Lease Renewals and Rent Increases
Dubai is a proud city these days having recently won the bid for Expo 2020. We all enjoyed the celebrations and the kids the day off school! But as the celebrations settle many of us are now a bit concerned that with all the hype rents are going to rocket. After all, it has been reported in the media that the event will create over 277,000 jobs so that’s a lot of people moving into our city.
However, if you are already ensconced and happy in your home in Dubai you will be pleased to learn that your landlord won’t be turning up with a new rental contract doubling your rent. In recent years the government has put in certain laws to protect the tenant from the ‘greedy landlord’ demanding ridiculous rents. The law (Decree No 2 of 2011) states categorically that the landlord can only increase rents by a minimum of five per cent to a maximum of 20 per cent if the existing rent is below the average market rate stated in RERA’s geographic rent index.
To understand what the government has worked out as the ‘average market rate‘ for your home in a particular area the tenant can use an Index calculator on The Real Estate Regulatory Agency (RERA) Website. This is updated four times a year. From this information you will then be able to work out what your landlord can increase your rent by. This works according to a stepped rental cap. It allows a rent increase of:
– 5% where the existing rent is 26 per cent to 35 % below the average rents for property in that area,
– 10% where the property is 36 to 45 % below market rent
– 15% where it is 46 to 55 % below the market rate
– Maximum of 20 % where it is more than 55 % below.
However, rents that are less than 25 per cent of the index rates cannot be raised.
Should the landlord be unhappy with the amount he is able to charge you then he may try and terminate your lease but again the law is on the tenants side and they must give you 12 months notice in addition to a valid reason as follows
The landlord wishes to demolish the property for reconstruction (all licenses for reconstruction should have been obtained)
The landlord wishes to renovate the property and cannot do so with tenant in situ
The landlord wishes to use the property for himself or next of kin to the first degree
The landlord wishes to sell the property
Before your lease expires you must be given a 90 days notice of any rent increase or change to the contract