But there is a nuance
How much can you or your landlord raise or lower the price of renting real estate?
Against the background of the recovery growth of the real estate sector and the UAE economy, investing in this country becomes an extremely attractive enterprise. However, before thinking about signing a lease or renting out in the United Arab Emirates, you should know that this process is quite strictly regulated by the state.
This or that price can be assigned, rise and fall, based on several key parameters of the property under consideration. The same criteria determine the limit of price growth and how often it can rise.
Here is a small historical summary. During the period of rapid price growth in the market, in 2013, to prevent a possible overestimation of supply, the Emir of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, signed Decree No. 43. This decree not only confined the limits of rent growth, but also became a way to combat illegal manipulation of the rental rate.
In general, such regulations depend on the laws of a particular emirate, but for Dubai, the conditions are as follows:
- If the rental price of a real estate object is up to 10% lower than the average rental price for real estate of the same type, then the owner has no right to increase the rental rate;
- If the rental price of a real estate object is 11-20% less than the average rental price for a property of the same type, then the owner can increase the rate by a maximum of 5%;
- If the rental price of a real estate object is 21-30% less than the average rental price for a property of the same type, then the owner can increase the rate by a maximum of 10%;
- If the rental price of a real estate object is 31-40% less than the average rental price for a property of the same type, then the owner can increase the rate by a maximum of 15%;
- If the rental price of a real estate object is 40 percent or more less than the average rental price for a property of the same type, then the owner can increase the rate by a maximum of 20%.
At the same time, the average rental price for real estate is determined by the Real Estate Rental Index (Property Rent Index) of the Emirate of Dubai.
The main convenience in all this lies in the fact that for tenants and landlords there is already a tool that helps to simply perform the necessary calculations.
RERA is the Dubai real estate regulatory agency, and it provides access to its own rental rate measurement calculator. The index adopted by RERA in 2016, used in this calculator, allows you to calculate the rate if you provide the following list of parameters:
- Type of property: residential, commercial, industrial property or property for staff accommodation
- Lease expiration date
- The main zone of the property location (Deira, Bur-Dubai, which means any other zone of Dubai, while taking into account the possibility that the property is in unconditional possession)
- If the rate is calculated for residential real estate, then you need to choose whether the property is an apartment or a villa
- The community or sub-community with which the property is associated
- The number of residential premises provided
- Current annual rental amount
However, the calculator does not take into account such indicators as:
- The current service life of the property
- The state of this object
- The presence or absence of additional facilities
- Height and condition of the foundation
The Resolution also introduces another restriction on changing the rental rate – the need to notify the tenant of a change in the rental price 90 days before the date of renewal of the contract, otherwise, changing the rental rate will be illegal.
Access to the calculator is open to all residents of the UAE.
And this is also the main disadvantage of the tool, since access is open only to residents of the UAE with the appropriate IP localization. However, for foreign citizens, this problem is solved by public proxies.
