Dubai's Rera Index: Impact on Tenant Rent Increases

Many landlords in Dubai have started increasing rents upon renewal of tenancy contracts after the Real Estate Regulatory Authority (RERA) updated its rental index, allowing property owners to raise rents to align with market value. However, industry executives say that many tenants will not have to pay higher rents until later this year or early next year when their current contracts end, as RERA guidelines state that landlords can only increase the rent at the time of renewal.

The updated index is expected to see up to a 20% increase in rental value for tenants who have been staying in the property for more than two years. This revision will allow more landlords to raise rents, with many being able to increase by a larger percentage than before, closing the gap between renewal prices and market prices.

Relocating or buying property may become more attractive for tenants, as the revisions are expected to reduce the disparity between renewal prices and market prices. Rental increases are anticipated to slow down as new housing supply comes onto the market in the second half of 2024.

Landlords must adhere to the Rental Calculator, which limits rent increases to approximately half the difference between the current rent and the calculated market value. The rental estimates have now been adjusted to reflect current market rents, empowering landlords to align their prices accordingly, but they must notify tenants of any increase 90 days before the lease expires.

There has been a sharp increase in landlords seeking rental valuations to increase the rent over the past year, as both tenants and property owners have become more knowledgeable about the RERA Rental Index. Starting April 1, 2024, landlords are now required to attach a judgment or legal order to apply for the rent evaluation service.