Question:
I own a villa in Dubai that I have rented out. As per the latest RERA rental index, my tenant is paying much lesser than the average in the area. Can I raise the rent at once to bring it on par with the average? That would be a substantial hike.
Answer
In Dubai, the percentage increase allowed when renewing rental agreements depends on the average rent for similar properties in the designated area. This is regulated by Article 1 of Decree No. (43) of 2013, which sets the following limits for rent increases:
- No increase: If the current rent is up to 10% less than the average.
- 5% increase: If the current rent is 11% to 20% less than the average.
- 10% increase: If the current rent is 21% to 30% less than the average.
- 15% increase: If the current rent is 31% to 40% less than the average.
- 20% increase: If the current rent is more than 40% less than the average.
When renewing a lease, both the landlord and tenant can discuss and modify the terms, including the rent. If they cannot agree, the Rental Disputes Center (RDC) may determine a fair rent based on specific criteria. Both parties must provide at least 90 days’ notice before the lease expiry if they intend to amend the terms, unless otherwise agreed. This is according to Articles 13 and 14 of Law No. 33 of 2008, which amends Law No. 26 of 2007.
Article 13
For the purposes of renewing a rent contract, the landlord and tenant may, prior to the expiry of the rent contract, amend any of its terms or reconsider increasing or reducing the rent. If the landlord and tenant fail to reach an agreement in this regard, the Tribunal may determine the fair rent, taking into account the criteria stipulated in Article (9) of this Law.
Article 14
Unless otherwise agreed by the parties to a rent contract, where either party wishes to amend any of its terms pursuant to Article (13) of this Law, that party must notify the other party of this intent no less than ninety (90) days before the date on which the rent contract expires.
Therefore, as a landlord, you can increase the rent by providing at least 90 days’ written notice before the renewal date. However, the increase must be permitted by the RERA rent index. If your tenant disagrees with the proposed increase, you may approach the RDC to decide on a fair rent for your property.
