Dubai decree provides mechanism for calculating maximum increase permitted upon renewing a lease
The Dubai decree on rental increases issued at the end of last year has significant implications for the current practice of landlords in the DIFC. Previously, there was no rent cap law in the DIFC.
Now, Decree No. 43 of 2013 — on ‘Determining the Increase in the Real Estate Rentals in the Emirate of Dubai’ — also determines the extent to which rents may be increased in the free zones, and expressly refers to its applicability in the DIFC. As a whole, the decree applies to landlords in all of Dubai.
The decree provides a mechanism for calculating the maximum rent increase permitted, if at all, upon renewing a lease. The calculation is determined by reference to the average rental value in the area where the property is located and the percentage to which the rent pre-renewal falls short of that.
Article 1 of the decree sets out the maximum increase in rent allowed, depending on the difference between the rental amount and the average rent paid in the area. No rent increase is permitted where the rental amount is up to 10 per cent less than the average rental in the same area.
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Dubai decree provides mechanism for calculating maximum increase permitted upon renewing a lease
