Rents are going up in Dubai and are likely to go up further by the end of the year. Many residents in Dubai, who were breathing easy as rents came down, fear a repeat of 2008, when greedy landlords would jack up the rents arbitrarily.
However, this should not be the case as there are legal clauses in place for rent hikes in the city. According to legal experts with top firms in Dubai, landlords are allowed hikes which are set out as per government guidelines.
For those tenants who can foresee rent hikes on the property they are living in, this is what they should consider. First, they need to look at the time when they signed the lease of the property.
According to Andrew Thomson, Senior Associate at Clyde & Co, the hikes will depend on when the tenant moved into the property and there are two slabs for this.
“For properties leased prior to January 2011, no increases will be permitted if the rent is less than 25 per cent of the average rent for similar property in the same area. If it is more than 25 per cent, then there is a staggered permitted increase ranging from 5 per cent to 15 per cent.
“For those leased after January 2011, if a landlord wants to increase the rent, he has to inform the tenant at least 90 days before expiry of the current tenancy period (unless the parties agree otherwise),” he told Emirates 24|7.
“The increase of rent in Dubai is governed by Amiri Decree 2 of 2011,” Mohammed Kawasmi, Head of Property, Northern Emirates at Al Tamimi & Company told this website.
However, in case of a dispute, the parties should approach the Rent Committee, which has been set up to resolve such cases.
“If the landlord requests an increase in violation to the said Decree, then the tenant has the right to file a case at the Rent Committee which will decide on this based on the said Decree,” added Kawasmi.
“If the parties do not reach agreement on this, the Rent Committee may decide a fair rent and have consideration to the RERA rental index calculator. The RERA rental index calculator currently states that no increases will be permitted if the rent is less than 25 per cent of average rent for similar property in the same area. If it is more than 25 per cent, then there is a staggered permitted increase ranging from 5 per cent to 15 per cent. Ultimately, however, the Rent Committee is not bound by the RERA rental index, and can make awards on the basis of the particular circumstances of each case,” said the Clyde & Co expert.
Rent hike slabs as per law
According to Decree No. 2 of 2011 on rentals in the Emirate of Dubai, the landlords can increase the rent as below.
The maximum rent increase percentage of property units in the Emirate of Dubai leased before the enforcement of this Decree shall be as follows:
A - There should not be any rent increase, if the rent for the real estate unit is up to 25% below the average similar rent.
B - If the rent value was 26% to 35% less than the average similar rent; the maximum rent increase shall be equal to 5% of such value.
C -If the rent value was 36% to 45% less than the average similar rent; the maximum rent increase shall be equal to 10% of such value.
D - If the rent value was 46% to 55% less than the average similar rent; the maximum rent increase shall be equal to 15% of such value.
E - If the rent value was less than 55% of the average similar rent; the maximum rent increase shall be equal to 20% of such value.
For the purpose of this Decree the similar rent value of the property unit means pursuant to “The Rent Index of the Emirate of Dubai” approved by RERA.
This Decree shall be enforced from the date of its issuance and shall be published in the Gazette.
Issued in Dubai on 10 January 2011.
Note: The above information has been provided by Al Tamimi & Company