Are you renting in Dubai and wondering about your upcoming rent increase? Fortunately for all renters in the emirate, the Real Estate Regulatory Authority (RERA) has implemented guidelines to regulate annual rent increases.
Additionally, to ensure transparency and fairness, RERA has developed a rental increase calculator that helps landlords and tenants determine the permissible rent increase based on specific factors.
So, without further ado, let’s walk you through how the RERA rental increase calculator works so you can clearly understand the factors that can influence rent adjustments.
- About RERA
- What is the RERA Rental Increase Calculator?
- How much can my rent increase by?
- How do I use the RERA Calculator in Dubai?
- When is a rent increase allowed?
- Illegal rent increases – what do I do?
- Rera Calculator 2024 Updates
- FAQs
Before we start, let’s answer a simple but common question: What is indexed rent?
Indexed rent is a rent increase that’s already agreed upon in the lease agreement. Basically, the landlord and tenant decide on a specific amount for the rent to go up each year during the initial contract negotiations. So, there’s no need to talk about it again when it’s time for the increase.
1. What is RERA?
RERA represents the Real Estate Regulatory Authority, as a unit of the Dubai Land Department, a key institution tasked with overseeing and regulating the real estate sector’s operations and standards.
Besides RERA provides a rental increase calculator which helps landlords and tenants to determine whether a proposed rental increase is allowed or not.
The new RERA Index has just come out and many residents of Dubai are wondering if they should expect rental increases or decreases from their landlords this year.
For those who don’t know how the RERA rental increase calculator works, here’s a simple explanation.
What is RERA Registration Dubai’s Role?
RERA primary mission is to establish a regulatory environment that ensures fairness and transparency for everyone involved in real estate transactions, while also strictly enforcing the regulations set forth for the industry.
What is the RERA Index in Dubai?
The RERA index is a comprehensive set of regulations developed by Dubai’s Real Estate Regulatory Authority (RERA) to promote transparency and equity within the real estate market. This framework ensures that all property transactions adhere to established standards, protecting both buyers and sellers.
By enforcing these guidelines, the RERA index helps maintain fair pricing, prevent fraudulent activities, and resolve disputes efficiently. Additionally, it covers various aspects of the real estate sector, including property listings, rental agreements, and developer practices.
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2. What is the RERA Rental Increase Calculator?
In December 2013, to cap rental increases and kerb illegal rental increases, H.H Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, issued Decree No. 43 of 2013 which set limits on the annual rent increases for all properties in Dubai.
The rental calculator works in accordance with the RERA rental index which is updated yearly and the rental recommendations in the index are valid for all rental properties in Dubai, for the entire year.
The RERA rental increase calculator allows landlords and tenants to input details of their property and be provided with results to show if a property rental increase is applicable or not.
Landlords are encouraged to check the rental calculator when considering a rental increase to ensure they are working within the confines of the law and tenants are advised to check the calculator in the event of a notice to increase their rent.
The RERA rental calculator asks for the following:
- Whether the property is residential, commercial, industrial or staff accommodation
- Tenancy contract expiry date
- Main area of the property (Deira, Bur Dubai which refers to elsewhere in Dubai or whether it is a freehold property)
- Property type (apartment or villa)
- Area (community or subcommunity)
- Number of bedrooms
- Current annual rental amount
However, there are some important aspects which the RERA rent calculator does not take into consideration:
- Age of the building/unit
- Building condition
- Available facilities
- Floor level
The calculator works by comparing the price of your property with the average prices of similar properties in your area.
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3. How Much Can My Rent Index Increase by?
RERA rental index is updated annually and according to RERA guidelines, the amount of rent increase depends on how much lower your current rent is compared to the average market rent for your location:
- If the current annual rent is below 10% of the calculated market value, there is no increase applicable.
- If your rent is 11-20% below the average, the landlord can increase the rent by 5%.
- If it is 21-30% below the average, a 10% increase is allowed.
- If it is 31-40% below the average, the increase can be 15%
- If the annual rent on the property is more than 40% below the RERA calculated market value, the maximum rent increase applicable is 20%.
How much rent increase is allowed in Dubai?
In Dubai, the permissible rent increase, as regulated by the Real Estate Regulatory Agency (RERA), typically does not exceed 5% annually. However, this cap may vary depending on factors like the type and location of the property, as well as the duration since the last rent increase.
4. How do I use the RERA Calculator in Dubai?
Using the RERA Calculator in Dubai is simple and can be done through the Dubai Land Department (DLD) website or the Dubai REST app. Here’s a step-by-step guide to help you determine your rental index:
- Access the Calculator: Visit the DLD website and choose the RERA rent calculator, or download the Dubai REST app where the calculator is also available.
