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The Rental Price Increase For Landlords Is Constrained By Factors Such As The Property Type And Size, The Location, And The Current Market Value.
Amidst the confusion surrounding tenants’ rights, the UAE’s commercial property sector witnessed its highest demand for occupancy in the second quarter since 2014. As the Dubai property market makes a robust recovery from the pandemic. Certain landlords have attempted to impose significant annual rent hikes. Consequently, many tenants are now seeking a better grasp of their rights, particularly concerning rent increases.
In the UAE, there are laws in place to safeguard both tenants and landlords. To avoid disputes, establishing positive landlord-tenant relationships is highly recommended. As emphasized by Mario Volpi, the sales and leasing manager for Engel & Voelkers.
As a tenant in Dubai, it is essential to be informed about your rights and the Rera rent calculator to understand permissible rent increases. If a landlord chooses to sell a property that is currently leased, the terms of the tenancy contract remain unchanged, as confirmed by Mr. Volpi.
If a landlord intends to evict an existing tenant, there are four qualifying reasons for doing so:
- Selling the property.
- Moving into the property or accommodating immediate family members. Provided the landlord doesn’t own a suitable alternative property for that purpose (with evidence given in advance)
- Carrying out extensive modernization work that would prevent the tenant from residing in the property (with evidence of plans or approvals provided in advance)
- Demolishing the property (with evidence given in advance)
Law 33 of 2008 mandates a 12-month written eviction notice to be served after the expiry of an existing tenancy agreement. Technically, if a tenant is mid-contract, the eviction notice can only be given at the contract’s end, which may lead to an extension of the tenancy for one more year.
However, some judges have previously allowed landlords to give the 12-month eviction notice at any time during the contract period. This decision varies on a case-by-case basis, leading Mr. Volpi to advise his clients to negotiate. In addition, to find common ground with their landlords to avoid unnecessary disputes.
When a landlord intends to increase the rent, they must provide a 90-day notice. Unless the contract specifies otherwise. Failure to give notice within this timeframe prohibits them from raising the rent.
If there is no electronic or written communication, the Dubai property rental contract automatically renews at the same rental price and with the same conditions as the previous year.
Likewise, if a tenant wishes to make changes to the contract, such as introducing a pet into the home, they must give the landlord a 90-day notice.
If the landlord and tenant cannot reach an agreement and neither party can come to terms. The tenant is required to vacate the property at the end of the current contract.
Using the RERA Calculator to Calculate Rent Increase
Established in 2013, RERA aims to regulate and stabilize the market in Dubai to prevent overheating. The RERA rental calculator assesses the eligibility for rent increases by considering factors like location, property type, current rent, and the number of rooms. It compares the property with similar ones in the vicinity.
Both tenants and landlords can access the RERA Rent Calculator on the Dubai Land Department website. The maximum percentage of rent increase in Dubai properties depends on the area, property type, size, and current market value.
Here are the guidelines for rent increases based on the rental price compared to the market value:
- If the rental price is less than 10% below the market value for the area, no increase is allowed.
- If it is between 11% and 20% below the market value, the landlord can increase by 5 percent.
- For a rental price between 21% and 30% below market value, the landlord can increase by 10 percent.
- If the rental price is between 31% and 40% below market value, the landlord can increase rent by 15%.
- Rental prices that are 41% or more below market value will attract a 20% increase in rent.
As per the RERA Calculator, landlords cannot increase the rent by more than 20 percent in any given year. However, if both parties agree on a higher increase during private negotiations, the rent can exceed the 20% limit set by RERA.
