Regulation on Rent increase in Dubai

Rent Cap in Dubai, UAE

What is the law regarding increasing rent in Dubai?

The Dubai Government issued a Decree on 18th December 2013, regulating the increase in rentals in Dubai. Coming into effect from the date of issuance, the New Decree aimed to limit disputes between landlords and tenants by clearly defining a structure laying out the maximum percentage by which rentals can be increased when a lease contract is renewed. It ensures that the rent increase is fair and logically based on the rental index of Dubai.

Tenants are protected from exorbitant and unnecessary hikes in annual rents. The landlord cannot ask you to pay a higher rent upon renewal, if you are already paying close to the existing average market rent.

Landlords earning a rent much below the average market rent, can increase the rent by up to 20%. This would be especially useful in areas where rentals were slow to pick up after the 2008 financial and real estate crisis.

Decree No. 43 of 2013

Under this Decree, the maximum rent increase percentage upon renewal of the lease contract, for all properties in Dubai (residential and commercial), will be determined based on the following:

Existing Rent                                                           (compared to average rent)

Maximum Rent Increase Allowed

10% less than Average Market Rent

0%

11-20% less than Average Market Rent

5%

21-30% less than Average Market Rent

10%

31-40% less than Average Market Rent

15%

40% less than Average Market Rent

20%

 

Important facts that both landlords and tenants need to know about the New Decree surrounding the rent cap in Dubai:

Who is the New Decree applicable for?

  • All landlords – Public and Private
  • All properties – Commercial and Residential
  • All developments – Private and Free Zone (including Dubai International Financial Center)

How is the average market rent calculated?

The average market rent is calculated based on the Rental Index in Dubai which is updated every quarter by the Real Estate Regulatory Agency (RERA).

Take a look at what the average rents look like for a two-bedroom apartment in various locations in Dubai, as per the latest Rental Index updated by RERA:

Community

Average Rent (AED)

Palm Jumeirah

180,000-230,000

Downtown Dubai

170,000-190,000

Dubai Marina

140,000-190,000

Jumeirah Beach Residences

130,000-160,000

Jumeirah Lake Towers

120,000-150,000

Business Bay

120,000-140,000

Al Barsha

90,000-110,000

Garhoud

85,000-90,000

Al Karama

80,000-100,000

Discovery Gardens & DSO

70,000-85,000

International City

50,000-65,000

 

You can check out the Rental Increase Calculator on the Dubai Land Department official website to find out the permitted rental increase for various types of apartments & villas across different communities in Dubai. If you are a landlord, you can use it to calculate how much you can increase the next annual rent by. And if you are a tenant, you can check whether your rent is likely to go up or not.

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