How Much Rent Can Be Increased in Dubai in 2024?

Betterhomes witnessed an average 24% increase in rental prices in Dubai in 2023, with significantly more tenants choosing to renew their tenancies. As a result of the strong market conditions, landlords have been increasingly raising rents. But what is the expected rent increase in Dubai in 2024? And if you are unhappy with a proposed rent increase, what rights do you have to negotiate or refuse? Here's everything you need to know.

Current Trends

Rents in the prime residential areas of Dubai are expected to increase by as much as 20% in 2024. Experts say this trend will continue because more investors are interested, more professionals are moving to Dubai, the population is growing, and the city is becoming more attractive to wealthy people. If the rate at which people move to Dubai stays higher than the number of new homes built, rental prices will keep increasing. In 2024, rents could be affected by more people choosing to buy homes instead of renting and property becoming a more attractive investment.

According to a recent report, one-bedroom apartments are the most popular choice for residents looking for a residential property. About 36% of people search for one-bedroom apartments, 30% for two-bedroom apartments, and 24% for studios. For villas and townhouses, 42% search for three bedrooms, and 35% for four or larger bedroom options. Most tenants, 66%, prefer furnished homes, while 32% look for unfurnished ones.

Role of RERA in Determining Rent Increase

On March 1, 2024, RERA updated the rent calculator to help tenants better understand rental adjustments upon lease renewal. The calculator shows results based on location, property type, current rent, and number of rooms and tells whether or not the property is eligible for a rent increase. The methodology also includes comparing properties with similar ones nearby. 

Using the RERA rent calculator is simple:

• Go to the Dubai Land Department's official Website and open the RERA Rental Index.
• Select the property type 
• Fill in the required fields based on the property type
• Confirm the "Captcha" Verification and click “Calculate.”

Tenants and landlords should use the Rental Increase Calculator during lease negotiations. New and existing tenants must use the RERA rent calculator to check the Rental Price Index. Landlords must use it to determine the appropriateness of rent increases.

RERA Rental Increase Law

As per the law, a landlord can increase rent once a year before 90 days' notice. The rent can only be increased based on how much lower the current rent is compared to the market value.

• If the rent is 10% below the market value, no rent increase is applicable
• If the rent is 11%-20% below market value, the maximum increase in rent can be up to 5%.
• If the rent is 21%-30% below market value, the maximum increase in rent can be up to 10%.
• If the rent is 31%-40% below market value, the maximum increase in rent can be up to 15%.
• If the rent is more than 40% below market value, the maximum increase in rent can be up to 20%.

Frequently Asked Questions

What is the legal way to inform tenants of the rent increase in Dubai?

Landlords must send a notice to the tenants at least 90 days before the lease agreement expires.

Are there any variables that affect the increase in rent in Dubai?

Yes, RERA follows some variables to determine the rent increase. They are:

• Property Type (residential, industrial, or commercial)
• Location of the property
• Freehold or leasehold
• Number of bedrooms

Can a tenant refuse the rent increase?

Yes, a tenant can refuse the rent increase as proposed by the landlord but must evacuate the property and provide 60 days' notice before the renewal date.

What can a tenant do if the rent increase isn't reasonable?

If the landlord increases the rent by more than the Rent Index permits, the tenant must speak to the landlord about this and state how much they are allowed to increase the rent. If the landlord still refuses, the tenant can file a case with the Rent Disputes Settlement Centre.

Can a landlord ask the tenant to evacuate the property before the contract's expiration?

A landlord can ask the tenant to evacuate the property before the contract's expiration under these circumstances:

• The tenant failed to pay the rent even after 30 days of notice.
• The tenant subleases the property without the landlord's written permission.
• The property is used for illegal or inappropriate activities by the tenant.
• The tenant modifies the property in a way that endangers its safety.
• The property has to undergo major maintenance due to the tenant's negligence.

What happens if the landlord fails to provide 90 days' notice before increasing the rent?

If the landlord fails to provide 90 days' notice before increasing the rent, the tenant can refuse the increase, and the contract will be renewed at the existing price.

Conclusion

The RERA rent increase law protects the interests of tenants and landlords by considering current market trends and conditions. It is best practice for tenants to consult the rental price index, while landlords must check the appropriateness of the rent increase using the RERA rent calculator. This will help both parties determine if the rent increase is applicable and how much rent should be increased before renewing their contracts.