Dubai is a charismatic city that attracts millions towards it. With a bullish trade market, strong economy, abundant employment opportunities and state-of-the-art infrastructure, it is a dream city for many to visit and get settled there. Knowing the rental market, rental laws and tenants’ rights are crucial as the number of expatriates settling in Dubai has been lately increasing.
If tenants are unaware of their rights can fall prey to unethical contractual changes or a dramatic increase in rent by the landlord. And landlords increasing rent is one of the most common contractual disputes between both parties. A majority of property agents in Dubai suggest tenants to understand the factors that can lead to a dispute, before signing a rental contract.
Read the contract before signing it
Finding the right property in Dubai at a desirable location and within the designated budget can be challenging. Therefore, when it comes to signing the tenancy contract and negotiating changes is pushed to the last minute. Do you know that the “tenancy contract” is one of the most important documents in the Dubai rental market and must not be neglected?
Are you worrying? Well, don’t be. The team HFRE has put up this matter with real estate experts and enlisted all the things that you need to know in regards to rental cap and rental increase.
Dubai tenancy law
The tenancy contract and the relationship between tenant and landlord are administered by the Real Estate Regulatory Authority (RERA) using Dubai Rental Law No. 26 (2007) and Law No. 33 (2008). All matters related to the increase in property rent are dealt with, using Law Decree No. 43 (2013).
Increase in rent across the emirate
A common trend observed across Dubai is rent hike, with more and more landlords increasing rent. In some posh communities, around 21% increase in rent is recorded. Arbitrary rent increase for properties for rent in Dubai is a common practice in the post-pandemic market. Resultantly, eviction by landlords in the hope of higher rents given the improving market conditions is another trend.
Here a question arises:
Can a landlord increase rent?
The brief answer is yes. A landlord can increase the rent for his/her rental properties in Dubai but he cannot raise it during your lease tenure.
It is because it is mandatory by the Dubai Land Department (DLD) for landlords to provide tenants at least a 90-day notice, in case they want to increase the rent. If you agree to the raise in the rent, the new rental contract will be renewed with the increased rental amount, (at the time of rent renewal). Otherwise, a tenant can legally refuse the increase in rent.
However, if you agree to the new hike, you must carefully review the entire contract for any other change made by the landlord. Try to settle it with your tenant, otherwise, upon refusing to agree to the new terms in the contract, a tenant can file a case with the Rent Disputes Settlement Centre at the Dubai Land Department (DLD).
The Dubai government released a rent decree
With the abrupt increase in rents across the emirate, a large number of high rental dispute cases are also unfolding. To cater to this issue, tenants must review the legal standing before filing the rental dispute case with the DLD, as the Dubai government has released a rent decree in December 2013 to regulate rental price hikes for properties for rent in Dubai by landlords. It is named Decree (43).
How much rent can be increased? Is there any cap on rent in Dubai?
The Decree (43) also outlines how much a landlord can increase rent in Dubai. In the context of the existing scenario, if the current rent is:
- Less than 10% below the average market rental rate, no rent increase is permitted.
- 11% to 20% below the average market rental rate, a maximum increase of 5% is permitted.
- 21% to 30% below the average market rental rate, a maximum increase of 10% is permitted.
- 31% to 40% below the average market rental rate, a maximum increase of 15% is permitted.
- More than 40% below the average market rental rate, a maximum increase of 25% is permitted.
Tenancy contract must be registered
To make the tenancy contract a legal document, it must be registered. It is not the landlord’s responsibility to register it with RERA but a tenant should do it himself or take help from an agent to do the task. Consider it the most important task after signing the contract, because if the contract is not registered with RERA and anything goes wrong in any rental properties in Dubai during the tenancy period, you cannot file a case against the landlord.
Do you know the average Dubai market rental rate?
It is crucial to be aware of real estate market conditions to predict the possibility of the rent increase. Landlords can justify the hike in rental prices of properties for rent in Dubai on the legal basis, so you must be on top of everything. The Dubai Land Department’s (DLD) Rental Index helps both parties (tenants and landlords) to determine an average market rental rate.
The result of the rental increase inquiry is immediately available upon providing the property type, area, number of bedrooms and current annual rent.
Do you know you can ask for a customized tenancy contract?
When it comes to signing a contract for properties for rent in Dubai, a majority of real estate agents have a standard one-pager tenancy document, which is just a template. Therefore, if a landlord is agreed upon a particular requirement or has made changes in the new contract, you must demand a customized rental agreement, drafted for you – enlisting your every term and condition. It will help you avoid any potential dispute in future.
Now you know a lot about rental properties in Dubai, market happenings and the laws regarding the increase in rent. If you are interested to get your hands on authentic property listings for rental properties in Dubai, you must call to the team HFRE at +971 4876 2473 or write us an email at email@example.com. Our experts will help you reach your dream rental property, within your budget and at your favourite location.