Decree No.1 for 2009, governing rentals in the emirate of Dubai, has been issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai.
The new decree, which applies to both residential and non-residential properties, prevents increases in rents during 2009 for tenants who are renewing rental contracts signed in 2008 – as long as the rent value in 2008 was equal to or less by a maximum of 25 per cent than the average rents in the index of the Real Estate Regulatory Authority (Rera).
The decree provides that the landlord will reserve the right to increase rents in cases where properties of similar specifications command rental payments of much higher value on the index than that of the landlord's property. However, the decree sets out guidelines on how to deal with such cases.
Rera earlier unveiled a new index, which shows average rental prices residents can expect to pay for properties in different areas of the emirate.
Director of Dubai Ruler's Court Mohammed Ibrahim Al Shebani, said that this decree aims to curb the continual increases in rentals in Dubai and keep rents at acceptable levels.
He added the new rules seek to bring about parity between landlords and tenants and stabilise the rental market to positively impact the economy of Dubai.
To restrict big increases in rents in properties where tenants pay reasonably lower rents, the decree provides a 25 per cent cushion between actual rents and the average rents in the Rera Rental Index.
The decree brings relief from further increases for a big chunk of the property in the emirate, especially for those rented in the past couple of years during the height of the economic boom.
At the same time, the decree also brings parity in rents for accommodation and commercial properties of similar kinds in the same localities and where rentals vary widely.