Rental Features in Dubai: Features of the Price Increase

11:58 pm  |  10.09.2023

How is the rental price for housing in Dubai determined, can the landlord raise it independently, and who regulates the price for apartments and villas.

Features of Formation of Rental Prices in Dubai

If you’re considering renting a property in Dubai for an extended period or are already renting a house in the Emirates, you may come across a situation where the landlord notifies you of a rent increase. However, such an increase may not be lawful.

Therefore, it is important to be well-versed in local rental laws so that you know when your rights are being violated and how you can protect your interests.

READ: Renting Property in Dubai: Current Features

In general, Dubai laws are fair and protect both the tenant and the landlord equally. The permissible increase in rental cost directly depends on the initial price specified in the contract and the average market indicators. Let’s look at in what cases the owner can increase payments, and in what situations he has no right to do this. We will also find out where the tenant should know if his rights are violated.

Rent Regulation in Dubai

Real Estate Regulatory Agency (RERA)

One of the main advantages of renting housing in Dubai is that all long-term rental relationships are controlled by the Real Estate Regulatory Agency (RERA). When entering into a lease agreement, it must be registered in the Ejari system launched by RERA – only in this case, the agreement will be legally binding.

In Dubai, there are laws that regulate the relationship between the landlord and tenant, with the most important one being No. 26 of 2007. According to Article 9 of this law, the lease agreement must clearly specify its value, and for the initial 2 years of the lease term, this amount cannot be altered, along with other contractual terms. In the future, the lessor can increase the rate no more than once a year, and not at any time, but only when extending the lease agreement.

READ: Top 3 Developing Areas in Dubai: Buying Property

If the property owner decides to raise the rent, he must notify the tenant at least 90 days before the end of the current contract. The message must be submitted through a notary or by registered mail. If the tenant does not agree with the increase, he must notify the other party no later than 60 days before the date of renewal of the contract.

In cases where the property owner notified the tenant about the increase in cost less than 90 days before the expiration of the current contract, the tenant has the right to refuse to pay rent at the new rates.

Important: Dubai legislation controls the process of increasing the existing rental price, but the initial rate is agreed upon by the landlord and the tenant independently. Before signing a contract, ensure the owner’s offered price matches market rates as payments can’t be revised.

Another condition that the landlord must comply with when increasing the rate is that the tariff corresponds to market realities. Decree No. 43 of 2013 establishes the maximum amount of increase in rental payments:

  • if the rent is 10% lower than the average rental price of similar real estate on the market, then increasing the rate is prohibited;
  • if the rent is 11–20% lower than the average market rental price for similar properties, then the rate can be increased by a maximum of 5%;
  • if the rent is 21–30% less than the average rental cost of similar units, then the rate can be increased by 10%;
  • if the rent is 31–40% lower than the average rental price for similar real estate, then the rate can be increased by 15%;
  • if the current rental price is more than 40% lower than the market average for similar properties, then the rental payment increases by 20%.

As the Dubai real estate market develops rapidly, rents will inevitably rise over time. If you plan to live in Dubai for an extended period, it may be more financially advantageous to purchase a home with a mortgage.

Calculations can be obtained immediately after data entry. To do this, just indicate the area, type of property, its area, number of bedrooms, and the current rental price for the year.

To ensure that owners and tenants can easily calculate the average market price of rental housing in a specific area of Dubai and calculate the permissible price increase limit, the Dubai Land Department has created a special service – the Rent Increase Calculator. It is available on both the DLD website and the free Dubai REST app.

READ: Top Finished Projects for Investors: Long-Term Rental Information

Settlement of Rent Disputes

If the parties cannot agree on the amount of rent, or the tenant wants to challenge the illegal increase in rent, he can contact the Rent Disputes Settlement Center at the DLD. Its office is located in the Deira area.

To file a claim, you need to prepare a package of documents, which includes a passport, resident visa, Emirates ID, rental agreement, Ejari certificate, correspondence with the landlord about increasing the rental price, receipts, and recent DEWA invoices. You may also need other documents that are relevant to the topic of your application.

To avoid conflicts with the landlord in the future, including over price, you can use the help of professional agents before concluding a contract.

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