- Choose Your Tab: You’ll have several options like Title Deed Number, Ejari Contract Number, residential, commercial, industrial, staff accommodation, or location map. Select the one that applies to you.
- Enter Required Information:
- If you select Title Deed Number, input your current rent, the certificate year, and other necessary details to see if there is a rental increase.
- For the Ejari Contract Number option, simply enter your contract number to get the current rent and any applicable increase according to the RERA rental index.
- For Residential, enter your lease contract end date, the type of property (Apartment or Villa), and the area you are living in. Then, provide the number of bedrooms in your property.
- Current Rent Information: If you already have a rented apartment in Dubai, you can enter your current annual rent. If not, you can leave this field empty.
- Calculate Rent: Once all details are filled in, click on “Calculate Rent” to get the average annual rent based on current market trends.
This user-friendly tool helps you stay updated with the rental market and make informed decisions regarding your property rentals in Dubai.
5. When is a Rent Increase Allowed?
If your property is eligible for a rental increase, and only then, your landlord must give you a notice 90 days prior to your contract renewal.
If the landlord fails to give you a notice before the assigned 90 days, you are not obligated to accept the rental increase.
6. Illegal Rent Increases – What do I do?
Unfortunately, despite the law and the presence of the rental increase calculator, some landlords will try to increase rent when they are not allowed to – or they will increase rent beyond what is allowed by law.
In the case that the rental calculator indicates a rental increase is excessive or simply not allowed, but the landlord is insistent on increasing rent, the tenant should try to discuss with the landlord and use the rental calculator as supporting evidence. However, if this does not help, you can look into filing a rental dispute.
7. RERA Rental Increase Calculator 2024 Update
The new rent law in Dubai for 2024, effective from March 1, sets clear limits on how much landlords can increase rent. The increase is based on the current rental value compared to the market value and can only happen once a year during contract renewal. Landlords must provide tenants with a 90-day notice before implementing any rent increase.
Example to help you understand
Let’s say you’re renting a two-bedroom apartment in Dubai Media City. In 2024, the average rent for such an apartment is between AED 90,000 and AED 110,000 annually. If you’re currently paying a rent that’s 40% below the market value, say between AED 54,000 and AED 66,000, your landlord has the right to increase your rent by up to 20%.
Here’s how you can calculate the potential increase:
- Check Current Rent and Contract End Date: Enter your current annual rent and the contract end date into the RERA rental index calculator.
- Calculate the Increase: The calculator will provide the amount by which your rent can be increased when you renew your lease.
For instance, if your current rent for a two-bedroom apartment is AED 60,000 per year, the landlord could increase it by up to AED 12,000, bringing your new annual rent to AED 72,000.
Note: These rental values do not include additional costs like electricity, water bills, or the Dubai Municipality Housing fees.
By staying informed and using the RERA rental index calculator, you can better anticipate and manage your rental expenses.
Rental Price Updates in Dubai 2024
Rental prices in Dubai are expected to stabilize or increase slower in 2024, even though demand for real estate has remained strong throughout 2023. While rental increases are likely to continue, they are predicted to happen at a much more gradual pace compared to the sharp rises seen in previous years. This provides a more balanced market outlook for tenants.
FAQs
The RERA Index in Dubai which is part of the Real Estate Regulatory Authority (RERA) under the Dubai Land Department, offers a valuable tool; the rera rental calculator. This tool aids both landlords and tenants in evaluating if a proposed rental increase is within the permissible guidelines.
To utilize the RERA rent calculator, input the necessary information such as property type, contract expiry date, certificate number, certificate year, and your current annual rent. After entering these details, click the “Calculate” button to receive the calculated outcome.
Under RERA guidelines, landlords in Dubai can raise the rent by up to 20% if the existing rent is 40% below the average market rate. The average market rate can be determined using the RERA rental index, ensuring fairness in rental practices.
According to the RERA guidelines we mentioned before, which were last refreshed in July 2023 and again on March 1st, 2024, the cap for rental hikes is a maximum of 20 percent. This cap is applied based on comparing your current rent to the ongoing market rates for similar rental properties.
In Dubai, once the rent amount is set in a lease agreement, landlords do not have the freedom to adjust it at will. However, rent increases are permissible only once annually and are typically implemented at the time of lease renewal. This approach ensures that rent adjustments are both fair and legally compliant.
How to calculate rent with index?
To calculate rent with indexation, divide the new index point figure by the old index point figure (from when the agreement was made) and then multiply this ratio by the original rent. This formula can also be used to check other agreement sums tied to an index.
Should the discussions not prove fruitful, then the tenant is well within their right to lodge a rental increase dispute with the Rental Dispute Settlement Centre where the matter will be dealt with accordingly.
Click to open the RERA rental increase calculator in a new window and see if your rent may increase.
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