How Much Rental Increase Is Allowed?

It's that time of the year again when you have to choose: should you renew your rental contract or look for better options out there? The choice may be simple if you don't face any rental increases, but if you're slapped with a price hike, you might wonder if it's legal in the first place. 

In this article, you can educate yourself on what constitutes a legitimate rental increase in Dubai against what counts as an unjustified rise from landlords. So before you let your landlord have it the next time you're shocked with a hefty rise, make sure you understand the law first. I always recommend a polite response at all times, no matter the situation. 

Rental Authority

Remember this: The Real Estate Regulatory Agency (RERA) is the exclusive authority that regulates the real estate sector in Dubai. RERA is the go-to source to determine how much rental increase is permitted. 

Allowable Rental Increase 

As a tenant, you need to know your rights and responsibilities. The Dubai Land Department (DLD) Decree No. (2) for 2011 states the following: 

If the rent is 10% less than the market value, there is no increase

If the rent is 11-20% lower than the market value, the maximum increase may be up to 5%

If the rent is 21-30% lower than the market value, the maximum increase may be up to 10%

If the rent is 31-40% lower than the market value, the maximum increase may be up to 15%

If the rent is lower than 40% or more of the market value, the maximum increase may be up to 20%

Remember: the maximum permissible increase in rent is 20%. It all depends on whether the property in question is overvalued or undervalued against its equivalent market rate. 

RERA Rental Increase Calculator 

Based on this law, DLD created a useful "Rental Increase Calculator" that calculates the increase in rent and average rent in the real estate market by entering data for the required area. The best part about this service is there are no required documents, terms, or fees. It's completely free!

You can access the service here. 

https://dubailand.gov.ae/en/eservices/rental-index/#/

Here's a bonus: You can refer to this service if you, the tenant, have a dispute with the landlord over rental increases. In this case, you need to visit the website above to access the Rental Increase Calculator and make an inquiry by entering the required data. 

Just enter your contract end date, property type, area, no of bedrooms, and current annual rent. For instance, suppose you're living in Warqa, and your annual rental contract is 40,000 Dhs for a two-bedroom apartment. Then by entering the details, the calculator would give you the following result. 

The message read: "When renewing real property lease contracts, the maximum percentage of rent increase for real property in the Emirate of Dubai, 15% of the rent of real property unit, where the rent is 31% to 40% less than the average rental value of similar units. The rent for a Two bedrooms apartment in Al Warga-BLD is in range 55000 to 67000 AED per year, (does not include water, electricity or any other fees, and not applicable for hotels and hotel apartments)." 

The amount of the increase is (6000 AED per year )."

This means the landlord is entitled to a 6000 AED rental increase. If the landlord wants to increase the price by more than that, then you have the right to dispute the price hike by referring to this calculator according to the law. 

Know the law and be smart! Don't be a victim of an unethical rental increase. 

90-Day Notice (IMPORTANT)

Keep in mind that the landlord must give a 90-day notice for any changes in the renewal of a tenancy contract. If the landlord doesn't provide such notice in electronic or written form, the rental price remains the same. Document the requested change date and check if it meets the 90-day notice requirement. If not, you're legally permitted to refuse the increase.

Read the Renewal Contract 

It's good practice to read any contract before signing it. That's what I remember the lady telling me when I was about to sign my TOEFL exam admission form when I was in high school. She said, "Never sign any document without reading it first, Adam!" 

She was right, even if I had to sign it anyway to enter the exam, and it seemed a formality to me. I still had to read all the terms and conditions. 

The same applies here. Always read any contract in its entirety (including all the clauses and addendums in the contract renewal) and look for any modifications or additions.  

I hope this information helps you with your decision. Knowledge is power, so don't let unscrupulous landlords deceive you with illegal rental increases. All the best!