Understanding the legal framework is crucial for both tenants and landlords in Dubai’s rental market. One of the key challenges is dealing with unfair rent increases. Illegal or sudden rent increases in Dubai can be a source of stress for tenants, disturbing their cost of living. However, a clear understanding of the law can empower tenants to protect their rights.
We will review laws regarding illegal rent increases in Dubai, how to determine it and deal with it. Without further ado, let’s begin.
- Understanding the Law: what Constitutes an Illegal Rent Increase?
- How to Determine an Illegal Increase
- Ways to Deal With Excessive Rent Spikes
- FAQs
Understanding the Law: what Constitutes an Illegal Rent Increase?
Before discussing ways to deal with illegal rent increases, it’s important to understand what is considered illegal. The Real Estate and Regulatory Authority (RERA) plays a significant role in this, setting tenancy guidelines to regulate rental transactions in Dubai.
According to the tenancy guidelines, specifically Article (1) of Decree No. (43) of 2013, a landlord is required to adhere to certain rules when increasing rent. This ensures a fair and just process for both parties.
Notice Period
A landlord must inform a tenant about any update to the tenancy agreement at least 90 days before the end of the agreement. This is to allow a tenant a fair time to accept the updated agreement or negotiate on the rent. In sudden or unfair increases, a tenant can file a complaint.
Percentage
The rental increase percentage is determined by a property’s current rental value against similar units in the area. It is illegal to increase the rent if the rental value is below 10% less than similar units. Increasing property rent is only permitted under the following cases and can be determined using a RERA rental increase calculator:
- A 5% increase in the rent when the rental value is 11% to 20% less than similar units.
- A 10% increase in the rent when the rental value is 21% to 30% less than similar units.
- A 15% increase in the rent when the rental value is 31% to 40% less than similar units.
- A 20% increase in the rent when the rental value is over 40% less than similar units.
Applicability
This law applies to all landlords of public and private entities. Free zones and special development zones must also follow the same rules.
How Does It Work?
You must be wondering about the actual statistics behind jotting down these figures. One can easily find the average rental value of similar units using the ‘Rent Index of the Emirate of Dubai’.
Let’s understand the rental increase percentage using an example. Suppose a studio apartment in Downtown Dubai has a rental value of AED 70,000. However, this is 20% lower than the average rental price of similar units with a rent of AED 84,000. In such cases, a landlord can increase rent according to the rent index. In this case, a 5% rent increase is legal.
How to Determine an Illegal Increase?
As a tenant, the first step is to identify an illegal rent increase. RERA has developed a rental calculator to determine a fair rent hike percentage. Both landlords and tenants should use this calculator before negotiating the rent of a property.
However, certain factors can affect the rental value of two similar properties, such as differences in the age of the building, condition, amenities, and floor level. Our complete guide to using the RERA rental calculator can help you navigate these factors.
However, certain factors affect the rental value of two similar properties. These are differences in the age of the building, condition, amenities, and floor level. Check out our complete guide to using the RERA rental calculator.
Ways to Deal With Excessive Rent Spikes
Here is how you can deal with illegal rent increases in Dubai:
Communication & Negotiation
Once you detect an illegal hike, the first expert suggestion is to clear doubts. The best way to sort things out is to discuss them by showing rental calculator outputs as proof. Share your concerns with your landlord and discuss the unfair rent percentage. Try to negotiate and solve the issue.
File a Dispute
If the landlord and tenant fail to reach a mutual ground, the last resort is to file a complaint against the landlord. A tenant has 30 days to accept or refuse the rental increase notice. In case of an unfair increase, a tenant can file a dispute with the Rental Dispute Centre (RDC) in Dubai.
Cost of Filing a Dispute
- Rental Dispute Settlement Centre (RDC) charges 3.5% of the annual rent value in case of a rental claim, eviction, reconstruction and lease renewal. The minimum amount is AED 500 and the maximum fee can be AED 20,000
- For financial claims, the fee is 3.5% of the claimed money. The minimum charge is AED 500 and the maximum is AED 15,000
- Miscellaneous Charges:
- Power of Attorney Registration (if required): AED 25
- Service Fee: AED 100
- Knowledge Fee: AED 10
- Innovation Fee: AED 10
- Real Estate Services Trustees Centres Service Charges (If Applicable): AED 130+VAT
RDC Key Information
Rental Dispute Centres are located in different areas of the City. Here are the details of the main branch of RDC:
- Location: Inside Dubai Land Department, Baniyas Road, Near Etisalat Tower 1, Riggat Al Buteen, Deira, Dubai, UAE
- Timing: 07:30 am to 03:00 pm (Monday to Thursday) and 07:30 am to 12:00 pm (Friday)
- Contact Information: +971 800 4488
Process of Filing a Complaint
The resolution begins once you file a dispute by submitting the necessary documents online or visiting in person. This starts with an initial court hearing, filing an appeal (if required), and finally, a mutually agreeable solution. Check out our complete guide to filing a rental dispute at the Rental Dispute Centre.
FAQs
The maximum rent increase is 20%, depending on the property’s rental value and similar units’ average rent.
No. RERA has strict guidelines. According to the guidelines, no individual party can back off or cancel the agreement. The consent of both parties is necessary for the nullification of a contract.
Try to resolve the issue through discussion. The second option is to discuss the problem with the building management. If this does not produce a fruitful outcome, you can file a dispute at RDC by submitting the documents and paying the fee.
That is all there is to know about dealing with illegal rent increases in Dubai. Ensure you follow the proper procedures and laws to avoid any rental trap.
Are you looking to rent a property in Dubai? Check out the how to rent a property in Dubai on Property Finder.
