. Am I allowed to increase the rent all at once to match the average, given that it would be a substantial hike?
Answer: In Dubai, rent increases upon contract renewal are governed by the Decree No. (43) of 2013, which ties the allowable rent hike to the difference between the current rent and the average rent in the area. According to Article 1 of the decree, the maximum increase is determined as follows:
- No increase if the rent is up to 10% below the average rental value of similar units.
- 5% increase if the rent is 11% to 20% lower than the average.
- 10% increase if the rent is 21% to 30% lower.
- 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" refers to the Rent Index approved by the Real Estate Regulatory Agency (RERA), as detailed in Article 3 of the Dubai Rent Increase Law.
Furthermore, under Article 10 of Law No. 26 of 2007, RERA has the authority to set criteria for rent increases based on the prevailing economic conditions in Dubai. Both landlords and tenants may negotiate the rent terms before the lease expires. If they can't reach an agreement, the tribunal will decide the fair rent based on specific criteria.
Both parties must provide written notice at least 90 days before the lease expires if they wish to alter any terms, including the rent. If a dispute arises, the Rental Dispute Centre can intervene to resolve the issue. In summary, while you can raise the rent, it must align with RERA’s guidelines, and any change must be communicated in advance.
News Source: Khaleej Times
