RERA (Real Estate Regulatory Authority), a division of the Dubai Land Department, offers a rental increase calculator to assist landlords and renters in determining if a proposed rental increase is permissible.
The 2016 RERA Index has recently been released, and many Dubai residents are wondering if they should expect rental hikes or cutbacks from their landlords this year. Here’s a quick explanation for individuals who don’t understand how the RERA rental increase calculator works.
How does the RERA Rental Increase Calculator work?
H.H Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, issued Decree No. 43 of 2013 in December 2013 to regulate rental rises and prohibit unauthorized rental increases in order to prevent the market from outpricing itself.
The rental calculator is based on the RERA rental index, which is updated yearly (the most recent update was in January 2016), and the rental recommendations in the index are valid for all rental properties in Dubai for the whole year.
The RERA rental increase calculator allows landlords and renters to enter facts about their property and receive answers indicating whether or not a rental increase is applicable. Landlords are urged to use the rental calculator when considering a rental increase to verify they are within the law, and renters are encouraged to use the calculator if they get a notice to increase their rent.
The RERA rental calculator requests the following information:
- Regardless of whether the facility is residential, commercial, industrial, or staff housing
- Expiration date of the tenancy contract
- The property’s main area (Deira, Bur Dubai which refers to elsewhere in Dubai or whether it is a freehold property)
- Type of property (apartment or villa)
- Area (community or subcommunity)
- Bedrooms available
- Annual rental amount as of now
However, there are certain critical factors that the RERA rent calculation does not consider:
- The building/age unit’s
- Condition of the building
- Facilities that are available
- Floor level
- The calculator compares the price of your home to the average price of comparable homes in your region.
How much can my rent be raised?
The RERA rental index uses a graded structural approach as of January 2016:
- There will be no increase if the existing yearly rent is less than 10% of the determined market value.
- The maximum rental increase applicable is 5% if the existing yearly rent is between 11% and 20% less than the assessed RERA market value.
- If the existing yearly rent is between 21% and 30% less than the determined RERA market value, the maximum rent increase is 10%.
- The maximum rent increase allowable is 15% if the yearly rent on the property is 31% to 40% less than the determined RERA market value.
- The maximum rent increase allowable is 20% if the yearly rent on the property is more than 40% less than the RERA determined market value.
When is it permissible to raise the rent?
If your property is eligible for a rental increase, your landlord must provide you with written notification that is notarized 90 days before your contract renewal. It can be presented to you directly, left at your door, or sent by registered mail.
If the landlord fails to provide you with a written, notarized notice within the specified 90-day period, you are not required to accept the rate increase.
What should I do about illegal rent increases?
Unfortunately, despite the legislation and the availability of the rental increase calculator, some landlords will attempt to raise rent when they are not permitted to do so – or will raise rent over what is permitted by law.
If the rental calculator suggests that an increase in rent is excessive or simply not permitted, but the landlord insists on raising rent, the tenant should try to negotiate with the landlord and use the rental calculator as evidence.
If the conversations fail to yield results, the tenant has the right to file a rental increase challenge with the Rental Dispute Settlement Centre, where the case would be handled appropriately.