January 30, 2025
Dubai is a city known for its dynamic and evolving real estate developments, it has become the hub of tourist’s attraction, potential investors and buyers from around the Globe who are interested to live there either for temporary or permanent period. Dubai has become a prevalent choice and there has been a noteworthy increase in rent in Dubai moderately because of increasing population and increased demand for real estate.
Dubai's citywide rents increased for the fourteenth consecutive quarter, with flat rents rising 22% over the same period in 2023, according to a report published in August 2024 by The National News. However, villa rentals are increasing by 13% annually. It is crucial to comprehend the idea of rent increases in Dubai in order to better understand the real estate market and to prepare oneself financially, even though rising rents have not stopped tenants from extending their leases.
Current Trends Observed in Rent Increase in 2024
In the year 2024, the rents in the most upscale areas of Dubai are predicted to rise by 20%. Many professionals are moving to Dubai, more investors are gaining interests and thus increasing the population. The city has emerged as a major preference for wealthy individuals and this trend is predicted to increase in future. Rental prices will continue to rise if the rate of population migration to Dubai continues to outpace the construction of new residences. Rents changed in 2024 as more people decided to buy rather than rent, and real estate has become a more alluring investment.
Understanding Dubai’s Rent Increase Law
A set of rules known as the Dubai Rent Increase Law was created to limit the manner and timing of price increases by landlords for both residential and commercial real estate in the city. The Dubai Land Department's (DLD) Real Estate Regulatory Agency (RERA) is in charge of enforcing it. RERA's main goal is to protect both landlords and tenants by ensuring a transparent and equitable rental market. The RERA Rental Index is used as a benchmark by the law to determine the maximum permitted rent increase, which is based on the current market value of comparable properties.
Major Reasons for the Implementation of Law
Protecting Tenant Rights: The main aim is to shield the renters from explosive increases in rent that will have difficulty to manage their income and make both ends meet. The law safeguards the tenants for unjustly demanding an increase in rent or forcing the movement of tenants due to sudden increase in rent.
Ensuring Equitable Returns for Landlords: The law is specially made for the tenants to protect their rights while simultaneously balancing the interests of landlords enabling them to make an increase in rent that is in coordination with the market trends without exploitation.
Encouraging Market Stability: The law is made to maintain stability in Dubai's rental market by overall managing the rent increases. This makes Dubai a desirable location for both investors and expats by minimizing the likelihood of sudden swings in rental prices.
Promoting Long-Term Tenancy: The law governs the long term leasing agreements by controlling immense rental increases, that facilitates tenants (by providing stable housing) and landlords (by providing consistent rental income).
Legal Framework Governing Rent Increases
RERA (Real Estate Regulatory Authority), the regulatory arm of the Dubai Land Department (DLD), keeps an eye on the city's rent increase laws. In order to maintain fairness, transparency, and stability in the real estate market, RERA is crucial in regulating the entire Dubai real estate market. Monitoring Dubai's rental laws, especially those pertaining to rent increases, is one of RERA's many responsibilities. RERA has the crucial duty of making sure that, even in the event of rent increases in Dubai, the various stakeholders (such as landlords and tenants) are not adversely affected. This is especially important in a dynamic city like Dubai where the market is subject to sudden fluctuations.
Rent increases in Dubai and the Emirates are governed by Law No. 43 of 2014, one of the most prevalent rental laws in the city. In certain circumstances, it says, landlords may raise rent, and the percentage increase must be directly related to the difference between the current rent and the going rate for comparable properties in the neighbourhood.
RERA Rental Increase Law in Dubai
RERA encourages both landlords and tenants to use the RERA index calculator when negotiating a lease. Both new and current tenants should use the RERA rental calculator to check the RERA Rental Index; in the meantime, landlords are encouraged to use the RERA calculator to assess whether rent increases are appropriate. As required by local laws, landlords are only permitted to raise rent once a year and are required to give tenants 90 days' notice. The online RERA rental calculator can be used to check whether an increase is within this range. Interestingly, landlords are only able to raise rental prices once a year if the current price is below the market value.
RERA Rental Increase Rules:
11%-20% below market value: 5% maximum increase
21%-30% below market value: 10% maximum increase
31%-40% below market value: 15% maximum increase
40% or more below market value: 20% maximum increase
Although a 20% rent increase is the maximum, actual rent increases may differ depending on the state of the market. While stable or declining markets may see lower increases, rising markets may see higher increases within the legal bounds. However, if a rent increase is perceived as unwarranted, tenants are entitled to contest it. In the event that they need to, they can complain to RERA. To account for changes in the market, RERA updates the RERA Rental Price Index on a regular basis. Tenants and landlords must use the most recent data when deciding which properties to rent.
Tips for Landlords and Tenants
Tips for Landlords:
Make Regular Use of the Rental Index Calculator: In order to calculate the maximum amount of rent increase that is in comparison with the city’s market, it is recommended to use the RERA rental increase calculator.
Transparent Communication: Communication is considered as the key, an honest and direct communication must be maintained with the tenants about the patterns of rent increase, explaining the logical terms for changes and if required by maintaining the documentation.
Examine the Tenant's Situation: When deciding on rent increases, consider the tenant's financial status and overall tenancy history.
Tips for Tenants:
Recognise Your Rights: The knowledge about rights of tenants and RERA regulations related to rent increase.
The Rental Index Calculator can be used: To determine whether a proposed rent increase is reasonable, use the RERA index calculator.
Be Fair in Your Negotiations: If you feel that the rent increase is too high, speak with your landlord politely and openly to work out a better price.
RERA and other regulatory agencies are working to make sure that price increases don't negatively affect either landlords or tenants, even though average rental increases in Dubai are becoming more frequent. To prevent disproportionate rent increases when a contract is being renewed, regulations are in place.
