Question: I own a villa in Dubai that I've rented out. However, compared to other villas in the area, I'm getting about Dh20,000 less. Can I raise the rent all at once to match the current market rate?
Answer: In Dubai, rent increases for properties are regulated based on specific guidelines, particularly during lease renewals. Under Article 1 of Decree No 43 of 2013 Determining Rent Increase for Real Property, the percentage increase may depend on average rent increases of the rented properties in the particular designated area.
When renewing real property rent contracts, the maximum percentage of rent increase for property in Dubai shall be as follows: no rent increase if the rental of the property unit is up to 10 per cent below the average rental value for similar properties; five per cent if the rental of the real property unit is 11 per cent to 20 per cent below the average for similar unit; 10 per cent if the rental of the unit is 21 per cent to 30 per cent less than the average rental value of similar properties; 15 per cent if the rental of the property is 31 per cent to 40 per cent below the average rental value for similar units; 20 per cent if the rental of the unit is more than 40 per cent below the average rental value of similar properties.
The average rental value refers to the average rent for similar properties in Dubai. These averages are established by Dubai's official Rent Index managed by the Real Estate Regulatory Agency (Rera). This is outlined in the Article 3 of the Dubai Rent Increase Law.
It is important to know that the rent increase and decrease related to residential properties in Dubai is decided by the Rera. Article 10 of the Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai states that “Rera shall have the authority to establish criteria relating to the percentage of rent increase in the Emirate in line with the requirements of the prevailing economic situation in the Emirate.”
When it’s time to renew a rental agreement, landlords and tenants can negotiate new terms, including any rent increase, before the lease expires. If an agreement cannot be reached, the rental tribunal may determine a fair rent based on specific criteria.
Additionally, if either party wants to change the rent terms, they must notify the other party at least 90 days before the rent ends, unless they have agreed otherwise. This is under Articles 13 and 14 of the Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in Dubai.
Based on the above-mentioned regulations, as the landlord, you are allowed to increase the rent by giving the tenant at least 90 days’ written notice before the renewal date, as long as the Rera index supports the increase. If you and your tenant cannot agree on the new rent, you may need to bring the matter to the Rental Dispute Centre, which will decide on the increase based on fair market criteria.
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